Mr. Chairman and honourable members of the committee, thank you very much for allowing me the opportunity to provide you with some information regarding the free trade agreement between Canada and the member states of EFTA: Iceland, Liechtenstein, Switzerland, and Norway.
The signing of the free trade agreement between Canada and EFTA in Davos, Switzerland, on January 26, 2008, marked the happy conclusion of lengthy and at times challenging negotiations.
The free trade agreement between Canada and EFTA is among the most important free trade agreements EFTA has ever concluded. Canada is an important economic partner for the EFTA states. In 2006 Canada was EFTA's fifth largest trading partner regarding trading goods, after the EU, the United States, Japan, and China. As for Norway, Canada is our third largest trading partner in goods, after the EU and the U.S. It goes without saying that concluding a free trade agreement with Canada has been a matter of great priority to us.
Why do we have regional or preferential trade agreements? It's a broadly held view that multilateral, non-discriminatory trade liberalization is the economic ideal. However, as we are currently experiencing, the multilateral process is often cumbersome and slow. We believe the regional trade agreements, like the one concluded between Canada and EFTA, can be good and useful supplements to the multilateral process.
The Canada-EFTA trade agreement is an agreement amongst some of the world's most developed economies, and it will surely bring new market opportunities for all parties involved. This potential can be realized further by expanding the agreement to cover new areas such as trade in services, as is foreseen. The Canada-EFTA free trade agreement covers trade in non-industrial products, including fish and other marine products and processed agricultural products. Selected basic agricultural products are covered by agreements concluded bilaterally between Canada and Iceland, Norway, and Switzerland at the same time as the free trade agreement.
The agreement aims at liberalizing and facilitating trade in goods in conformity with the relevant WTO provisions. Most industrial goods, including fish and other marine products, will benefit from duty-free access to the respective markets as of the entry into force of the agreement. The elimination of barriers to trade and duty-free access to industrial products of each others' markets is expected to boost trade flows between Canada and EFTA countries.
The agreement also includes references to existing WTO obligations in areas such as services, investment, and public procurement. General principles regarding competition law and policy are also set out in the agreement. The Canada-EFTA joint committee, established by the agreement, will supervise the application of the agreement, which also provides for binding arbitration.
Canada is already a key trading partner for EFTA, and the agreement is expected to bring further growth and diversification in bilateral trade. Total goods trade between EFTA and Canada amounted to $8.7 billion U.S. in 2006, up 10% in nominal value terms from the previous years. EFTA's exports to Canada in 2006 were worth $6 billion U.S., up 4% from the previous year in nominal value terms. EFTA's imports from Canada totalled $2.7 billion U.S., up 26% from the previous year.
EFTA's leading imports from Canada in 2006 were nickel and articles thereof, pharmaceuticals, machinery, and mechanical appliances. Norway's main export to Canada in 2006 were mineral fuels and oil, followed by machinery and mechanical appliances. Switzerland's most important exports to Canada consisted of pharmaceuticals, organic chemicals, farm machinery, and mechanical appliances. In 2006 Iceland exported mainly fish, crustaceans, machinery and mechanical appliances to Canada. Bilateral investment stocks between EFTA and Canada reached more than $22 billion Canadian dollars in 2006.
As mentioned previously, Canada is Norway's third largest trading partner for goods, after the EU, and the U.S. Norwegian exports to Canada are dominated by oil and petroleum products. But even if one disregarded this, Canada is Norway's sixth largest trading partner for goods. The import of goods from Canada is growing more rapidly than Norwegian exports to Canada. The largest imports are nickel and articles thereof, machinery, electrical machinery, ores, slag, ash, and optical instruments.
Canada generally has low applied tariff rates and already offers zero tariffs on a number of products that are central to Norwegian exports, such as fish and artificial fertilizers.
Regarding the Norwegian ratification process, the parliamentary bill for the ratification of the Canada-EFTA agreement is currently under way. According to plan, this will be presented to Parliament during the first half of May 2008. We cannot predict with certainty how long it is going to take for Parliament to pass the bill, but the assumption is that this will be done by the end of the parliamentary session in June. Ratification by the cabinet, king, and council will follow. The ratification will be notified through the depositary, which will then notify all parties to the agreement.
We are aware there have been concerns about Norwegian subsidies to the shipping industry. The subsidy measures that were previously in place to support the Norwegian shipbuilding industry no longer exist. Ordinary shipbuilding support was terminated in 2000. A temporary measure was introduced in 2003 as a result of the case brought by the EU against Korea in the WTO. This measure was in effect from March 15, 2003, until March 31, 2005. Currently the Norwegian shipbuilding industry is not subsidized. Norway has no plan to reintroduce such subsidies.
The Canada-EFTA trade agreement provides Canada with very beneficial conditions by allowing the phase-out period for tariff eliminations for several ship products. The phase-out period is up to 15 years for most sensitive ship types.
I would like to underline that EFTA's general position is always zero tariff on industrial products from day one. Consequently, Canada has been granted extraordinary concessions in this respect. I would also like to stress that a phase-out period like this for some industrial products is very rare in free trade agreements with developed countries.
Mr. Chairman, I will end my comments here. Thank you for allowing me to provide the committee with this information.
I welcome questions from you and honourable members of the committee, and I will do my best to answer them.
Thank you.