Law Times

Law Times • June 12, 2017 Page 9 www.lawtimesnews.com Will NAFTA changes impact Canadian companies? BY GABRIELLE GIRODAY Law Times I mpending negotiations around the North American Free Trade Agreement may mean changes for Canadian companies, say lawyers. With negotiations anticipated to be- gin later this year, lawyers are advised to stay aware of the po- tential impacts for their clients. Discussions over proposed changes to NAFTA became part of the U.S. presidential election race last fall, with Democratic candidate Hillary Clinton and then-Republican candidate Donald Trump both discussing the possibility of renegotiations. Following Trump's election into power last fall, U.S. trade representative Robert Lighthizer sent a letter to U.S. Congress in May stating attempts would be made to begin negotiations with Mexico and Canada within 90 days over "modernization" of the agreement. "The United States seeks to support higher-paying jobs in the United States and to grow the U.S. economy by improving U.S. opportunities under NAF- TA," said Lighthizer. Warren Ragoonanan, senior business law associate at Gardin- er Miller Arnold LLP, as well as chairman of the Ontario Bar As- sociation's international law sec- tion, says that, with the Trump administration, it's "tough to tell what's posturing and what is an actual concern." "I'm telling my clients that it's wait and see for now because we have no information at the mo- ment," he says. While Canada has launched an offensive to prove the agree- ment's value to the U.S., nothing is certain about the outcome, especially in light of remarks by Trump that the agreement was the "worst deal ever." "In particular, we note that NAFTA was negotiated 25 years ago, and while our economy and businesses have changed considerably over that period, NAFTA has not," stated the let- ter by Lighthizer, signalling new provisions are targeted for "in- tellectual property rights, regu- latory practices, state-owned enterprises, services, customs procedures, sanitary and phyto- sanitary measures, labor, envi- ronment and small and medium enterprises." Geoffrey Kubrick, Ottawa- based national chairman of the international trade practice at McMillan LLP, says some com- panies have expressed worry over the possibility of impend- ing NAFTA negotiations. "There's a lot of concern about the negotiations, but it's not so much about the negotia- tions as what is being reported about what is going to be cov- ered," says Kubrick. "For example, there are things like border taxes, and those things are never going to happen. What people should be focusing [on] is what really could change under NAFTA." Kubrick says he believes ne- gotiations could focus on spe- cific sectors where there were exceptions or reservations taken by Canada and Mexico. "I think that's where people should be focusing, but right now, there's a lot of talk about things that probably aren't go- ing to happen," he says. Kubrick says that when he recently re- viewed NAFTA, he discovered that "about two-thirds of NAF- TA is actually exclusions, res- ervations and exceptions, and most of those are for Canada and Mexico." "So, I fear that President Don- ald Trump was correct in that the United States gave up more than Canada and Mexico did," he says. Kubrick says that, in his opinion, industries that could see changes include the dairy in- dustry and the poultry products industry. Changes could also impact the telecommunications and entertainment industries, digital services such as cloud computing and liquor rules. Kubrick predicts that, in certain areas, the U.S. govern- ment will look to have "Cana- dian exclusions and exceptions and reservations removed or reduced," such as for dairy and egg products. "That will certainly be a topic of discussion, and if we want to keep it, we're going to have to give the Americans something else," he says. Brenda Swick, partner at Dickinson Wright LLP, who practises international trade and customs law as well as govern- ment contracting law, says law- yers are "well advised to make sure that their clients' views are heard." She says lawyers also need to be aware where NAFTA is in- volved in any contractual rela- tions or provisions, such as sup- ply contracts. "I think normally negotia- tions would be a good thing, be- cause NAFTA is over 20 years old and clearly in need of updat- ing," she says. "But there is a risk that the process could go off the rails, if the Trump administration con- tinues to paint — without eco- nomic justification — NAFTA as a villain, which causes mas- sive disruption and harm be- cause the facts prove otherwise." Swick says that, in the years since NAFTA was first negoti- ated, "supply chains have devel- oped, and technology has inter- vened, and China has entered the scene." "[Re]negotiating NAFTA, as Mr. Trump would like, to return jobs to the U.S. would be de- structive politically, internation- ally and economically," she says. Kubrick says the negotiations could mean more work for law- yers. "The real issue for lawyers comes after the negotiation, on implementation," he says. "When the rules change, there's always more work for lawyers. . . . If you have new laws, you have new rules, and they have to be tested to see where they stand." This is especially true for in- ternational trade lawyers. "The more trade you have, the more trade disputes you tend to have," says Kubrick. LT FOCUS ON International/Cross-Border Law FOCUS Brenda Swick says lawyers need to be aware where NAFTA is involved in any contractual relations or provisions, such as supply contracts. THE ULTIMATE SOURCE For Today's Legal Profession Canlawyer.lawtimes@tr.com | 416.609.3800 | 1.800.387.5164 Online bitly.com/CanLawyer-Subscription Free preview bitly.com/CanLawyer-FreePreview Subscribe today! ONE-YEAR SUBSCRIPTION INCLUDES: • 11 issues print and digital editions • FREE exclusive access to Canadian Lawyer digital edition archives • FREE weekly e-newsletter: Canadian Legal Newswire • Interactive & immersive feature-rich digital for desktop, laptop, tablet or smartphone Each issue of Canadian Lawyer is packed with unbiased in-depth case analyses, valuable strategies, expert insights, and a wealth of information that will allow readers to prepare for cases and effectively manage their practice. 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