Title

FREE TRADE AGREEMENT BETWEEN CANADA AND THE STATES OF THE EUROPEAN FREE TRADE ASSOCIATION (ICELAND, LIECHTENSTEIN, NORWAY AND SWITZERLAND)

Preamble

Canada, and the Republic of Iceland, the Principality of Liechtenstein, the Kingdom of Norway and the Swiss Confederation (the "EFTA States"), hereinafter collectively referred to as the "Parties",

Resolved to strengthen the special bonds of friendship and co-operation among their nations;

Reaffirming their commitment to the United Nations Charter and the Universal Declaration of Human Rights;

Desiring to contribute to the harmonious development and expansion of world trade and provide a catalyst to broader international and transatlantic co-operation;

Determined to create an expanded and secure market for the goods produced in their territories;

Wishing to establish a free trade area through the removal of trade barriers;

Committed to reduce distortions of trade;

Resolved to establish clear and mutually advantageous rules governing their trade;

Intending to enhance the competitiveness of their firms in global markets;

Aiming to create new employment opportunities and improve working conditions and living standards in their respective territories; Determined to ensure that the gains from trade liberalisation are not offset by the erection of private, anti-competitive barriers;

Recalling the Arrangements on Trade and Economic Co-operation that were signed: between the Government of Canada and the Government of the Kingdom of Norway, on 3 December 1997; between the Government of Canada and the Government of the Swiss Confederation, on 9 December 1997; and between the Government of Canada and the Government of the Republic of Iceland, on 24 March 1998;

Building on their respective rights and obligations under the Marrakesh Agreement Establishing the World Trade Organization, done on 15 April 1994 (hereinafter referred to as the "WTO Agreement"), the other agreements negotiated thereunder and other multilateral and bilateral instruments of co-operation;

Taking into account the Agreement on Mutual Recognition in Relation to Conformity Assessment between Canada and Switzerland, done at Ottawa on 3 December 1998; and the Agreement on Mutual Recognition in Relation to Conformity Assessment between Canada and the Republic of Iceland, the Principality of Liechtenstein, and the Kingdom of Norway, done at Brussels on 4 July 2000;

Recognizing the importance of trade facilitation in promoting efficient and transparent procedures to reduce costs and ensure predictability for the Parties' respective trading communities;

Committed to co-operate in promoting recognition that States must maintain the ability to preserve, develop and implement their cultural policies for the purpose of strengthening cultural diversity; Recognizing the need for mutually supportive trade and environmental policies in order to achieve the objective of sustainable development;

Affirming their commitment to economic and social development and the respect for the fundamental rights of workers and the principles set out in the International Labour Organization's Declaration on Fundamental Principles and Rights at Work; and

Declaring their readiness to examine the possibility of developing and deepening their economic relations in order to extend them to fields not covered by this Agreement;

Have agreed as follows:

Body

Section I. Objectives and Scope

Article 1. Objectives

1. The Parties hereby establish a free trade area in accordance with this Agreement.

2. The objectives of this Agreement are:

a. to promote, through the expansion of reciprocal trade, the harmonious development of the economic relations between Canada and the EFTA States and thus to foster in Canada and in the EFTA States the advancement of economic activity;

b. to provide fair conditions of competition affecting trade between the Parties;

c. to establish a framework for further co-operation between Canada and the EFTA States in the light of developments in international economic relations, in particular with the aim of liberalising trade in services and increasing investment opportunities; and

d. to contribute in this way, by the removal of barriers to trade, to the harmonious development and expansion of world trade.

Article 2. Geographical Scope

1. Without prejudice to Annex C and except as otherwise provided elsewhere in this Agreement, this Agreement shall apply to:

a. the land territory, air space, internal waters and territorial sea over which a Party exercises sovereignty; and

b. the exclusive economic zone and the continental shelf of a Party, as determined by its domestic law, consistent with international law.

2. Annex A applies with respect to the Kingdom of Norway.

Section II. Trade In Goods

Article 3. Coverage

1. This Agreement applies to trade in goods of a Party, except as otherwise provided in this Agreement and in the bilateral Agreements on trade in agricultural products referred to in paragraph 2.

2. The Parties declare their readiness to foster, in so far as their agricultural policies allow, harmonious development of trade in agricultural products. In pursuance of this objective, Canada and each individual EFTA State have concluded bilateral Agreements on trade in agricultural products. These Agreements shall form part of the instruments establishing the free trade area between Canada and the EFTA States.

3. In this Agreement:

a. "goods of a Party" means domestic products as these are understood in the General Agreement on Tariffs and Trade 1994 (hereinafter referred to as the "GATT 1994"), or such goods as the Parties may agree, and includes originating products of that Party;

b. "originating products of a Party" means goods of a Party qualifying under the rules of origin set out in Annex C.

Article 4. National Treatment

1. The Parties shall apply national treatment in accordance with Article III of the GATT 1994, which is incorporated into and made part of this Agreement.

2. Paragraph 1 does not apply to the measures set out in Annex B.

Article 5. Import and Export Restrictions

1. Prohibitions or restrictions other than duties, taxes or other charges, whether made effective through quotas, import or export licences or other measures, shall be prohibited in trade between the Parties in accordance with Article XI of the GATT 1994, which is incorporated into and made part of this Agreement.

2. Paragraph 1 does not apply to the measures set out in Annex B.

Article 6. Sanitary and Phytosanitary Measures

The rights and obligations of the Parties in respect of sanitary and phytosanitary measures shall be governed by the WTO Agreement on the Application of Sanitary and Phytosanitary Measures.

Article 7. Technical Regulations

1. The rights and obligations of the Parties in respect of technical regulations, standards and conformity assessment shall be governed by the WTO Agreement on Technical Barriers to Trade (hereinafter referred to as the "WTO TBT Agreement").

2. Notwithstanding paragraph 1, the rights and obligations of Canada and the EFTA States in the field of mutual recognition of conformity assessment shall be governed:

a. as between Canada and the Swiss Confederation, by the Agreement on Mutual Recognition in Relation to Conformity Assessment of 3 December 1998; and

b. as between Canada, on the one hand, and the Republic of Iceland, the Principality of Liechtenstein and the Kingdom of Norway, on the other, by the Agreement on Mutual Recognition in Relation to Conformity Assessment of 4 July 2000.

3. The Parties shall strengthen their co-operation in the field of technical regulations, standards and conformity assessment.

4. Without prejudice to paragraph 1, where Canada or an EFTA State considers that one or more EFTA States or Canada have taken a measure that is likely to create, or has created, an obstacle to trade, the Parties concerned shall hold consultations under the framework of the Joint Committee in order to attempt to find an appropriate solution in conformity with the WTO TBT Agreement. This paragraph is limited to matters falling within the scope of paragraph 1 and does not apply to matters falling within the scope of either of the Agreements on Mutual Recognition listed in paragraph 2. In matters falling within the scope of paragraph 2, the procedures of the applicable Agreement on Mutual Recognition shall apply.

Article 8. Rules of Origin and Administrative Co-operation

The provisions on rules of origin and administrative co-operation are set out in Annex C.

Article 9. Sub-committee on Rules of Origin and Trade In Goods

1. The Parties hereby establish a Sub-Committee on Rules of Origin and Trade in Goods of the Joint Committee. 2. The mandate of the Sub-Committee is set out in Annex D.

Article 10. Customs Duties

1. Customs duties shall be prohibited in respect of the following originating products of the Parties as of the date of entry into force of this Agreement, except as otherwise provided for in Annex E:

a. products falling within Chapters 25 through 97 of the Harmonized Commodity Description and Coding System (hereinafter referred to as the "Harmonized System"), excluding the products listed in Annex F;

b. products falling within Chapters 1 through 24 of the Harmonized System specified in Annex G, with due regard to the provisions of that Annex; and

c. fish and other marine products as provided for in Annex H.

2. A customs duty includes any duty or charge of any kind imposed in connection with the importation or exportation of a product, including any form of surtax or surcharge in connection with such importation or exportation, but does not include any:

a. charge equivalent to an internal tax imposed consistently with Article 4;

b. anti-dumping or countervailing duty; or

c. fee or other charge, provided that it is limited in amount to the approximate cost of services rendered.

3. Paragraphs 1 and 2 shall not prevent any Party from introducing, reintroducing or increasing a customs duty vis-à-vis another Party, as may be authorizedby or pursuant to the WTO Agreement, in particular pursuant to the rules and procedures on dispute settlement, but excluding any modification of schedules and tariff modifications in accordance with Article XXVIII of the GATT 1994.

Article 11. Base Rate of Customs Duties

For each product, the base rate of customs duties, to which the successive reductions set out in Annex E are to be applied, shall be the most-favoured nation (hereinafter referred to as "MFN") customs duty rate applied on 1 January 2007.

Section III. Services and Investment

Article 12. Services and Investment

1. The Parties recognise the increasing importance of trade in services and investment in their economies. In their efforts to gradually develop and broaden their co-operation, they will work together with the aim of creating the most favourable conditions for expanding investment between them and achieving further liberalisation and additional mutual opening of markets for trade in services, taking into account on-going work under the auspices of the WTO.

2. Upon request of a Party, the requested Party shall endeavour to provide information on any of its measures that may have an impact on trade in services or investment.

3. The Parties shall encourage the relevant bodies in their respective territories to co-operate with a view to achieving mutual recognition for licensing and certification of professional service suppliers.

4. The Parties shall jointly review issues related to services and investment in the Joint Committee and consider the adoption of liberalisation measures with due regard to Article V of the WTO General Agreement on Trade in Services and in the light of developments in multilateral and bilateral agreements. Such a review shall take place no later than three years after the entry into force of this Agreement.

5. Any future negotiation on services and investment between Canada and the EFTA States shall be based on the principles of non-discrimination and transparency.

Article 13. Temporary Entry

1. The Parties recognise that investment and services are growing in importance in relation to trade in goods. Each Party shall, in accordance with its applicable laws:

a. facilitate the temporary entry into its territory of nationals of another Party who are intra-corporate transferees (managers, executives, specialists) and business visitors;

b. facilitate the temporary entry into its territory of nationals of another Party who render services directly related to the exportation of goods by an exporter of that same Party into the territory of the Party concerned; and

c. facilitate the entry into its territory of spouses and children of nationals described in sub-paragraph (a) above.

2. The Joint Committee shall monitor the operation and implementation of this Article and deal with issues of implementation or administration related to temporary entry.

3. No later than one year after the date of entry into force of this Agreement, each Party shall make available explanatory material regarding the requirements for temporary entry under this Article, in such a manner as will enable nationals of the other Parties to become acquainted with them.

4. For the purposes of this Article:

a. "temporary entry" means the right to enter and remain for the period authorised;

b. "national" means a natural person who is a citizen or a permanent resident of a Party; and

c. "business visitors" means short term visitors who do not intend to enter the labour market of the Parties, but seek entry to engage in activities such as buying or selling goods or services, negotiating contracts, conferring with colleagues, or attending conferences.

Section IV. Competition Law and Policy

Article 14. General Principles

1. The Parties agree that anti-competitive business conduct can hinder the fulfilment of the objectives of this Agreement. Accordingly, each Party shall adopt or maintain measures to proscribe such conduct and take appropriate action with respect thereto, acknowledging that such measures may be brought about by a Party's obligations entered into through other international agreements, such as the Agreement on the European Economic Area, done at Brussels on 17 March 1993, to which certain EFTA States are party. The Parties shall, upon request of a Party, consult about the effectiveness of measures undertaken by each Party.

2. Each Party shall ensure that the measures referred to in paragraph 1, and the actions it takes pursuant to those measures, are applied on a non-discriminatory basis.

3. For the purpose of this Chapter, "anti-competitive business conduct" includes, but is not limited to, anti-competitive agreements, concerted practices or arrangements by competitors, anti-competitive practices by an enterprise that is dominant in a market and mergers with substantial anti-competitive effects, unless such conduct is excluded directly or indirectly from the coverage of a Party's own laws or authorised in accordance with those laws. All such exclusions and authorisations should be transparent and should be reviewed periodically to assess whether they are necessary to achieve their overriding policy objectives.

4. No Party may have recourse to dispute settlement under this Agreement for any matter arising under this Chapter.

Article 15. Co-operation

1. The Parties recognise the importance of co-operation and co-ordination on general issues relating to competition law enforcement policy, such as notification, consultation and exchange of information relating to the enforcement of competition laws and policies.

2. Unless providing notice would harm its important interests, a Party shall notify another Party when a proposed or actual competition law enforcement action may have an effect on that other Party's important interests, and give full and sympathetic consideration to the views expressed by that other Party, including possible ways of fulfilling its enforcement needs without harming those interests.

3. If a Party considers that any specified anti-competitive business conduct carried out within the territory of another Party is adversely affecting an important interest referred to in paragraph 2, that Party may notify the other Party and may request that the Party or its competition authority initiate appropriate enforcement action.

4. The notifying Party shall include in its notification sufficient information to permit the notified Party to identify the anti-competitive business conduct that is the subject of the notification and shall include an offer to provide such further information and co-operation as the notifying Party is able to provide. The notified Party may consult with the notifying Party and shall accord full and sympathetic consideration to the request of the notifying Party in deciding whether to initiate enforcement action with respect to the anti-competitive business conduct identified in the notification. The Parties may conduct such consultations through their respective competition authorities.

5. The notified Party shall inform the notifying Party of its decision and may include the grounds for the decision. If enforcement action is initiated, the notified Party shall advise the notifying Party of its outcome and, to the extent possible, of any significant interim development. The Parties may act under this paragraph through their respective competition authorities.

Article 16. Communication of Information

Nothing in this Chapter shall require the communication of information by a Party, including its competition authority, if such communication is prohibited by its laws, including those regarding disclosure of information, confidentiality and business secrecy.

Section V. Other Common Rules

Article 17. Subsidies

1. Subject to paragraphs 2 and 3, the rights and obligations of the Parties in respect of subsidies and the application of countervailing measures shall be governed by Articles VI and XVI of the GATT 1994 and the WTO Agreement on Subsidies and Countervailing Measures.

2. Each Party shall designate, and provide full contact information for, a person that the other Parties can contact with respect to any matter concerning subsidies or countervailing measures.

3. Before initiating an investigation under Part V of the WTO Agreement on Subsidies and Countervailing Measures, the competent investigating authority of Canada or the EFTA State, as the case may be, shall notify, in writing, the Party whose goods would be subject to the investigation and allow such Party a period of 25 days from the date upon which notification was given, for consultations, with a view to finding a mutually acceptable solution. The outcome of such consultations shall be communicated to the other Parties after the decision has been made on whether or not to initiate the investigation.

Article 18. Anti-dumping

1. Subject to paragraphs 2 and 3, the rights and obligations of the Parties in respect of the application of anti-dumping measures shall be governed by Article VI of the GATT 1994 and the WTO Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994.

2. Each Party shall designate, and provide full contact information for, a person that the other Party may contact with respect to any matter concerning anti-dumping measures.

3. The Parties shall, within three years after the entry into force of this Agreement, meet to review this Article.

Article 19. State Trading Enterprises

The rights and obligations of the Parties in respect of State trading enterprises shall be governed by Article XVII of the GATT 1994 and the WTO Understanding on the Interpretation of Article XVII of the General Agreement on Tariffs and Trade 1994.

Article 20. Public Procurement

1. The rights and obligations of the Parties in respect of public procurement shall be governed by the WTO Agreement on Government Procurement.

2. If, after the entry into force of this Agreement, Canada or the EFTA States enter into an international agreement that provides greater transparency or access to the procurement market or markets concerned than is provided under the WTO Agreement on Government Procurement, Canada or the EFTA States may request that the Parties enter into negotiations with a view to achieving a level of transparency or market access through this Agreement that is equivalent to that provided in the other agreement.

3. The Parties agree to co-operate in the Joint Committee, with the aim of achieving further liberalisation among them, of public procurement markets and greater transparency in public procurement. They shall meet to review this Article no later than three years after the entry into force of this Agreement.

Article 21. Trade Facilitation

To facilitate trade between Canada and the EFTA States, the Parties shall:

a. simplify, to the greatest extent possible, procedures for trade in goods and related services;

b. promote multilateral co-operation among them in order to enhance their participation in the development and implementation of international conventions and recommendations on trade facilitation; and

c. co-operate on trade facilitation within the framework of the Joint Committee, in accordance with the provisions set out in Annex I.

Section VI. Exeptions and Safeguards

Article 22. General Exceptions

For purposes of the Chapter on Trade in Goods, Article XX of the GATT 1994 is incorporated into and made part of this Agreement. The Parties understand that the measures referred to in Article XX(b) of the GATT 1994 include environmental measures necessary to protect human, animal or plant life or health, and that Article XX(g) of the GATT 1994 applies to measures relating to the conservation of living and non-living exhaustible natural resources.

Article 23. Other Exceptions

Without prejudice to the rights and obligations of the Parties pursuant to the WTO Agreement, Annex J shall apply to measures of a Party with respect to cultural industries.

Article 24. Security Exceptions

Nothing in this Agreement shall be construed:

a. to require any Party to furnish any information the disclosure of which it considers contrary to its essential security interests;

b. to prevent any Party from taking any action which it considers necessary for the protection of its essential security interests:

i. relating to fissionable materials or the materials from which they are derived;

ii. relating to the traffic in arms, ammunition and implements of war and to such traffic in other goods and materials as is carried on directly or indirectly for the purpose of supplying a military establishment; or

iii. taken in time of war or other emergency in international relations; or

c. to prevent any Party from taking any action in pursuance of its obligations under the United Nations Charter for the maintenance of international peace and security.

Article 25. Emergency Action

1. Where, during the transition period referred to in paragraph 9, as a result of the reduction or elimination of a customs duty under this Agreement, an originating product of a Party is being imported into the territory of another Party in such increased quantities, in absolute terms or relative to domestic production, and under such conditions as to constitute a substantial cause of serious injury or threat thereof to the domestic industry of like or directly competitive products in the importing Party, the importing Party may take emergency action to the minimum extent necessary to remedy or prevent the injury, subject to the provisions of this Article.

2. Each Party shall ensure equitable, transparent and effective procedures for emergency action proceedings. An emergency action proceeding may be instituted by a petition or a complaint by an entity representing the domestic industry producing a good like or directly competitive with the imported product. The Party receiving a petition or a complaint shall, without delay, deliver to the other Parties and the Joint Committee written notice of the institution of a proceeding that could result in the application of emergency action. The written notice shall contain the contact information of the Party's competent investigating authority.

3. An emergency action shall only be taken upon clear evidence that increased imports have caused or are threatening to cause serious injury pursuant to an investigation conducted in accordance with definitions and procedures equivalent to those of Articles 3 and 4 of the WTO Agreement on Safeguards.

4. The Party intending to take an emergency action under this Article shall, before taking an action, notify the other Parties and the Joint Committee. The notification shall contain all pertinent information, including evidence of serious injury or threat thereof caused by increased imports, a precise description of the product involved, and the proposed action, as well as the proposed date of introduction, and expected duration of the action. A Party that may be affected by the action shall be offered compensation in the form of substantially equivalent trade liberalization in relation to the imports from such Party.

5. If the conditions in paragraph 1 are met, and following an examination by the Joint Committee as set out in paragraph 7, the importing Party may increase the rate of customs duty for the product to a level not to exceed the lesser of:

a. the MFN rate of duty applied at the time the action is taken; or

b. the MFN rate of duty applied on the day immediately preceding the date of the entry into force of this Agreement.

6. An emergency action shall be taken for a period not exceeding three years, and shall not extend beyond the end of the transition period referred to in paragraph 9. No action shall be applied to the import of a product that has previously been the subject of such an action.

7. The Joint Committee shall, within 30 days from the date of notification referred to in paragraph 4, examine the information provided under paragraph 4 in order to facilitate a mutually acceptable resolution of the matter. In the absence of such resolution, the importing Party may take an action in accordance with paragraph 5 and, in the absence of mutually agreed compensation, the Party against whose product the action is taken may take compensatory action. The emergency action and the compensatory action shall be immediately notified to the other Parties and the Joint Committee. In the selection of the emergency action and the compensatory action, priority must be given to the action which least disturbs the functioning of this Agreement. The compensatory action shall consist of suspension of tariff concessions under this Agreement having substantially equivalent trade effects or concessions substantially equivalent to the value of the additional duties expected to result from the emergency action. The Party taking compensatory action shall apply the action only for the minimum period necessary to achieve the substantially equivalent trade effects and in any event, only while the measure under paragraph 5 is being applied.

8. Upon the termination of the emergency action, the rate of customs duty shall be the rate that would have been in effect but for the action.

9. Unless extended by the Joint Committee as set out in paragraph 10, the transition period referred to in paragraphs 1 and 6 is the longer of: