CANADA In the securities sector, provincial laws which regulate the sector were recently amended to abolish the "10/25" rules applying to investment in securities firms. In the trust and loan and insurance sectors, which are regulated by both the federal and provincial governments, foreign investors wishing to establish in either of these two areas may do so, but acquisitons of Canadian firms are still subject to both provincial "10/25" rules and to the federal "10/25" rule as described above. As already noted, Canada reserves the right to review certain foreign investments and consider any conditions investors "volunteer" consistent with the Investment Canada Act. Once an investor "volunteers" to meet various performance requirements, the undertakings are de facto preconditions to entry. The FTA ends the imposition of most performance requirements on U.S. investors and third-country investors when U.S. interests would be affected. Under the FTA, export requirements, import substitution, domestic content and local purchasing requirements are prohibited. Investment Canada offers ample administrative authority to deny national treatment to foreign-owned investors in certain sectors, e.g., book publishing, and also permits considerations based on nationality (rather than antitrust) for indirect acquisitions of some Canadian firms. Limitations on national treatment as reported to the Organization for Economic Cooperation and Development include: discriminatory federal and provincial grants and other types of financial assistance for oil and gas exploration, minerals exploration, agriculture, publishing, and retail and wholesale commerce; discriminatory federal and provincial provisions on income tax and land transfer taxes; several discriminatory government procurement practices; and right of establishment restrictions on new investment by already established investors. Where the GATT Government Procurement Code or FTA requirements do not apply, Canadian government entities follow preferential sourcing policies favoring Canadian-based firms over foreign-based firms. These preferential policies include restricting bids to Canadian suppliers if there is sufficient competition from Canadian-based sources; use of single-source procurement to favor Canadian firms; and application of a 10 percent price preference for "Canadian content" when evaluating competing bids. In addition, Supply and Services Canada, the major Federal procurement agency, maintains a supplier development fund to promote new Canadian sources of supply. Canada's Federal and Provincial crown (quasi-government) corporations also follow strong "buy national" or "buy provincial" policies. Products affected include telecommunications, heavy electrical and transportation-related products. The Canada pursues an "industrial benefits policy" which is administered through a procurement review mechanism. policy is intended to insure that major government procurement projects provide long-term benefits for "the economic or social development of Canada" beyond the immediate impact of the procurement expenditures. Frequently resulting in "offsets," this policy is one of Canada's most objectionable government procurement practices. The Canadian government subsidizes rail transportation of wheat, barley, oats and many other agricultural commodities intended for export. In 1984, the Canadian government extended rail rate subsidies to exports of these and an enlarged list of commodities destined to the western United States. The Free Trade Agreement eliminated subsidies on agricultural products shipped to the United States through West Coast ports, though not on shipments to third markets or through Thunder Bay. Under the terms of the FTA, Canada will terminate export-based duty remission schemes by 1998. Canada's production-based duty remission program provides for the rebate of customs duties to qualifying foreign automobile firms on their imports of automobiles and original equipment automotive parts into Canada. Under the program, duty remissions are granted in proportion to the amount of "Canadian value-added" generated by these firms in Canada. Under the provisions of the FTA, Canada has agreed to terminate the program by 1996 or any earlier date specifically agreed with participating firms and to limit application of the program to four companies. Canada's export-based duty remission program was eliminated January 1, 1989 for automotive exports to the United States. 7. Protection of U.S. Intellectual Property Canada is a member of the World Intellectual Property Organization, as well as the Berne Convention for the Protection of Literary and Artistic Works, the Paris Convention for the Protection of Industrial Property and the Universal Copyright Convention. The Canadian government has long-standing legislation to protect intellectual property rights and effective law enforcement. The Canadian Patents Act, first passed in 1869, was most recently amended on November 19, 1987. By significantly improving protection for patented drugs, this amendment was a positive step in resolving some of the complaints voiced by the U.S. pharmaceutical industry concerning alleged Canadian bias in favor of generic drugs. However, the law still contains compulsory licensing for pharmaceuticals. These provisions are discriminatory as drugs invented in Canada are exempt from some types of compulsory licensing while drugs invented abroad are not. Because of this continued inadequacy, the U.S. Trade Representative placed Canada (together with 16 other countries) on the "Watch List" under Section 301 of the 1988 Omnibus Trade and Competitiveness Act, and U.S. industry has continued to press for action, either bilaterally or multilaterally, to end the Canadian compulsory licensing practices. Another remaining concern is the lack of adequate legislation to protect semiconductor design topographies. However, the Canadian authorities are actively participating in multilateral negotiations to achieve a viable regime to adequately protect this high technology sector. The negotiations did not achieve a solution that either the United States or Canada believes sufficient, but demonstrated that we share the same goal for standards in this area. CANADA Copyright legislation has been strengthened. The amendment of June 8, 1988 to the Canadian Copyright Act provided explicit protection to computer programs, increased criminal penalties for commercial piracy, and clarified several ambiguities in the extent of the coverage provided by the earlier copyright and industrial design protection statutes. A further copyright amendment has been enacted acknowledging compensation rights for U.S. copyright holders whose radio and television signals are being retransmitted into Canada from the United States by Canadian cable operators. The measure, introduced in compliance with the terms of the Free Trade Agreement, fell short of U.S. expectations regarding the extent of the signal that would be subject to copyright protection. However, the law did establish a Copyright Board to adjudicate claims. In October 1990 the Board announced its schedule of compensation tariffs retroactive to January 1, 1990. The tariffs are currently under review and may be appealed. Regarding multilateral efforts to strengthen intellectual property protection, Canada has generally shared the views of the United States. Most recently, Canadian authorities have worked together with the United States to bring about a stricter regulatory regime in the context of the Uruguay Round. Workers in both the public and private sectors have the right to associate freely. These rights, protected by both the federal labor code and provincial labor legislation, are freely exercised. b. Right to Organize and Bargain Collectively Workers in both the public and private sectors freely exercise their rights to organize and bargain collectively. Some essential public sector employees have limited collective bargaining rights which vary from province to province. Among Canada's non-agricultural workforce, 36.2% is organized into trade unions. C. Prohibition of Forced or Compulsory Labor There is no forced or compulsory labor practiced in Canada. d. Minimum Age for Employment of Children Generally, workers must be 17 years of age to work in an industry under federal jurisdiction. Provincial standards (covering over 90 percent of the national workforce) vary, but generally require parental consent for workers under 15 or 16 and prohibit young workers in dangerous or nighttime work. In all jurisdictions, a person under 16 cannot be employed in a designated trade, or, in other words, become an apprentice before that age. Federal and provincial labor codes establish labor standards governing maximum hours, minimum wages and safety standards. Those standards are respected in practice. f. Rights in Sectors with U.S. Investments Worker rights are the same in all sectors, including those with U.S. investment. Extent of U.S. Investment in Goods Producing Sectors Source: U.S. Department of Commerce, Survey of Current Business August 1990, Vol. 70, No. 8, Table 13 * Section 8 is an abridged version of Section 6 of the Canada country report included in the Department of State's Country Reports on Human Rights Practices for 1990, submitted to the Congress January 31, 1991. For a comprehensive discussion of worker rights, please refer to that report. 2/ Source: Czechoslovak Federal Statistical Office figures 3/ Source: U.S. Dept. of Commerce 1. General Policy Framework Czechoslovakia is currently in a transition from a command economy, in which the state owned and controlled production in all key sectors, to a market economy in which most ownership will be in private hands. In November 1990, the Czechoslovak Federal Assembly approved a "small" privatization law, which directs privatization of small businesses through an auction system. This will not be implemented until the beginning of 1991, though a relatively small number of such businesses have been privatized already. A "large-scale" privatization law is currently before the Federal Assembly. Futher action is expected in 1991. The bill envisions privatization of most of the large state enterprises through a voucher system and the formation of joint stock companies. Privatization is also proceeding 39-308-91 - 8 |