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ANNEX A

The Mandate of the NAFTA Secretariat

The mandate of the Secretariat is set out in Article 2002.3 of the NAFTA and reads:

The Secretariat shall:

a) provide assistance to the Commission;

b) provide administrative assistance to:

1. panels and committees established under Chapter Nineteen (Review and Dispute Settlement in Antidumping and Countervailing Duty Matters), in accordance with the procedures established pursuant to Article 1908; and
2. panels established under this Chapter, in accordance with procedures established pursuant to Article 2012; and

c) as the Commission may direct:

1. support the work of other committees and groups established under this Agreement; and
2. otherwise facilitate the operation of this Agreement.

In 1997 and then again in 2002, the Canadian Section's mandate was expanded to include the administration of the dispute settlement processes under the following trade agreements:

• the Canada-Israel Free Trade Agreement (CIFTA);
• the Canada-Chile Free Trade Agreement (CCFTA); and
• the Canada-Costa Rica Free Trade Agreement (CCRFTA).

Legislation governing the work of the Canadian Section is as follow: the North American Free Trade Agreement Implementation Act; the Special Imports Measures Act; the Canada-Israel Free Trade Agreement Implementation Act; the Canada-Chile Free Trade Agreement Implementation Act; and the Canada-Costa Rica Free Trade Agreement Implementation Act.

ANNEX B

Guiding Principles

Commitment to an Unbiased and Equitable Administrative Process	The NAFTA Secretariat, Canadian Section is committed to administering the dispute settlement provisions of the relevant Free Trade Agreements and other Bilateral Agreements as directed by the Parties in a manner which ensures unbiased administrative processes, equity, security and fairness.
Commitment to Service Quality	The NAFTA Secretariat, Canadian Section is committed to maintaining the highest quality of administration to all dispute settlement proceedings and to investing in technologies that will sustain future operations.
Support to Stakeholders	The NAFTA Secretariat, Canadian Section is committed to supporting and providing services to its stakeholders in dispute resolution in a manner that is impartial, responsive, accessible and timely.
Openness and Accountability	The NAFTA Secretariat, Canadian Section is committed to the promotion of a corporate culture implementing transparent management processes and accountability, both to the NAFTA Free Trade Commission and to the public.
Operational Efficiency	The NAFTA Secretariat, Canadian Section is committed to pursuing alternative service delivery to enhance information access and sharing and to improve operating practices.
Continuous Learning	The NAFTA Secretariat, Canadian Section is committed in having in place professional and motivated employees and in offering them the opportunity to advance their careers through continuous learning.

ANNEX C

Financial Statements (Unaudited)

Table of Contents

1. Statement of Management Responsibility
2. Statement of Operations (Unaudited)
3. Statement of Financial Position (Unaudited)
4. Statement of Equity of Canada (Unaudited)
5. Statement of Cash Flow (Unaudited)
6. Notes to the Financial Statements (Unaudited)

1. Statement of Management Responsibility

Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2008 and all information contained in these statements rests with NAFTA Secretariat - Canadian Section management. These financial statements have been prepared by management in accordance with Treasury Board accounting policies which are consistent with Canadian generally accepted accounting principles for the public sector.

Management is responsible for the integrity and objectivity of the information in these financial statements. Some of the information in the financial statements is based on management's best estimates and judgment and gives due consideration to materiality. To fulfill its accounting and reporting responsibilities, management maintains a set of accounts that provides a centralized record of the department's financial transactions. Financial information submitted to the Public Accounts of Canada and included in the Secretariat's Departmental Performance Report is consistent with these financial statements.

Management maintains a system of financial management and internal control designed to provide reasonable assurance that financial information is reliable, that assets are safeguarded and that transactions are in accordance with the Financial Administration Act, are executed in accordance with prescribed regulations, within Parliamentary authorities, and are properly recorded to maintain accountability of Government funds. Management also seeks to ensure the objectivity and integrity of data in its financial statements by careful selection, training and development of qualified staff, by organizational arrangements that provide appropriate divisions of responsibility, and by communication programs aimed at ensuring that regulations, policies, standards and managerial authorities are understood throughout the Secretariat.

The financial statements of the Secretariat have not been audited.

Original Signed by:
Daniel Plourde
Secretary and Senior Financial Officer
Ottawa, Ontario
August 5, 2008

2. Statement of Operations (Unaudited)

For the year ended March 31 (in dollars)	2008	2007
Expenses
Salaries and employee benefits	834,506	706,117
Professional and special services	486,170	272,385
Accommodation	205,299	205,299
Communications, travel and relocation	67,138	48,202
Amortization	63,753	42,202
Material and supplies	35,151	24,060
Repairs and maintenance	23,805	20,151
Furniture and equipment	17,991	28,547
Miscellaneous	6,580	4,095
Equipment rentals	5,383	5,573
Information	5,005	6,930
Total Expenses	1,750,781	1,363,849
Miscellaneous Revenues	1,219	2,039
Net Cost of Operations	1,749,563	1,361,810

The accompanying notes form an integral part of these financial statements.

3. Statement of Financial Position (Unaudited)

as at March 31 (in dollars)	2008	2007
Assets
Financial assets
Accounts receivable and advances (Note 4)	132,397	255,089
Total financial assets	132,397	255,089
Non-financial assets
Tangible capital assets (Note 5)	150,223	97,386
Total non-financial assets	150,223	97,386
Total	282,620	352,475
Liabilities
Liabilities
Accounts payable and accrued liabilities	284,848	272,980
Vacation pay and compensatory leave	57,439	70,666
Employee severance benefits (Note 6)	163,128	153,112
	505,415	496,112
Equity of Canada	(222,795)	(144,283)
TOTAL	282,620	352,475

The accompanying notes form an integral part of these financial statements.

4. Statement of Equity of Canada (Unaudited)

as at March 31 (in dollars)	2008	2007
Equity of Canada, beginning of year	(144,283)	(726,520)
Net cost of operations	(1,749,563)	(1,361,810)
Current year appropriations used (Note 3)	1,617,997	1,511,318
Net change in Consolidated Revenue Fund (Note 3)	(159,135)	(223,989)
Services provided without charge from other government departments (Note 7a)	212,190	208,740
Equity of Canada, end of year	(222,795)	(144,283)

The accompanying notes form an integral part of these financial statements.

5. Statement of Cash Flow (Unaudited)

For the year ended March 31 (in dollars)	2008	2007
Operating activities
Net cost of operations	1,749,563	1,361,810
Non-cash items
Amortization of capital assets	(63,753)	(42,490)
Services provided without charge from other departments (Note 7a)	(212,190)	(208,740)
	1,473,620	1,110,580
Increase (decrease) in accounts receivable and advances	(122,692)	75,646
Decrease (increase) in liabilities	(8,657)	461,522
Cash used by operating activities	1,342,271	1,647,748
Capital investment activities
Acquisitions of tangible capital assets	116,591	87,559
Cash used by capital investment activities	116,591	87,559
Financing Activities
Net cash provided by Government of Canada	(1,458,862)	(1,753,307)

The accompanying notes form an integral part of these financial statements.

6. Notes to the Financial Statements (Unaudited)

1. Authority and objectives

The NAFTA Secretariat comprised of the Canadian, United States and Mexican national sections is a unique organization, established by the NAFTA Free Trade Commission. The mandate of the Secretariat is set out in Article 2002.3 of the North American Free Trade Agreement.

The NAFTA Secretariat, Canadian Section's program objective is to implement the dispute settlement provisions of the North American Free Trade Agreement (NAFTA), the Canada-Israel Free Trade Agreement (CIFTA), the Canada-Chile Free Trade Agreement (CCFTA), and the Canada-Costa Rica Free Trade Agreement (CCRFTA), by providing support to panels established under the relevant agreements and by maintaining a court-like registry system relating to panel, committee and tribunal proceedings of the relevant agreements.

2. Summary of significant accounting policies

The financial statements have been prepared in accordance with Treasury Board accounting policies which are consistent with Canadian generally accepted accounting principles for the public sector.

Significant accounting policies are as follows:

(a) Parliamentary appropriations - The NAFTA Secretariat, Canadian Section is financed by the Government of Canada through Parliamentary appropriations. Appropriations provided to the Secretariat do not parallel financial reporting according to generally accepted accounting principles since appropriations are primarily based on cash flow requirements. Consequently, items recognized in the statement of operations and the statement of financial position are not necessarily the same as those provided through appropriations from Parliament. Note 3 provides a high-level reconciliation between the bases of reporting.

(b) Net Cash Provided by Government - The NAFTA Secretariat, Canadian Section operates within the Consolidated Revenue Fund (CRF). The CRF is administered by the Receiver General for Canada. All cash received by the Secretariat is deposited to the CRF and all cash disbursements made by the Secretariat are paid from the CRF. Net cash provided by Government is the difference between all cash receipts and all cash disbursements including transactions between departments of the federal government.

(c) Change in net position in the Consolidated Revenue Fund is the difference between the net cash provided by Government and appropriations used in a year, excluding the amount of non-respendable revenue recorded by the department. It results from timing differences between when a transaction affects appropriations and when it is processed through the CRF.

(d) Revenues - Revenues are accounted for in the period in which the underlying transaction or event occurred that gave rise to the revenues.

(e) Expenses - Expenses are recorded on the accrual basis:

1. Vacation pay and compensatory leave are expensed as the benefits accrue to employees under their respective terms of employment.
2. Services provided without charge by other government departments for accommodation and the employer's contribution to the health and dental insurance plans are recorded as operating expenses at their estimated cost.

(f) Employee future benefits

1. Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multiemployer plan administered by the Government of Canada. The NAFTA Secretariat, Canadian Section's contributions to the Plan are charged to expenses in the year incurred and represent the total departmental obligation to the Plan. Current legislation does not require the Secretariat to make contributions for any actuarial deficiencies of the plan.
2. Severance benefits: Employees are entitled to severance benefits under labour contracts or conditions of employment. These benefits are accrued as employees render the services necessary to earn them. The obligation relating to the benefits earned by employees is calculated using information derived from the results of the actuarially determined liability for employee severance benefits for the Government as a whole.

(g)Accounts receivable and advances are stated at amounts expected to be ultimately realized; a provision is made for receivables where recovery is considered uncertain.

(h) Foreign currency transactions - Transactions involving foreign currencies are translated into Canadian dollar equivalents using rates of exchange in effect at the time of those transactions. Monetary assets and liabilities denominated in a foreign currency are translated into Canadian dollars using the rate of exchange in effect on March 31.

(i) Tangible capital assets - All tangible capital assets and leasehold improvements having an initial cost of $500 or more are recorded at their acquisition cost.

Amortization of tangible capital assets is done on a straight-line basis over the estimated useful life of the assets as follows:

Asset Class	Amortization Period
Office furniture and equipment	5 years
Computer software	3 years
Computer hardware	3 years
Leasehold improvements	Lease term

(j) Measurement uncertainty - The preparation of these financial statements, in accordance with Treasury Board accounting policies which are consistent with Canadian generally accepted accounting principles for the public sector, requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses reported in the financial statements. At the time of preparation of these statements, management believes the estimates and assumptions to be reasonable. The most significant items where estimates are used are the liability for employee severance benefits and the useful life of tangible capital assets. Actual results could differ from those estimated. Management's estimates are reviewed periodically and, as adjustments become necessary, they are recorded in the financial statements in the year they become known.

3. Parliamentary Appropriations

The NAFTA Secretariat, Canadian Section receives all of its funding through annual Parliamentary appropriations. Items recognized in the statement of operations and the statement of financial position in one year may be funded through Parliamentary appropriations in prior, current or future years. Accordingly, the NAFTA Secretariat, Canadian Section has different net results of operations for the year on a government funding basis than on an accrual accounting basis. The differences are reconciled in the following tables:

(a) Reconciliation of net cost of operations to current year appropriations used:

(in dollars)	2008	2007
Net cost of operations	1,749,563	1,361,810
Adjustments for items affecting net cost of operations but not affecting appropriations:
Add (Less):
Services provided without charge	(212,190)	(208,740)
Vacation and compensatory leave	13,227	6,479
Amortization of tangible capital assets	(63,753)	(42,490)
Employee severance benefits	(10,016)	59,142
Shared cost activities - net (Note 7c)	-	(17,500)
Adjustment to prior years Payables At Year End (PAYE)	23,295	245,438
Other	1,280	19,620
Adjustments for items not affecting net cost of operations but affecting appropriations
Add (Less):
Acquisition of tangible capital assets	116,591	87,559
Current year appropriations used	1,617,997	1,511,318

(b) Appropriations provided and used:

(in dollars)	2008	2007
Appropriations Provided
Vote - 15 Operating expenditures	2,802,000	2,789,000
Transfer from TB Vote 15	12,000	17,000
Contributions to employee benefits plan	93,664	133,858
Less:
Lapsed appropriations: Operating	(1,289,668)	(1,428,540)
Total appropriations used	1,617,997	1,511,318

(c) Reconciliation of net cash provided by Government to current year appropriations used:

(in dollars)	2008	2007
Net cash provided by Government	1,458,862	1,735,307
Change in net position in the Consolidated Revenue Fund
Variation in accounts receivable and advances	122,692	(75,646)
Variation in accounts payable and accrued liabilities	8,657	(461,522)
Shared cost activities - net (Note 7c)	-	(17,500)
Adjustment to prior years Payables At Year End (PAYE)	23,295	245,438
Other adjustments	4,491	85,241
	159,135	(223,989)
Current year appropriations used	1,617,997	1,511,318

4. Accounts Receivable and Advances

The following table presents details of the accounts receivable:

(in dollars)	2008	2007
Receivables from other Federal Government departments and agencies	92,832	95,989
Receivables from external parties	39,165	158,700
Advances	400	400
Total	132,397	255,089

5. Tangible Capital Assets

(in dollars)	Cost				Accumulated amortization				Net Book Value
Capital asset class	Opening balance	Acquisitions	Disposals	Closing Balance	Opening balance	Acquisitions	Disposals	Closing Balance	2008	2007
Office furniture and equipment	125,245	20,085	(4,710)	140,620	110,744	6,356	(4,710)	112,390	28,230	14,501
Computer hardware	312,846	17,817	(11,087)	319,576	255,194	31,680	(11,087)	275,787	43,789	57,652
Computer software	17,377	61,500	-	78,877	7,312	15,125		22,437	56,440	10,065
Leasehold Improvements	77,792	17,189	-	94,981	62,624	10,593		73,217	21,764	15,168
Total	533,260	116,591	(15,797)	634,054	435,874	63,754	(15,797)	483,831	150,223	97,386

Amortization expense for the year ended March 31, 2008 is $63,754 (2007 - $42,490).

6. Employee Benefits

(a) Pension benefits: The NAFTA Secretariat, Canadian Section's employees participate in the Public Service Pension Plan, which is sponsored and administered by the Government of Canada. Pension benefits accrue up to a maximum period of 35 years at a rate of 2 percent per year of pensionable service, times the average of the best five consecutive years of earnings. The benefits are integrated with Canada/Québec Pension Plan benefits and they are indexed to inflation.

Both the employees and the department contribute to the cost of the Plan. The 2007-08 expense amounts to $68,281 ($98,774 in 2006-2007), which represents approximately 2.1 times (2.2 in 2006-2007) the contributions by employees.

The Secretariat's responsibility with regard to the Plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the financial statements of the Government of Canada, as the Plan's sponsor.

(b) Severance benefits: The NAFTA Secretariat, Canadian Section provides severance benefits to its employees based on eligibility, years of service and final salary. These severance benefits are not pre-funded. Benefits will be paid from future appropriations. Information about the severance benefits, measured as at March 31, is as follows:

(in dollars)	2008	2007
Accrued benefit obligation, beginning of year	153,112	212,254
Expense (recovery) for the year	10,016	(59,142)
Benefits paid during the year	-	-
Accrued benefit obligation, end of year	163,128	153,112

7. Related party transactions

The NAFTA Secretariat, Canadian Section is related as a result of common ownership to all Government of Canada departments, agencies, and Crown corporations. The Secretariat enters into transactions with these entities in the normal course of business and on normal trade terms. Also, during the year, the department received services which were obtained without charge from other Government departments as presented in part (a).

(a) Services provided without charge:

During the year the NAFTA Secretariat, Canadian Section received without charge from other departments, accommodation and the employer's contribution to the health and dental insurance plans. These services without charge have been recognized in the Secretariat's Statement of Operations as follows:

(in dollars)	2008	2007
Accommodation	162,794	162,794
Employer's contribution to health and dental insurance plans	49,396	45,946
	212,190	208,740

The Government has structured some of its administrative activities for efficiency and cost-effectiveness purposes so that one department performs these on behalf of all without charge. The costs of these services, which include payroll, cheque issuance and translation services provided by Public Works and Government Services Canada, are not included as an expense in the NAFTA Secretariat, Canadian Section's Statement of Operations.

(b) Payables and receivables outstanding at year-end with related parties:

(in dollars)	2008	2007
Accounts receivable with other government departments and agencies	92,832	95,989
Accounts payable to other government departments and agencies	8,239	57,628

(c) Administration of cost shared services:

In previous years the NAFTA Secretariat, Canadian Section was responsible for the coordination and management of the funds obtained by the Council of the Network of Departmental Official Languages Champions (CNDOLC). These responsibilities were transferred to Library and Archives Canada during the course of the year. The Council is funded according to voluntary contributions from departments and agencies. In 2006-2007, the contributions received exceeded the funding required by the Council and thus, $17,500 was transferred to the Treasury Board at year end.

HOW TO CONTACT US

Contacts and other relevant information:

Secretary
NAFTA Secretariat, Canadian Section
90 Sparks Street, Suite 705
Ottawa, Ontario
K1P 5B4
Tel: (613) 992-9388
Fax: (613) 992-9392
Website: www.nafta-alena.gc.ca

The NAFTA Secretariat, Canadian Section (as of September 22, 2008): Anne McCaskill Secretary 613-992-9380 Daniel Plourde Deputy Secretary 613-992-9382 Judy Thériault Executive Assistant 613-992-9382 Maya Ali-Adib Financial Analyst 613-992-9385 Christine Allain Receptionist 613-992-9388 Feleke Bogale Registrar 613-992-9384 Isabelle Costa Rego Administrative Clerk 613-992-9386 Darryl Dass Systems Manager 613-947-9311 Renée Lagacé Deputy Registrar 613-992-8325 Collette Lavallée Administrative & Compensation Manager 613-992-9388 Marie-France Meunier Information Management Officer 613-992-2303 ** Our e-mail addresses: Complete first name followed by period, last name and @nafta-alena.gc.ca (e.g.: darryl.dass@nafta-alena.gc-ca).

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