2.1 Legislation on trade and investment

Canadian laws related to trade and investment mainly include: Customs Act, Customs Tariff Act, Export Act, Export Development Act, Export and Import Permits Act, Special Import Measures Act, Special Import Measures Regulations, Import Permits Regulations, Investment Canada Act, Investment Canada Regulations, Companies Act, Canadian International Trade Tribunal Act, Marking of Imported Goods Order, Consumer Packaging and Labeling Act, Precious Metals Marking Act, Canada Agricultural Products Act, Textile Labeling Act, and Textile labeling and Advertising Regulations, etc.

Canadian laws and regulations affecting inspection and quarantine mainly consist of Food and Drugs Act, Hazardous Products Act, Meat Inspection Act, Fish Inspection Act, Health of Animals Act, and Wild Animal and Plant Trade Regulations.

2.2 Trade administration

2.2.1 Tariff system

The domestic market of Canada is highly liberalized, average tariff level comparative low. The average ad valorem duty in 2005 was about 1.83 percent.

The Canadian Customs Tariff was made by the Canadian Department of Finance based on relevant multilateral and bilateral agreements. Canada Border Services Agency (CBSA) is in charge of levying duties, a right to which all provinces are not entitled. Most imported goods are subject to ad valorem duty while some are subject to specific duty. Certain products are sometimes subject to mixed duty. Different tariff rates are imposed on products from different countries. At present, Canada imposes mainly the Most Favored Nations (MFN) tariff rate and the preferential tariff rate. Most of the imports from China enjoy the preferential tariff rate with the exception of most textile products and clothing, footwear, a small number of industrial products, refined sugar, and certain agricultural products.

2.2.2 Import Administration

2.2.2.1 Import Control

According the Export and Import Permits Act, Canada Import and Export Controls Bureau (EICB) is in charge of monitoring imports according to the Import Control List (ICL). The ICL consists of a list of products put under control, among which some products are only restricted when they come from specific countries or regions.

An import permit is required for any product listed in the ICL. Currently controls are exercised on four kinds of products, including agricultural products (poultry, eggs and dairy products), textiles and clothing, certain iron and steel products, weapons and military supplies, a total of 154 categories.

a. Agricultural products

As of 1995, Canada exercises Tariff Quota (TRQ) administration over agricultural products. For all agricultural TRQ categories except margarine, wheat, barley, wheat products, and barley products, importers are required to obtain a quota allocation from competent authorities. For margarine, import permits are issued by the International Trade Canada (ITCan) on a first-come, first-served basis until the quota has been filled. For barley, wheat, barley products and wheat products, a General Import Permit (GIP) is granted until the quota has been filled.

b. Textiles and clothing

As of April 1, 2005, only those clothing and textile products from the U.S., Mexico, Chile, and Costa Rica that are eligible for a tariff preference level (TPL) benefit are subject to import permit requirements. For imports not eligible for TPL benefit, import permits are no longer required.

c. Iron and Steel products

The Canadian Government implements a monitoring program over the importation of iron and steel products. Carbon steel products and special steel products are put under the ICL. On 31 August 2005, EICB issued a notice to the effect that the new monitoring program for iron and steel products would last till 31 August 2008.

2.2.2.2 Prohibited imports

Canada prohibits the importation of the following goods: material which is considered to be obscene, treasonable, seditious, hate propaganda, or child pornography; used or second-hand automobiles of all kinds (except from the USA); used or second-hand aircraft of all kinds; debased or counterfeit currency; certain birds; aigrettes, egret plumes and certain other feathers; used or second-hand mattresses; articles manufactured or produced by prisoners; reprints of Canadian works protected by copyright; matches made with white phosphorus.

2.2.2.3 Rules of origin

There are three main types of certificates of origin in Canada: Certificates of origin required under free trade agreements; Form A, Certificate of Origin, or the exporter’s statement of origin, goods subject to general preferential tariff and goods other than textiles and apparels originating in a Least Developed Country; Form B255, Certificate of Origin, Textile and Apparel Goods originating in a Least Developed Country.

Exporters shall have to present the certificates if a Customs officer requests them.

2.2.3 Export Administration

The Canadian Government exercises export control over some products, which are listed in the Export Control List (ECL). These products include: agricultural products (refined sugar, sugar-containing products and peanut butter); textiles and clothing; military, strategic dual-use goods; nuclear energy materials and techno logy; missile, chemical or biological goods of non-proliferation concern; softwood lumber, unprocessed logs and certain other forest products; miscellaneous goods including goods of U.S.-origin, Roe Herring and certain items with medical value. All goods destined for countries on the Area Control List are subject to export control. Currently, there are only two countries on the Area Control List: Angola and Myanmar. Goods subject to export control require an Export Permit. There are two types of permit: General Permit and Individual Permit. While General Permits allow for the pre-authorized export of certain eligible goods to certain eligible countries by a simplified process, Individual Permits are specific to an individual importer or exporter. Most controlled goods require an Individual Permit for import or export. In addition, goods must be reported to the CBSA by filing an export declaration prior to export: when the goods are valued at CAN$2,000 or more; and the final destination of the goods is a country other than the United States, Puerto Rico, or U.S. Virgin Islands.

2.3 Investment administration

Industry Canada is responsible for promoting and examining the proposals of non-Canadian citizens in acquiring a key interest in any of the non-cultural sectors in Canada. Canadian Heritage is in charge of examining proposals for investing in cultural sectors.

The Canadian Government facilitates inward investment made by Canadian and non-Canadian citizens. According to the Investment Canadian Act (hereinafter referred to as “the Act”), no restrictions are imposed on foreign investment in all ordinary circumstances. The establishment of a new Canadian business is subject to prior notification only, that is, the only thing the investor has to do is notify Investment Canada of the proposal at any time prior to implementation, or within 30 days thereafter. No further presentation of the details of the proposal is required if the proposal is an ordinary one. No examination or approval is required unless the new establishment falls under the protected sectors.

However, according to the Act, an investment is reviewable if the interests to be acquired equals or exceeds the following thresholds:

For non-WTO investors, the thresholds are

(1) CAN$5 million (included) for a direct acquisition;

(2) over CAN$50 million (included) for an indirect acquisition; and

(3) the 5 million threshold will apply however for an indirect acquisition if the asset value of the Canadian business being acquired exceeds 50 percent of the asset value of the global transaction.

A threshold is calculated annually for reviewable direct acquisitions by or from WTO investors, except for investment in sectors related to uranium, financial services, transportation services, and conventional cultural sectors. The threshold for 2005 is CAN$250 million, higher than that of CAN$237 million in 2004. The threshold for 2006 is further increased to CAN$265 million, which means a direct acquisition by WTO investors of a Canadian business below the new threshold is not reviewable and only requires filing with the Canadian Government. Pursuant to Canada’s international commitments, indirect acquisitions by or from WTO investors are not reviewable and only require filing with the Canadian Government.

For investment by WTO investors in uranium industry, financial services, transportation services, and conventional cultural businesses, thresholds for non-WTO investors shall apply.

2.4 Competent authorities

The authority to administer foreign trade is vested with International Trade Canada, which is mandated to help Canadian enterprises expand into the international market, and to represent Canada in negotiating and supervising trade agreements. The Export and Import Controls Bureau (EICB) authorizes, under the discretion of the Minister of International Trade, the import and export of goods restricted by quotas and/or tariffs. It also monitors the trade in certain goods and ensures personal security of Canadians and citizens of other countries by restricting trade in dangerous goods and other materials.

Created in December 2003, the Canada Border Services Agency (CBSA), the successor to the Canada Customs and Tariff Bureau, operates as an agency under the Public Safety and Emergency Preparedness (PSEP) portfolio. The CBSA is responsible for providing integrated border services that support national security priorities and facilitate the free flow of persons and goods, including animals and plants.

Canadian International Trade Tribunal is responsible for initiating safeguard investigations based on the complaints made by domestic producers and making decisions as to whether domestic enterprises have incurred a serious injury or a threat to serious injury as a result of a surge in imports.

Health Canada is responsible for establishing policies and standards for the safety and nutritional quality of food sold in Canada. The Canadian Food Inspection Agency (CFIA) is in charge of food inspection and quarantine and at the same time consolidates the delivery of federal food, animal and plant health inspection programs.

The Standards Council of Canada (SCC) is the focal point for standardization and conformity assessment in Canada, and operates the Enquiry Point under the TBT and SPS Agreements. The SCC approves national standards and represents Canada in international standards forums.