ARCHIVED - NAFTA Secretariat — Canadian Section - Report

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Minister’s Message

The North American Free Trade Agreement (NAFTA) – now in its 17th year – has been a success story for all three partners. It has contributed to significant increases in trade and investment in both countries and has laid a strong foundation for economic growth. Canada remains committed to NAFTA as the cornerstone of North American competitiveness.

The global trading environment has changed dramatically in the last decade. Increased competitiveness pressures and the recent economic downturn makes it all the more important to work together to foster the return of economic growth for our economies. NAFTA provides for the elimination of duties for practically all goods, facilitates the cross-border movement of business persons, addresses certain non-tariff barriers and provides formal mechanisms for resolving disputes. Today, NAFTA is now one of the largest free trade areas in the world and has a total market place of some 448 million consumers. For example, since 1993, merchandise trade between Canada, Mexico and the United States has more than doubled, reaching $639.2 billion in 2009. Over that period, the North American economy has doubled in size. North American employment levels climbed about 21percent between 1993 and 2009, representing a net gain of 34.5 million jobs.

The NAFTA Secretariat, which is composed of the Canadian Section, the U.S. Section and the Mexican Section, is responsible for the administration of the dispute settlement provisions in Chapters 19 and 20 of NAFTA. Chapter 19 establishes a mechanism to provide an alternative to judicial review by domestic courts of final determinations in antidumping and countervailing duty cases with review by independent binational panels. Chapter 20 dispute settlement provisions are applicable to all disputes regarding the interpretation or application of the obligations of NAFTA for which there are no special dispute settlement provisions.

For the 2009-2010 reporting period, the Canadian Section of the NAFTA Secretariat continued to focus its efforts to collaborate with the United States and Mexico. I encourage the Canadian Section of the NAFTA Secretariat to continue its high level of service in support of the effective, unbiased and equitable administration of the dispute settlement mechanisms of the NAFTA.

The Honourable Peter Van Loan
Minister of International Trade

SECTION 1 – DEPARTMENTAL OVERVIEW

1.1 Raison d'être and Responsibilities

The NAFTA Secretariat, Canadian Section is an independent agency created in 1994 under the North American Free Trade Agreement Implementation Act (see Annex A for the full mandate of the Secretariat). Its principle responsibility is to administer the dispute settlement provisions in NAFTA Chapters 19 and 20. It also provides assistance to the Ministerial level Free Trade Commission when required and participates in the Chapter 19 Working Group. The Canadian Section’s mandate was expanded in 1997 and again in 2002 to include the administration of dispute settlement provisions in Canada’s Free Trade Agreements with Israel, Chile and Costa Rica.

The Canadian Section of the NAFTA Secretariat is funded by Parliament through a program expenditures vote. It reports to Parliament, for financial accountability purposes, through the Minister of International Trade.

For more details on the operating context, see the NAFTA Secretariat website at http://www.nafta-sec-alena.org and the Canadian Section website at http://www.nafta-alena.gc.ca/en/view.aspx

1.2 Strategic Outcome and Program Activity Architecture (PAA)

The diagram table below illustrates the NAFTA Secretariat, Canadian Section’s strategic outcome supported by its two program activities.

1.3 Performance Summary

1.3.1 Total Financial Resources ($ 000)

2009-2010

Planned Spending	Authorities	Actual Spending
3,015	3,060	1,283

1.3.2 Total Human Resources (FTEs)

2009-2010

Planned	Actual	Difference
12	10	-2

1.3.3 Performance Summary Table

The tables below show planned and actual spending by our key program activity. They also indicate how each operational priority performed in achieving expected results and the link to the agency's only strategic outcome.

Strategic Outcome: A highly efficient, impartial and rules-based international trade dispute resolution process that benefits Canadian exporters to NAFTA countries, as well as NAFTA country exporters doing business in Canada

Performance Indicators	Targets	2009-10 Performance
Perception of institutional independence and increased confidence by participants in the integrity of the dispute settlement process	At least 80 % or more of the clients are satisfied that the NAFTA Secretariat, Canadian Section, administered the dispute settlement provisions in a manner that ensures unbiased administrative processes, equity and fairness	Given that no cases were filed in Canada during the year under review, the targets could not be evaluated.

Program Activity	2008–09 Actual Spending	2009–101				Alignment to Government of Canada Outcome
		Main Estimates	Planned Spending	Total Authorities	Actual Spending
Administration of International Trade Dispute Settlement Mechanisms	1,578	1,815	1,815	1,835	540	A Strong and Mutually Beneficial North American Partnership
Internal Services		1,200	1,200	1,225	743
Total	1,578	3,015	3,015	3,060	1,283

1.4 Contribution of Priorities to Strategic Outcome

Operational Priorities	Type	Status	Linkages to Strategic Outcome
1. Support to panels and committees	Ongoing	Successfully met	A highly efficient, impartial and rules-based international trade dispute resolution process that benefits Canadian exporters to NAFTA countries, as well as NAFTA country exporters doing business in Canada
2. Collaboration with delivery partners in the administration of trade disputes	Ongoing	Successfully met
3. Management of corporate agenda	Ongoing	Partially met

1.5 Risk Analysis

The NAFTA Secretariat operates in a context where different legal, linguistic, business and cultural traditions prevail. Managing the Canadian participation in this tripartite organization must be conducted within the policies and practices of the Canadian Government and also be harmonized with administrative practices of its U.S. and Mexican partners. New initiatives often require extensive consultations and negotiation before they can be implemented. In light of this, maintaining close working relationships with its counterpart sections in the United States and Mexico is fundamental to the Canadian Section’s effective performance.

1.6 Expenditure Profile

The expenditure profile of the Canadian Section can vary from year-to-year and future spending trends are difficult to predict. The costs associated with delivery of its program fluctuate with the number of dispute settlement cases that are filed. In 2009-10, the number of cases involving Canada was much fewer than previous caseload years.

The government is nevertheless required under NAFTA and Canadian legislation to maintain the dispute settlement system and be ready for new cases as they arise. This includes management of the web-enabled dispute settlement case registry system and the NAFTA Secretariat website, both of which are the responsibility of the Canadian Section on behalf of the Secretariat. As well as providing information to governments and the public on an ongoing basis. The corporate expenses associated with the management of the agency itself are ongoing.

The figure below shows the Canadian Section’s spending trends from 2006-07 to 2009-10.

Spending Trend ($, 000)

1.7 Voted and Statutory Items ($ 000)

Vote or Statutory Item	Truncated Vote or Statutory Wording	2007-2008 Actual Spending	2008-2009 Actual Spending	2009-2010 Main Estimate	2009-2010 Actual Spending
50	Program Expenditures	1,524	1,464	2,827	1,171
(S)	Contributions to Employee Benefit Plans (EBP)	94	114	188	112
	Total	1,618	1,578	3,015	1,283

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¹ Commencing in the 2009-10 Estimates cycle, the resources for Program Activity: Internal Service is displayed separately from other program activities; they are no longer distributed among the remaining program activities, as was the case in previous Main Estimates. This has affected the comparability of spending and FTE information by Program Activity between fiscal years.

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