CMKZ International Trade Law Predictions for 2016

On January 27, 2016, Posted by , In International Analysis,

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The beginning of a new year is the perfect opportunity for CMKZ to inform businesses active on the international market of developments susceptible of affecting their activities and strategies.

According to CMKZ, 2016 will be specifically noteworthy in respect of:

Free-Trade: Prioritizing the Pacific and Europe

  • The signature of the TransPacific Partnership (TPP) on February 4, 2016 by representatives of 12 countries from Pacific Asia and the Americas that participated in the negotiation, and thereafter parliamentary debates and more formal consultations on the potential participation of Canada in the TPP. With two years to ratify the TPP, it is unlikely that Canada will decide to implement it this year or that President Obama will be able to have it ratified by the American Congress before the end of his mandate.  Before making any decision on the TPP, Canada will surely wait for the results of the next presidential elections in November 2016 in order to see if the next President will request some changes to the text like President Bill Clinton did with NAFTA and to evaluate its options as to the possibility of requesting its own modifications.
  • The discussions surrounding the legal review of the Comprehensive Economic and Trade Agreement (CETA) and its translations. CETA continues to generate discussions in Europe notably on the investment arbitration provisions and the European Union appears to be waiting for the progress of its free-trade negotiations with the United States that President Obama would like to conclude before the end of his mandate in order to evaluate if it should adjust some provisions of the CETA. In order to accelerate the signature of the CETA and hope for the approval of the European Parliament, Canada appears to be open to adjust in the context of the legal revision some provisions on State-investor arbitration. It is very difficult to predict the outcome of these dealings.
  • The relaunching of the negotiation of the Comprehensive Economic Partnership Agreement (CEPA)with India and the possible launch of negotiations on free trade with China. The new Canadian government seems to prioritize these countries as well as efforts dedicated to the TPP and the CETA, which would leave, for the time being, less time this year to extend and reinforce its network of free-trade agreements with other countries and of Foreign Investment Promotion and Protection Agreement (FIPA).
  • The signature of the new Canada-Israël Free Trade Agreement (CIFTA) which will modernise the free trade agreement previously in force since 1997 and which will extend to new areas such as intellectual property, electronic commerce, labour and the environment.
  • The signature of the Canada-Ukraine Free Trade Agreement (CUFTA)in July 2015. For Ukraine, this agreement limited to trade in goods will be added to the one with the European Union in force since January 1, 2016, date at which the agreement with Russia ended by decision of President Putin.

WTO: Re-establishing the relevance

  • With respect to the World Trade Organization (WTO), the debates concerning the implementation of decisions adopted in Nairobi in December 2015 by WTO members will be at the heart of its agenda. These decisions notably cover agricultural export subsidies, the exports of least developed countries, public stockholding for food security purposes and the recourse to a special safeguard mechanism to mitigate price volatility risks and to balance distortions in agricultural trade.
  • The entry into force of the Trade Facilitation Agreement as well as the amendment of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) to broaden the access to medicines, notably for African countries, if the minimum number of ratifications is reached. Finally, Iraq should become a member of the WTO in 2016.
  • We are awaiting important decisions from the Dispute Settlement Body of the WTO whose agenda will continue to be quite hectic. Even though Members will continue to prefer settling their commercial disputes with the WTO rather than in accordance with regional free trade or customs union agreements, Members will have to question themselves on the way to reconcile the relevance of the WTO while continuing to conclude trade agreements outside the WTO, such as the TPP or the important Trade in Services Agreement (TISA) on which 50 countries have planned six rounds of negotiation in 2016 to further advance the liberalization of trade in services between themselves. WTO Members will notably have to look into the political and technical means of reintegrating the results of these negotiations into multilateral trade agreement that Canada has traditionally defended, notably within the WTO.  The new Minister of International Trade, Mrs. Chrystia Freeland, wants to reinvest in this multilateral forum. She should play a role as useful as the one played in the name of Canada, in a multilateral context, at the 2015 Paris Climate Conference in concluding the Paris Agreement, in accordance with the United Nations Framework Convention on Climate Change (UNFCCC), which should be signed this year and thereafter put into force.

United States: Reviving the relationship

  • The first official visit of Prime Minister Justin Trudeau to Washington on March 10, 2016 will give him an opportunity to strengthen relations and exchanges between Canada and the United States and to make progress on the discussions with respect to the preparation of a North American agreement on clean energy and the environment.

Economic sanctions: Resumption of commercial relations with Iran

  • The easing of commercial sanctions by Canada against Burma in response to the democratic reform and the recent elections in that country as well as against Iran which complied with resolution of the United Nations Security Council 2231 (2015) in accordance with the IAEA. However, sanctions against North Korea should be strengthened following recent nuclear trials and those against Russia maintained (although designated persons could be added) as well as against the other 18 countries under sanction.

Trade regulations : Ensuring respect

  • A modification to the regulations with respect to the labeling of food products and an increase (i) on the control and respect of trade and border laws and regulations applied by the Canada Border Services Agency (CBSA), (ii) on files related to dumping and subsidies, and (iii) on lawsuits to sanction violations of the Corruption of Foreign Public Officials Act.
  • Furthermore, with the expected ratification of the Protocol Relating to the Madrid Agreement in 2016, Canadian companies will be able, through the Canadian Intellectual Property Office, to file their trademarks with one trademark application in approximately 97 countries.

International contracts: Strengthening the legal system

  • The progressive ratification of an agreement on the recognition and execution of jurisdiction clauses in international contracts. With the entry into force in October 2015 of the Convention on Choice of Court Agreements (The Hague, 2005), many countries will likely follow the example of European Union countries and Mexico which were the first ones to ratify this convention that enlists the tribunals of contracting States to respect the exclusive choice of court agreements between parties to commercial transactions and to recognize and enforce judgments resulting from proceedings based on such agreements, subject to few exceptions.
  • The onset of negotiations of a new Judgment Convention that would have the advantage of guaranteeing the execution in one contracting State of a judgment rendered in a civil or commercial matter in another contracting State. It is worthwhile to note that all too frequently, a judge refuses, according to his national regulations, to recognize a judgment rendered in another jurisdiction and therefore deprives a party who has obtained a favorable judgment of this recognition.
  • The adoption by member countries of the United Nations Commission on International Trade Law (UNCITRAL) (i) of a text on the Online dispute resolution for cross-border electronic commerce transactions and (ii) of a Model law on secured transactions as well as its legislative guide, i.e. on the rules and registries relating to security rights on movable assets which should be very useful to facilitate the financing and the granting of guarantees in developing countries.

Considering these developments, companies will be able in 2016 to anticipate the resumption of commercial relations with Iran and development with Burma, Israel, and Ukraine, stay prudent with Russia, participate in the debates on the ratification of the TPP and start to show an interest to countries that have signed the TPP with whom Canada has not signed free trade agreements (Japan, Malaysia, Vietnam, Singapore, Brunei, Australia and New Zealand), ensure regulatory compliance, and continue to attach importance to the drafting of clauses dealing with conflict resolutions in their international contracts.

For more information on these predictions and on the impact that these developments might have on your activities, do not hesitate to contact Bernard Colas (+1 514-288-2726) or one of our attorneys specialized in international trade and business law at CMKZ.