Canada's Objectives for Negotiations for a Canada-ASEAN Free Trade Agreement

On November 16, 2021, during the 10th ASEAN Economic Ministers (AEM)-Canada Consultations, Canada and the Association of Southeast Asian Nations (ASEAN)^{Footnote 1} agreed to launch negotiations toward a Canada-ASEAN Free Trade Agreement (FTA). On November 24, 2021, the Government of Canada submitted to Parliament a Notice of Intent to enter into negotiations toward a Canada‑ASEAN FTA, in accordance with the amended Policy on Tabling of Treaties in Parliament.

The launch of FTA negotiations represents a significant milestone in the Canada-ASEAN relationship and in the renewal and deepening of Canada’s economic partnerships and commercial engagement across the Indo-Pacific. It demonstrates the government’s continued commitment to pursuing free trade opportunities—including through new bilateral and regional agreements in the Indo-Pacific—and to advancing Canada’s Export Diversification Strategy for the benefit of Canadian consumers and businesses.

Canada and ASEAN have been assessing the benefits of a potential FTA since 2017, beginning with the launch of exploratory discussions, followed by the establishment of an annual Trade Policy Dialogue. Canada and ASEAN conducted a joint study on the economic potential for a Canada-ASEAN FTA, which was concluded in 2018. Canada’s modelling projects that an FTA could increase Canada’s GDP by US$2.54 billion, and could boost Canadian exports to ASEAN countries by as much as US$2.67 billion. This is on top of the gains already enjoyed as a result of Canada’s existing preferential market access to Vietnam and Singapore under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)^{Footnote 2}.

Before the COVID-19 pandemic, ASEAN was one of the fastest growing economic regions in the world and, after two years of slower growth due to the pandemic, ASEAN is forecast to rebound in 2022 to become again one of the world’s fastest-growing regions. Collectively, ASEAN has the third‑largest population in the world, after China and India, with over 661.8 million people. As a group, ASEAN member state economies represent Canada’s sixth-largest trading partner (2020). Despite a 1.4% decrease in bilateral merchandise trade during the COVID-19 pandemic, Canada’s trade in goods and services with ASEAN remains important and totalled $32.9 billion in 2020.

A Canada-ASEAN FTA that eliminates tariffs and other barriers and enhances market access would help Canadian businesses further integrate and benefit from the dynamic supply chains in the region. A Canada-ASEAN FTA could also create a more transparent, predictable, and accessible environment for Canadian investment to ASEAN. Canada is now the eighth-largest foreign investor in ASEAN, but is falling behind other growing players in the region.

Canada’s interests in negotiating an FTA with ASEAN extend beyond strengthening our trade and investment relationship. A Canada-ASEAN FTA would advance the government’s objective to deepen Canada’s partnerships in the Indo-Pacific region in the context of expanding diplomatic engagement and the Joint Declaration on ASEAN-Canada Enhanced Partnership. It also supports ASEAN centrality, which as an underlying principle for cooperation, helps operationalize Canada’s commitment to a free, open and inclusive Indo-Pacific.

ASEAN represents a diverse group of member states, each with a different set of opportunities and considerations. The Government of Canada’s vision for a Canada-ASEAN FTA is a commercially meaningful and comprehensive agreement that gives due consideration to the different levels of development amongst ASEAN member states.

The Government of Canada conducted public consultations from September 1 to October 16, 2018, to solicit the views of Canadians on a possible Canada-ASEAN FTA. Public consultations highlighted the significant opportunities identified by Canadians and Canadian businesses in the ASEAN market across a broad range of sectors, including agriculture and agri-food, fish and seafood, natural resources, manufacturing, and financial services. A number of submissions supported the government’s broader efforts to diversify Canada’s trade toward the Indo-Pacific region. Some submissions expressed concern with respect to human rights and labour issues in the ASEAN region. Organizations representing supply-managed sectors also requested that no market access commitments be made that impact their products. In pursuing a Canada-ASEAN FTA, the government will be guided by the views shared during public consultations and ongoing engagement with Canadians throughout the negotiating process. Canada’s approach to negotiations will also be guided by a comprehensive Gender-based Analysis Plus and an environmental assessment.

In addition to seeking new commercial opportunities, Canada will seek commitments in the FTA to uphold environmental protection and labour rights and standards as well as promote gender equality through provisions which seek to address the specific challenges that women and other underrepresented groups face in international trade. Canada will preserve the right of governments to regulate in the public interest, including in areas such as public health and safety, education, social services, and the environment. In addition, the government will seek to preserve flexibility to adopt and maintain measures related to Canada’s cultural sector and to fulfill Canada’s legal obligations to Indigenous peoples, including Aboriginal rights as recognized and affirmed by Section 35 of the Constitution Act, 1982, and the rights set out in the self-government agreements.

The Government of Canada is fully committed to a high level of transparency throughout the negotiation of a Canada-ASEAN FTA. In this spirit, the Government has agreed to publish a summary of its specific negotiating objectives for the negotiation of new comprehensive trade agreements.

In line with the considerations listed above, Canada will seek to negotiate an FTA that:

Trade in goods

National treatment and market access

• Delivers commercially meaningful market access, achieved through the elimination of tariff and non-tariff barriers, and addresses the concerns of sensitive Canadian sectors. Canada will continue to fully defend its supply-management system for dairy, poultry and eggs, including by not conceding any additional market access in these sectors.
• At a minimum, reaffirms key international market access commitments, and includes provisions and mechanisms to prevent and address non-tariff barriers.

Rules of origin and origin procedures

• Includes rules of origin and product-specific rules that allow for cumulation of materials and production. Canada will seek to establish criteria for determining the origin of goods that are clear, as simple as possible, leave little room for administrative discretion, and take into account the existing production patterns and regional integration.
• Sets out the procedures to be used by customs administrations to both administer the rules of origin and to enable the trading community to take advantage of the preferential tariff treatment afforded under an FTA. These procedures will support the evolving trade environment and allow certification of origin by the exporter with verifications performed on a risk-managed basis after the good is imported.

Customs and trade facilitation

• Affirms and builds upon the WTO Agreement on Trade Facilitation. This will include seeking provisions that promote a transparent, predictable and consistent border environment that facilitates legitimate trade in goods while safeguarding Canada’s ability to protect its borders and to provide certainty around Canada’s ability to administer or introduce new measures that ensure or enhance trader compliance with Canada’s laws, regulations or procedural requirements relating to the importation, exportation or transit of goods. Such measures include those that seek to ensure the safety and security of Canada and its citizens through the proper reporting and accounting declaration of goods and payment of duties, taxes, fees and charges by traders.

Trade remedies

• Reaffirms the rights and obligations of parties under the WTO agreements in respect of global safeguard, anti-dumping and countervailing measures.

Sanitary and phytosanitary measures

• Affirms and builds upon the WTO Sanitary and Phytosanitary Measures (SPS) Agreement to enhance transparency, strengthen cooperation and facilitate trade through science-based measures, while preserving each party’s right to take measures necessary for the protection of human, animal or plant life or health.
• Establish a bilateral mechanism to address SPS issues.

Technical barriers to trade

• Builds on the key commitments of the WTO Agreement on Technical Barriers to Trade and sets out provisions that prevent and address disruptions created by regulations and associated testing or certification requirements.
• Promotes regulatory transparency and predictability while preserving each party’s right to regulate in the public interest to achieve legitimate public policy objectives.

Investment and trade in services

Investment

• Includes rules regarding the promotion and protection of investment and investors subject to a negative list of reservations, enforced by the Agreement’s dispute settlement mechanism and a transparent investor-state dispute settlement mechanism.

Cross-border trade in services and development and administration of measures (Domestic regulation)

• Sets out comprehensive commitments subject to a negative list of reservations to secure market access, address barriers, and substantially improve predictability, certainty and transparency with respect to trade in services between the parties. Canada will seek to address disciplines on domestic regulations and provisions to facilitate trade in professional services, including non-binding guidelines for the negotiation of mutual recognition agreements.

Financial services

• Includes specific trade and investment protection commitments for financial services that reflect the specialized and highly regulated nature of the sector, while safeguarding the parties’ ability to take prudential measures.

Temporary entry for business persons

• Seeks to enhance transparency and mobility of certain categories of business persons in support of bilateral trade in goods, services and investment.

Telecommunications

• Maintains a competitive telecommunications marketplace through transparent and effective regulations.

Other areas

Digital trade

• Facilitate inclusive economic growth and trade opportunities through the use of the Internet and address potential barriers to digital trade.

Government procurement

• Encourages transparency and cooperation in government procurement and provides reciprocal access to government procurement markets.

Competition policy

• Aims to promote competitive markets and ensure that the benefits of free trade are not offset by anti-competitive activities, misleading representations or deceptive marketing practices.

State-Owned enterprises and designated monopolies

• Ensures that large commercial state-owned enterprises (SOEs) and designated monopolies generally operate in accordance with market principles, while recognizing the role of SOEs in the public domain.

Intellectual property

• Supports efficient, predictable and transparent intellectual property (IP) systems that balance the interests of rights holders, intermediaries and users, and consider broader public policy objectives. To reduce barriers to trade and investment, the FTA will seek to promote and build on international and regional standards in the administration, protection and enforcement of IP rights, including through cooperation between Canadian and ASEAN IP officials.

Labour

• Includes comprehensive and enforceable labour commitments to help ensure that trade and investment do not come at the expense of workers’ protections. Canada recognizes that promoting fundamental labour rights supports equitable growth and stability.

Environment

• Includes comprehensive and enforceable environment commitments to help ensure that environmental protection is upheld as trade and investment is liberalized and to promote the mutual supportiveness of trade and environment. Canada recognizes that the promotion of trade and the protection of the environment are interconnected and mutually beneficial goals.

Good regulatory practices

• Supports, to the extent possible, the development of predictable and evidence-based regulations by encouraging widely accepted good regulatory practices in Canada and ASEAN.

Transparency, anti-corruption and responsible business conduct

• Facilitates a transparent and predictable environment for trade and investment by promoting transparency, anti-corruption and responsible business conduct.

Trade and gender

• Includes dedicated provisions on trade and gender, which seek to address the specific interests, needs and unique challenges that women and other underrepresented groups face when participating in international trade and investment and ensure that they have access to the benefits and opportunities that may flow from bilateral trade and investment relations between Canada and ASEAN.

Trade and indigenous peoples

• Includes dedicated provisions on trade and Indigenous peoples, which seek to address the specific interests, needs and unique challenges that Indigenous peoples face when participating in international trade and investment and ensure that Indigenous peoples have access to the benefits and opportunities that may flow from bilateral trade and investment relations between Canada and ASEAN.

Small and medium-sized enterprises

• Includes provisions dedicated to SMEs, which recognize the significant contribution of SMEs to economic growth and development and ensure that SMEs are able to utilize and benefit from the opportunities accruing from bilateral trade and investment relations between Canada and ASEAN. Provisions will address the specific interests and unique challenges that SMEs face in doing business in foreign markets, and will seek to reduce barriers to their participation in international trade and investment.

Administrative

Dispute settlement

• Provides for fair, transparent, efficient and effective means of resolving differences relating to the agreement that arise between the parties, including consultations and binding dispute settlement.

Institutional and general exceptions

• Includes detailed provisions relating to the implementation and ongoing functionality of the agreement, including the creation of an institutional body to oversee implementation and general exceptions. Exceptions will ensure that the parties retain the right to regulate in the public interest, including for a party’s essential security interest and other public welfare reasons.