Introduction

Canada has reinvigorated its regional and bilateral free trade agreement (FTA) agenda in line with the government's resolve to ensure that Canadian businesses can compete in world markets. With its trade-oriented and globally integrated economy, Canada benefits from an open, transparent and rules-based international trading system-at the multilateral, regional and bilateral levels. FTAs help level the playing field for Canada vis-à-vis competitors who have agreements with markets of interest, and also help to secure Canadian investments. They offer enhanced market access for a broad range of Canadian goods and services. And they encourage Canadian businesses to expand into foreign markets and boost living standards by creating jobs in Canada.

In addition to the North American Free Trade Agreement (NAFTA-which entered into force on January 1, 1994), Canada has FTAs with Israel (January 1, 1997), Chile (July 5, 1997) and Costa Rica (November 1, 2002). Canada will continue to look for ways to create new market opportunities that will make the Canadian economy stronger and more successful within the rapidly changing global economy.

European Free Trade Association

Canada and the European Free Trade Association (EFTA) signed an FTA on January 26, 2008, on the margins of the World Economic Forum in Davos, and entry into force is expected by early 2009. Free trade negotiations with EFTA, which comprises Iceland, Liechtenstein, Norway and Switzerland, were launched in 1998.

The agreement is Canada's first FTA with any European countries and our first FTA in more than six years. It will bolster our existing commercial relationships with the EFTA countries, and broaden Canadian access to these valuable European markets. The direct commercial benefits to Canada will come from the elimination of duties on all non-agricultural goods and from the elimination or reduction of tariffs on selected agricultural exports. The FTA also provides a platform for Canadian business to tap into European Union value chains.

Peru

The conclusion of free trade negotiations with Peru was announced by Minister Emerson on the margins of the World Economic Forum in Davos, Switzerland, on January 26, 2008. Negotiations began in June 2007.

Under the agreement, Peru will provide greater market access for a range of Canadian agricultural products, as well as non-agricultural products such as paper products and machinery and equipment. The agreement also contains provisions on cross-border trade in services of interest to Canada in sectors including mining, energy and professional services. In addition, the FTA will provide greater stability, transparency and protection for Canadian investments in Peru, creating a more receptive environment for the rapidly growing stock of Canadian investment in that economy.

Provisions on the environment, biodiversity and corporate social responsibility are included in an environment agreement. A labour cooperation agreement, which includes enforcement obligations and associated penalties, has also been negotiated. This comprehensive agreement sets a new standard for labour provisions in Canada's FTAs. Following a legal review of the negotiated texts, the FTA will be signed by the parties and proceed to each country's respective legislatures for ratification.

Colombia

Free trade negotiations with Colombia (launched in June 2007) are ongoing. Canada remains committed to concluding a deal in the near future.

A number of Canada's competitors have already concluded FTAs with Colombia. A Canada-Colombia FTA would help level the playing field for a broad range of Canadian goods and services, and also help secure Canadian investments. There is potential for gains in a variety of sectors including agriculture and agri-food, mining, machinery and equipment, and financial and professional services. As well as providing new market opportunities for Canadian business, an FTA would foster increased cooperation between Canada and Colombia to help Colombia maximize the opportunities and benefits deriving from the Agreement.

Dominican Republic

In June 2007, Canada announced the launch of FTA negotiations with the Dominican Republic. The first full round of negotiations was held in December 2007 in Ottawa. Canada anticipates that a second round of negotiations will take place following the Dominican Republic's presidential elections, scheduled for May 2008. To date, negotiators have made considerable progress on a range of issues, including market access for goods and services, investment, rules of origin and trade facilitation.

The Dominican Republic is an established and growing destination for Canadian goods (e.g. mineral fuels, equipment, machinery, agri-food and fish products) and for services and investment (e.g. in the financial, mining, tourism and engineering sectors). A free trade agreement with the Dominican Republic would strengthen the bilateral economic relationship, and better position Canadian business vis-à-vis competitors that currently have preferential market access (e.g. the United States and European Union). It would also promote a more stable and predictable environment for investors.

Canada is pursuing a comprehensive FTA, which would cover a wide range of areas including trade in goods and services, investment and government procurement. Canada is seeking tariff elimination on a range of commercially significant agricultural and industrial products, and is working to address non-tariff barriers.

CARICOM

In July 2007, Prime Minister Harper and Caribbean Community (CARICOM) heads of government announced the launch of negotiations toward a comprehensive FTA. The inaugural meeting was held in October 2007 in Kingston, Jamaica. The first full round of negotiations may take place in early summer 2008, although a firm date has not yet been set. CARICOM (consisting of Antigua and Barbuda, the Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, Haiti, Jamaica, Montserrat, Saint Lucia, Saint Kitts and Nevis, Saint Vincent and the Grenadines, Suriname, and Trinidad and Tobago) is an established market for Canadian goods, services and investment. A comprehensive agreement would create market opportunities for Canadian exporters of goods and services and a more transparent, stable and predictable environment for Canadian business.

There are potential gains in several goods sectors including industrial goods (e.g. pharmaceuticals and electrical equipment), agriculture (e.g. french fries, pork and pulses) and fish and seafood. Potential gains are also expected in various services sectors (e.g. professional services and research and development) and in investment (e.g. financial services, oil and gas, and tourism).

Canada is seeking a comprehensive and modern trade agreement with CARICOM that would cover issues besides trade in goods, services and investment. Canada will take into account different levels of development, the vulnerabilities of island states, and trade-related capacity challenges during the negotiation process.

Central America Four

FTA negotiations between Canada and the Central America Four (CA4) countries of El Salvador, Honduras, Nicaragua and Guatemala were launched in November 2001. After 10 full rounds, the negotiations are well-advanced. A number of chapters in the agreement have been completed or are near completion, while some of the more sensitive issues require further work. Officials last met in October 2006 in Ottawa. Although the discussions were useful, considerable differences remain on key issues, including market access. A date for the next meeting has not been set.

Canada remains committed to concluding a comprehensive and balanced FTA with the CA4 countries that yields benefits to all parties. Canada is seeking an FTA that will allow Canadian exporters to compete on a level playing field with competitors in the region, in particular the United States, which has an FTA with these countries.

Canada is seeking to reduce or eliminate CA4 tariffs on exports of key Canadian interest, including petroleum products, wood and paper products, industrial and electrical machinery, beef, pork, pulses and frozen potatoes, and to create a more stable and predictable business environment for Canadian investors.

South Korea

In July 2005, Canada and South Korea (Korea) launched negotiations toward a comprehensive FTA. Thirteen full rounds of negotiations have been conducted, the latest in March 2008 in Ottawa.

A conclusion to the negotiations is within reach, but the remaining issues will be difficult to resolve. The government will continue to consult with Canadian stakeholders and will not conclude negotiations until it has an agreement that meets the needs of Canadians. Canada is seeking an ambitious and high-quality FTA with Korea that provides real market access opportunities for Canadian exporters, including Canadian automotive manufacturers. The majority of responses to Canada's domestic consultations have been positive.

An FTA with Korea would deliver significant commercial benefits to Canada. Results from macroeconomic modelling suggest that if the FTA had been fully in place in 2005, Canadian goods exports to Korea might have been 56% higher and Canadian GDP $1.6 billion greater. Sectors that could benefit from an FTA include agriculture and agri-food, fisheries, forestry and other natural resources, machinery and equipment, and financial and professional services.

The signing of the Korea-U.S. FTA (KORUS) last June, coupled with Korea's ongoing negotiations with the European Union, underlines the importance of maintaining Canada's competitiveness in this strategic Asian market, as well as the significance of Korea as a strategic trading partner in Northeast Asia.

Singapore

The Canada-Singapore FTA negotiations were launched in 2001. Canada and Singapore completed the eighth round of negotiations in August 2007 in Ottawa. Negotiations are at an advanced stage, with many elements already finalized. Despite progress, more work remains to be done on issues such as market access for services and investment in order to secure a satisfactory outcome for Canadians.

An FTA would raise Canada's profile in Singapore, facilitate goods and services trade, and improve Canada's ability to participate in global value chains. High-growth, export-oriented services sectors such as financial and professional services stand to benefit the most through improved access to opportunities in Singapore, a pre-eminent hub in the region.

Jordan

In July 2007, Prime Minister Harper and King Abdullah II of Jordan agreed to study the feasibility of an FTA. Canada and Jordan held exploratory discussions in November 2007 to discuss the scope of a potential FTA, and negotiations were launched on February 20, 2008. The first round of negotiations was held in Amman from April 13 to 17, 2008, with the second round scheduled for July 28 to August 1, 2008, in Ottawa.

An FTA with Jordan could generate increased export opportunities for Canada in a variety of sectors including manufacturing, agriculture and agri-food, and forest products. Jordan has FTAs with some of our key competitors (e.g. the United States and European Union), and a Canada-Jordan agreement would help ensure a level playing field for Canadian exporters.

Panama

Canada and Panama have strong, well-established economic ties and commercial relations that continue to expand. At the request of Panama and in accordance with Canada's re-engagement with the Americas, Canada has agreed to exploratory FTA discussions with Panama to better assess the potential scope and benefits of a prospective FTA. If the outcome of the talks is positive, the government would embark on comprehensive consultations with stakeholders across Canada before taking any decision to begin negotiations.

Other Initiatives

European Union-Canada Study on the Costs and Benefits of a Closer Economic Partnership At the June 2007 Canada-European Union (EU) Summit in Berlin, the European Union and Canada agreed, among other things, to cooperate on a study to examine the costs and benefits of a closer economic partnership. This study will examine existing barriers, especially non-tariff barriers, to the flow of goods, services and capital, and estimate the potential benefits of removing such barriers. The study will also identify how such a partnership could complement ongoing efforts to enhance bilateral cooperation in areas such as science and technology, energy and the environment.

Leaders will review the results of the study at the 2008 Canada-EU Summit, with a view to pursuing balanced and closer future Canada-EU economic integration. While neither the European Union nor Canada should presuppose the outcomes of the study, Canada hopes the study will help lay the foundation for leaders to take ambitious steps toward enhancing the Canada-EU economic relationship at the summit.

Canada-Japan Joint Study

The Canada-Japan Joint Study was launched at the signing of the Economic Framework in November 2005 by the prime ministers of each country. The objective of the study was to assess the costs and benefits of further promoting and liberalizing bilateral trade and investment. Released in October 2007, the study highlighted the positive economic relations between Canada and Japan and indicated that more could be done to strengthen our commercial ties. It identified a number of initiatives-such as enhanced cooperation on food safety and continued efforts toward a double taxation agreement- that would promote future bilateral economic relations. At the January 2008 meeting of the Canada-Japan Joint Economic Committee, Canada and Japan agreed to engage in focused discussions on the establishment of a "trade and investment dialogue" that would address regulatory cooperation, trade policy and the overall business environment. Such discussions will enable us to strengthen our cooperation efforts with Japan.

Regulatory Cooperation

Through various regulatory cooperation initiatives, Canada continues to collaborate with key partners with the goal of providing greater economic opportunity for all parties while protecting the health and safety of its citizens and their environment. Canada is currently at differing stages of broad-based regulatory cooperation with its NAFTA partners (the United States and Mexico), the European Union and Japan.

With the implementation of NAFTA Canada has achieved free trade with the United States and Mexico. However, the benefits could be further enhanced through closer cooperation on regulatory issues. The non-binding North American Regulatory Cooperation Framework (RCF) enables the NAFTA partners to pursue further regulatory cooperation aimed at lowering costs for North American businesses, producers, governments and consumers; maximizing trade in goods and services across our borders; while protecting health, safety and the environment. In order to enhance North American competitiveness in global markets, ongoing work is taking place to improve regulatory cooperation in priority sectors (such as the automotive sector), which includes the development of regulatory approaches that are compatible across our borders. New areas for cooperation continue to be identified and pursued under the RCF, which was adopted in August 2007 at the North American Leaders' Summit in Montebello, Quebec.

The non-binding Framework on Regulatory Cooperation and Transparency, implemented through the Canada-EU Roadmap for Regulatory Cooperation, continues to advance regulatory cooperation in sector-specific areas such as chemicals and food allergen labelling. The Canada-EU Framework and the Roadmap also facilitate regulatory cooperation on horizontal issues. New areas of cooperation continue to be identified for the Roadmap, which was adopted in June 2007 at the Canada-EU Summit in Berlin. Progress in regulatory cooperation with the EU could be further strengthened by concluding a standalone regulatory cooperation agreement, as called for by leaders at the June 2007 Canada-EU Summit.

Pursuant to the recently concluded Canada-Japan Joint Study, Canada is developing a regulatory cooperation initiative with Japan. In addition, Canada has a variety of issue-specific dialogues on regulatory matters with a range of other commercial partners and is open to considering additional broad-based dialogues where appropriate.