WTO report underlines Canada’s trade achievements

The WTO notes that Canada continues to pursue reciprocal FTAs and seeks to modernize older agreements.

The World Trade Organization (WTO) Secretariat issued its Trade Policy Review report on Canada’s international trade performance for the period 2015-2019. Trade Policy Reviews are an exercise, mandated in the WTO agreements, in which member countries’ trade and related policies are examined and evaluated at regular intervals.

The WTO notes that, since the last report on the country’s trade, Canada continued to pursue reciprocal free trade agreements (FTA) during the review period, with the implementation, or provisional application, of three new Agreements: the Canada-European Union Comprehensive Economic and Trade Agreement (CETA), the Canada-Ukraine Free Trade Agreement (CUFTA), and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

Canada was also active in updating and expanding existing FTAs in order to modernize certain FTA provisions, when revised agreements were negotiated with Chile, Israel, and NAFTA partners; however, only the agreement with Chile entered into force, in February 2019. Canada is now a party to 14 FTAs.

The country’s FTA trade is heavily dominated by Canada’s NAFTA trading partners, with the United States and Mexico accounting for 94% of imports under FTA provisions in 2017.

According to the report, the 2019 average applied MFN tariff is 6.1%, slightly up from 6.0% in 2014, mainly due to changes in the tariff structure. About 70.4% of tariff lines are duty-free on an MFN basis, a higher percentage than in 2014 (67.0%), mainly reflecting the elimination of import duties on products under the Information Technology Agreement (ITA) Expansion, and the unilateral tariff elimination on certain imported products used in the agri-food processing industry.

Canada continues to apply some non-ad valorem duties (3.7% of total tariff lines) on agricultural products. Tariffs on agricultural products remain higher (the simple average is 21.8%, and there are some tariff peaks with ad valorem equivalents (AVEs) of over 100%) than on non-agricultural products (2.5%). Tariff rate quotas (TRQs) are applied on 159 tariff lines, including dairy products, poultry and egg products, beef and veal, and certain wheat and barley products.

Canada grants preferential tariff treatment under bilateral or plurilateral agreements, or under unilateral concession schemes. Preferential schemes include the newly-signed FTAs with the European Union (EU), Ukraine, and the 11 CPTPP countries. Under most FTAs, duty-free treatment (including MFN duty-free) covers 95% of tariff lines. The simple average tariff for FTA partners is slightly over 3.0% (e.g. 3.7% for CPTPP partners, 3.3% for the European Union and Ukraine). However, the simple average preferential rates for agricultural products remain high (ranging between 17% and 21%, as compared to an MFN average tariff of 21.8%), mainly due to exceptions from preferences for certain agricultural products such as dairy produce, and meat and fish products. On the other hand, tariffs on non-agricultural products are nearly all zero.

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