Canada-U.S. Blog

Trade Lawyers Cyndee Todgham Cherniak and Susan K. Ross

The CBSA (as Administrator of Laws) Must Follow CITT Decisions (Subject to Limited Exceptions)

Posted in Antidumping, Cross-border litigation, Customs Law, Government Procurement, Imports Restrictions

Gavel and Scales of JusticeThis case is a must-read for all customs and trade lawyers.  This case is a must- read by other administrative lawyers who appear before quasi-judicial tribunals. The general administrative law rules for law enforcers and tribunals have been clarified in simple, understandable terms. May there be greater certainty, greater predictability and finality as a result of this important case.

On October 21, 2016, Justice David Stratas of Canada’s Federal Court released a game-changing customs decision/administrative law, which is Canada (Attorney General) v. Bri-Chem Supply Ltd., 2016 FCA 257 (the “Bri-Chem Decision – FCA”).  The Federal Court of Appeal has spoken.  The Canada Border Services Agency (“CBSA”) is an “administrator” of Canada’s border laws.  The Canadian International Trade Tribunal (“CITT”) is a a quasi-judicial tribunal that has been granted the powers of a superior court of record.  The CBSA must follow the decisions of the CITT and can no longer ignore decisions it does not agree with (subject to general rules set out below).

I will put money on an appeal of the Bri-Chem Decision-FCA to the Supreme Court of Canada.  As a result, I expect more significant developments in Canada’s customs and trade laws regimes to be forthcoming.  But, until then, the Bri-Chem Decision-FCA is a significant decision that will be quoted often by counsel for importers who are the subject of CBSA enforcement actions.  It will also be quoted by lawyers who regularly appear before other tribunals.

Before I discuss the decision itself, I would like to say something about Justice Stratas.  I worked with Justice Stratas at Heenan Blaikie before he was appointed to the bench. He has proved himself to be a great appointment to the Federal Court of Appeal (and I have no cases pending before him now – just to be clear).  He sits on many judicial reviews of CITT decisions (customs and antidumping injury decisions).  His judgments are understandable and one often nods as his decisions are read.  This decision should be taken seriously because it was written by Justice Stratas.  As a result, his Bri-Chem Decision-FCA should be given great weight.

Justice Stratas made the following important points in his decision, which are, for many purposes, general rules to be followed by tribunals and administrators:

Rules for Tribunals

  1. Tribunals and administrators are both public bodies established by legislation. Both wield public power and both must obey all relevant legislation, often the same legislation. They are independent from each other. But they are in a hierarchical relationship. Tribunals pass judgment on the acts of administrators;
  2. While tribunals should try to follow their earlier decisions, they are not bound by them;
  3. It is possible for one tribunal panel to disagree with another and still act reasonably – however, while it is true that later tribunal panels are not bound by the decisions of earlier tribunal panels, it is equally true that later panels should not depart from the decisions of earlier panels unless there is good reason;
  4. As long as an administrator is acting bona fide and in accordance with its legislative mandate, an administrator can assert—where principled and warranted—that an earlier tribunal decision on its facts does not apply in a matter that has different facts.
  5. A tribunal is constrained by any rulings and guidance given by courts that govern the facts and issues in the case;
  6. Parliament—with a view to furthering efficient and sound management over an area of administration—has passed a law empowering a tribunal to decide certain issues efficiently and once and for all;
  7. Certainty, predictability and finality matter;
  8. Allowing tribunal panels to disagree with each other without any limitation tears against the need for a good measure of certainty, predictability and finality.

Rules for Administrators

  1. An administrator whose actions are regulated by a tribunal (like the CBSA whose decisions are regulated by the CITT) must follow tribunal decisions.
  2. Tribunals bind those who are subject to their jurisdiction, including administrators, subject to any later orders by reviewing courts.
  3. Certainty, predictability and finality matter;
  4. In pursuit of its legislative mandate, an administrator can sometimes distinguish an earlier tribunal decision on its facts and act accordingly;
  5. In certain circumstances, the administrator should be allowed to act upon its view of the matter and, when challenged, should be allowed to raise with the tribunal the flaw it sees;
  6. An administrator can act or take a position against an earlier tribunal decision only if it is satisfied it is acting bona fide in accordance with the terms and purposes of its legislative mandate and only if a particular threshold has been crossed. This threshold should be shaped by two sets of clashing principles (1) the principles of certainty, predictability, finality and tribunal pre-eminence and (2) ensuring that potentially meritorious challenges of arguably wrong decisions can go forward.

What Is The Threshold?

Justice Stratas articulates his answer to this important question as follows:

“In an administrative regime like the one before us, the administrator must be able to identify and articulate with good reasons one or more specific elements in the tribunal’s earlier decision that, in the administrator’s bona fide and informed view, is likely wrong. The flaw must have significance based on all of the circumstances known to the administrator, including the probable impact of the flaw on future cases and the prejudice that will be caused to the administrator’s mandate, the parties it regulates, or both.

This is something far removed from an administrator putting essentially the same facts, the same law and the same arguments to a tribunal on the off-chance it might decide differently. Tribunal proceedings are not a game of roulette where a player, having lost, can just hope for better luck and try again.

When the administrator tries to persuade the tribunal that its earlier decision should no longer be followed, the administrator must address at least the matters discussed above, offering submissions that are not simply a rerun. They must go further than just a modest modifying or small supplementing of the earlier submissions. The tribunal may then decide whether its earlier decision remains good law after considering the evidence before it, the terms and purposes of the legislation, and any other legal standards that properly bear on its decision.”

Why is the Bri-Chem Decision-FCA important?

The Bri-Chem Decision-FCA is important in respect of matters within the mandate of the CITT AND other administrative/quasi-judicial tribunals at the federal and provincial levels.  This may be a customs case, but it will be cited in matters before other administrative tribunals regarding actions of other administrators.  Customs lawyers can rejoice because customs law will influence other court cases – this is not a common occurrence.

Even before the CITT, the Bri-Chem Decision-FCA will be relevant in antidumping appeal proceedings, government procurement bid challenge proceedings and excise tax proceedings.  The importance of the general rules is applicable beyond customs decisions and the specific facts of the underlying CITT cases discussed therein. I have not even covered the facts underlying the Bri-Chem Decision-FCA because they will only be a footnote in the future.

The CBSA is an administrator of many border laws beyond just the Customs Act, Customs Tariff and Special Import Measures Act.  But, there are many other administrators of laws who must read this decision and follow this decision. Unless and until the Bri-Chem Decision-FCA is appealed to the Supreme Court of Canada or another case that follows the Bri-Chem Decision – FCA is considered by the Supreme Court of Canada, this is precedent.

This Canadian Federal Court of Appeal decision may even have relevance in other jurisdictions.  It is that significant.

For more information, please call Cyndee Todgham Cherniak at 46-3017-4168 or email at cyndee@lexsage.com. Please review more free information on the LexSage website.

 

 

On What Authority Does The CBSA Search Smart Phones?

Posted in Border Security

Canada CustomsI often receive calls from travelers who have had their cell phone, smart phone, PDA, iPhone, camera, and laptop computer examined by the Canada Border Services Agency (“CBSA”) during a secondary inspection.  Most of the time, the traveler is outraged because the CBSA either (a) saw naked photos on the phone, (b) found the receipt for the goods they failed to declare, (c) read emails about illegal work in Canada or (d) saw a photo of them smoking drugs or using a bong, or (e) all of the above.  In the initial contact, the person claims that the CBSA illegally searched the cell phone, smart phone, PDAs, iPhones, cameras, or laptop computer without a warrant.

The CBSA does not require a warrant to conduct an examination at the border. Section 99 of the Customs Act (Canada) gives CBSA officers the authority to examine goods and provides in part:

“An officer may
(a) at any time up to the time of release, examine any goods that have been imported and open or cause to be opened any package or container of imported goods and take samples of imported goods in reasonable amounts;

(c) at any time up to the time of exportation, examine any goods that have been reported under section 95 and open or cause to be opened any package or container of such goods and take samples of such goods in reasonable amounts;

(e) where the officer suspects on reasonable grounds that this Act or the regulations or any other Act of Parliament administered or enforced by him or any regulations thereunder have been or might be contravened in respect of any goods, examine the goods and open or cause to be opened any package or container thereof; or

(f) where the officer suspects on reasonable grounds that this Act or the regulations or any other Act of Parliament administered or enforced by him or any regulations thereunder have been or might be contravened in respect of any conveyance or any goods thereon, stop, board and search the conveyance, examine any goods thereon and open or cause to be opened any package or container thereof and direct that the conveyance be moved to a customs office or other suitable place for any such search, examination or opening.”

The term “goods” is defined in subsection 2(1) of the Customs Act as “any document in any form”.  This includes electronic records.

The CBSA takes the position that they have the authority under the Customs Act to examine any electronic document because goods include any document in any form, which would include electronic form.

It is well established that the CBSA does not require a warrant when conducting searches at the border.  The Supreme Court of Canada acknowledged in R. v. Simmons that the CBSA has wide power of search at the border.  The Supreme Court of Canada wrote:

“The degree of personal privacy reasonably expected at customs is lower than in most other situations. Sovereign states have the right to control both who and what enters their boundaries. Consequently, travellers seeking to cross national boundaries fully expect to be subject to a screening process. Physical searches of luggage and of the person are accepted aspects of the search process where there are grounds for suspecting that a person has made a false declaration and is transporting prohibited goods.”

The best way to prevent the CBSA from looking at naked photos (or drug photos) on your phone is to not have them in the first place.  There is nothing wrong with traveling with a clean laptop that does not connect to your email.  There is nothing wrong with deleting your email accounts before you arrive at the border.  Review your text messages and delete ones that you do not want anyone (including your Granny) to read.

More information about searches at the border is contained in a PowerPoint “Hot Topics in Privilege: New Things To Think About!” (April 2015)

For more information, please contact Cyndee Todgham Cherniak at 416-307-4168 or by email at cyndee@lexsage.com.

Is the Canada-EU CETA Dead? An Update

Posted in Canada's Federal Government, Cross-border trade, International Arbitrations, Politics, Trade Agreeements

iStock_000019169483XSmallAs a trade lawyer, I remain optimistic that the Canada-EU Comprehensive Economic and Trade Agreement (“CETA”) will be signed. I am not ready to issue a “call of death”; but I am closer to that call than I was last week.  The problem is that Canada is finished negotiations of the CETA and will not reopen the agreement for further modifications and concessions.  Wallonia has indicated it will oppose the CETA unless the investment chapter is reopened and rewritten to remove the investor-state dispute settlement mechanism. Further, Belgium has indicated that three jurisdictions oppose the CETA.  This means that the CETA deal is in critical condition.

However, Donald Tusk, President of the European Council has tweeted:

“Together with PM , we think Thursday’s summit still possible. We encourage all parties to find a solution. There’s yet time.”

@CanadianPM tweeted:

“PM Trudeau and agree that the EU and its member states should continue to work towards the Summit on Thursday.

This may mean that heroic measures are being taken to revive the dying CETA.  Prime Minister Trudeau’s plane is ready to fly to Europe and give CETA CPR.

Timeline

Before I discuss about where we are and where we are going, we need to review where we came from:

  • In June 2007, Canada and the European Commission agreed to conduct a joint study examining the costs and benefits of pursuing a closer economic partnership.
  • In October 2008,  Canada and the EU issued a joint study entitled “Assessing the Costs and Benefits of a Closer EU-Canada Economic Partnership”.
  • In March 2009, the joint report was finalized.
  • In May 2009, Prime Minister Stephen Harper, EU President Mirek Topolánek and European Commission President José Manuel Barroso, announced the launch of CETA negotiations.
  • In October 2009, Canada and the EU engaged in the first round of CETA negotiations.
  • By October 2011, nine formal rounds of CETA negotiations are completed.
  • In October 2013, Prime Minister Harper and José Manuel Barroso announced that Canada and the EU had reached an agreement in principle.
  • In August 2014,  Canada and the EU announced that they had reached a complete text of the Canada-EU CETA, marking the conclusion of negotiations. Canada and the EU commenced the legal review and translation of the text into the other 22 EU treaty languages.
  • In September 2014, Canada and the EU released the text of the CETA.
  • In February 20916, a joint statement is issued by Canada and the EU after CETA is revised to address concerns within the EU.
  • In July 2016, the revised text of CETA is released.
  • In October 2016, Canada meets with counterparts in the EU to address additional concerns.
  • On October 13, 2016, a German Court dismisses a legal case brought to block CETA.
  • On October 14, 2016, Wallonia’s Parliament indicates they will veto CETA.
  • Canada and the EU work on a joint declaration to clarify the CETA and reinforce some important points in an attempt to alleviate the concerns of Wallonia.
  • On October 21, 2016, the negotiations break-down due to demands by Wallonia.
  • On October 22, 2016, Martin Schultz has meetings with Canada and Wallonia and announces that more time is needed.
  • On October 24, 2016, Charles Michel, President of Belgium said that Wallonia and two other jurisdictions will not sign off.  Mr. Paul Magnette said that Wallonia will not be pressured by the European Commission to sign on for CETA.

Where are we now?

On October 21, 2016, Mr. Paul Magnette attempted to extract more concessions out of Canada because he believed that he had Canada backed in a corner.  At this point. Canada’s Trade Minister Chrystia Freedland walked out of the negotiations (as she should).  She issued the following statements:

  • “Canada has worked, and I personally have worked very hard, but it is now evident to me, evident to Canada, that the European Union is incapable of reaching an agreement even with a country with European values such as Canada, even with a country as nice and as patient as Canada.”
  • “Canada is disappointed and I personally am disappointed, but I think it’s impossible. We are returning home. At least I will see my three children tomorrow at our home.”

She indicated that she was heading home to Canada – but stayed in Belgium overnight to attend meetings in the morning of October 22.

As at 8:30 AM on October 22, 2016, Canada’s Trade Minister Chrystia Freedland correctly stated that “[t]he ball is in Europe’s court and it’s time for Europe to finish doing its job.”  Canada is not prepared to reopen the CETA again so that Wallonia can extract further concessions.

Minister Freeland is now on Canadain soil and gave a press conference at 1:45PM on October 24, 2016.  Minister Freeland clearly stated that:

  • “CETA isn’t dead”;
  • “the ball is in Europe’s court”;
  • “it is entirely up to EU to overcome opposition”;
  • “The problems on the table are European problems”;
  • “For us, it is a good agreement … we are ready to sign it”;
  • “Today all the Europeans, including the Wallooons, have public accepted that Canada’s job is done”; and
  • Paul Magnette (Wallonia) said “Negotiations with the Canadians are over and we are pleased with the results of the negotiations.”

In short, Canada is ready, willing and able to sign the CETA this Thursday (October 27).

Where do we go from here?

First, Thursday is an arbitrary deadline.  However, if there is no deadline, there will be no momentum.  If there is no momentum, the CETA will stall. An open ended time period will surely result in a flat-lining of CETA.

Second, there is not much that Canada can do while the European Union addresses their internal issues.

Third, if the Thursday deadline passes and CETA flatlines, we might have to wait for the European Court of Justice (“ECJ”) decision regarding the EU-Singapore challenge on ISDS (Investor State Dispute Settlement).  It is only if local governmetn approval is not required can the CETA be revived.

Fifth, to the extent that Wallonia is worried about a future trade negotiation with the United States, Canada cannot fight that ghost of the future.  It is unlikely that President Clinton or President Trump will be able to commence comprehensive negotiations with the EU (especially in light of Brexit) and even less likely that the United States will be the giver in the negotiations. The United States is not going to just sign on to accede to CETA – that will never happen.

It would be very helpful to Canadians if the Walloons clearly articulate the problems that the European Commission must overcome.  At this point, there is an understanding that it has something to do with:

  1. agriculture,
  2. the Investment Chapter and the Investor-State Dispute Settlement;
  3. environmental, labour and consumer protection legislation;
  4. hormones in beef; and
  5. a perceived issue with sovereignty.

That being said, it is important for Canada to understand the specific concerns that need to be addressed and whether further clarifications (not concessions) are in Canada’s best interests. If Canada determines that further language relating to the Investment Chapter would benefit Canadians, it may possible to offer such clarifications to allow Wallonia to save face.  If Canada determines that there are benefits to Canada by addressing additional concerns, why wouldn’t we.

Finally,what might hold Canada and the EU back is Article XXIV of GATT, which requires that in any new free trade agreement “the duties and other restrictive regulations of commerce (except, where necessary, those permitted under Articles XI, XII, XIII, XIV, XV and XX) [must be] eliminated on substantially all the trade between the constituent territories in products originating in such territories.”

If the EU cannot sign a trade agreement with Canada, it is unlikely that the EU can negotiate any trade agreements.  Any future negotiating country will be nervous about these types of last minute obstructions.  After all parties put their best offers on the table, after the agreement is negotiated, after the text is translated into all necessary languages, after the language is scrubbed, after further modifications are made, after joint interpretative note is developed, there should not be a reopening of the text.  That is not negotiation in good faith.  Wallonia should have raised the issues sooner and if they did, the compromise had been reached long ago.

For more information, please contact Cyndee Todgham Cherniak at 416-307-4168 or by email at cyndee@lexsage.com.  Please look at additional articles posted on the LexSage website.

What Is A CITT Section 18 Reference?

Posted in Antidumping, Canada's Federal Government, Cross-border trade, Legal Developments, Trade Remedies

Question In Maze Showing Confusion And Puzzled

On October 17, 2016, Canada’s Department of Finance announced that the Government of Canada had asked the Canadian International Trade Tribunal (“CITT”) to conduct an inquiry (actually, it is a Reference) in respect of the antidumping case involving gypsum board from the United States and imported into Western Canada in order to hear from a wide range of stakeholders and the public, and to report its findings in early January, so that the Government can determine the best path forward.  The Reference is contained in Order of Council 2016-0879 (October 13, 2016), which states, in part:

“Whereas the circumstances merit timely consideration of whether the imposition of duties is in Canada’s economic, trade and commercial interest;

Therefore, His Excellency the Governor General in Council, on the recommendation of the Minister of Finance, pursuant to section 18 of the Canadian International Trade Tribunal Act,

(a) refers to the Canadian International Trade Tribunal the matter of whether the imposition of provisional duties or duties, applicable to gypsum board imported from the United States for markets in Manitoba, British Columbia, Saskatchewan, Alberta, Yukon and the Northwest Territories, is contrary to Canada’s economic, trade or commercial interests, and specifically whether such an imposition has or would have the effect of substantially reducing competition in those markets or causing significant harm to consumers of those goods or to businesses who use them; and

(b) directs that the Tribunal report to the Governor in Council on those matters no later than January 4, 2017 and submit to the Governor in Council, within 15 days after that date, its findings and recommendations on any remedy that could be taken.”

I have been asked many times this week: “What is a section 18 Reference”?

A Section 18 Reference is a rarely used legal proceeding conducted by the CITT whereby the Governor-in-Council (the Federal Cabinet) may ask the CITT to review and report on any matter in relation to the economic, trade or commercial interests of Canada with respect to any goods or services or any class thereof. Section 18 is in the Canadian International Trade Tribunal Act and not the Special Import Measures Act.  This means that a Reference is separate from and not directly related to Canada’s trade remedies regime.  The end product is a Report (containing a summary of the evidence and economic analysis) to be submitted by the CITT to the Governor-in-Council.

The last Reference occurred 19 years ago when the CITT was asked to look into a number of issues concerning Canada’s dairy industry.  The Reference decisions are:

Before the cases prior to the Dairy References are also agriculture related:

There has never been a Reference relating to an ongoing antidumping proceeding.  Normally, the CITT makes a decision regarding material injury and threat of material injury.  If the CITT determines that the domestic industry has suffered, is suffering or is threatened with material injury, then the CITT may commence a public interest inquiry pursuant to subsection 45(1) of the Special Import Measures Act.  This means that we are in uncharted territory.

What we do know from prior References, the CITT may issued orders to receive testimony of relevant persons:

It might be that the Reference will be similar to the recommendation phase of a Safeguard Inquiry.  In a Safeguard Inquiry, the CITT considers whether a surge in imports has caused serious injury to the domestic industry.  If the answer is “Yes”, the Tribunal makes recommendations to the Minister of International Trade concerning the level of duties to be imposed.  In that sense, this Gypsum Board Reference may be a cross between a Public Interest Inquiry and a Safeguard Inquiry.

For more information, please contact Cyndee Todgham Cherniak at 416-307-4168 or email cyndee@lexsage.com.  For more information, please see Canada Acknowledges That Antidumping Proceedings Can Hurt Consumers.

Is the Canada-EU CETA Dead?

Posted in Canada's Federal Government, Cross-border deals, Cross-border trade, International Arbitrations, Trade Agreeements

iStock_000019169483XSmallAs a trade lawyer, I remain optimistic that the Canada-EU Comprehensive Economic and Trade Agreement (“CETA”) will be signed. I am not ready to issue a “call of death”.  However, the CETA deal is in critical condition.  Canada has walked away from the table because of the actions of Wallonia.  The good news is that many people are working hard to see that CETA survives.  But, there are those who wish for the obituary to be written.

Recent experience has demonstrated that large trade deals are no longer possible.  CETA, if it survives and is ratified, may be the last major trade deal to be signed this decade. The Transpacific Partnership Agreement (TPP) is unlikely to proceed under President Clinton or President Trump. It may be that only small bilateral trade deals are possible for the next decade. It is most likely that any new activity at the WTO is doomed for failure as small regions (with an effective veto) will have learned from the Wallonia example.

Timeline

Before I discuss about where we are and where we are going, we need to review where we came from:

  • In June 2007, Canada and the European Commission agreed to conduct a joint study examining the costs and benefits of pursuing a closer economic partnership.
  • In October 2008,  Canada and the EU issued a joint study entitled “Assessing the Costs and Benefits of a Closer EU-Canada Economic Partnership”.
  • In March 2009, the joint report was finalized.
  • In May 2009, Prime Minister Stephen Harper, EU President Mirek Topolánek and European Commission President José Manuel Barroso, announced the launch of CETA negotiations.
  • In October 2009, Canada and the EU engaged in the first round of CETA negotiations.
  • By October 2011, nine formal rounds of CETA negotiations are completed.
  • In October 2013, Prime Minister Harper and José Manuel Barroso announced that Canada and the EU had reached an agreement in principle.
  • In August 2014,  Canada and the EU announced that they had reached a complete text of the Canada-EU CETA, marking the conclusion of negotiations. Canada and the EU commenced the legal review and translation of the text into the other 22 EU treaty languages.
  • In September 2014, Canada and the EU released the text of the CETA.
  • In February 20916, a joint statement is issued by Canada and the EU after CETA is revised to address concerns within the EU.
  • In July 2016, the revised text of CETA is released.
  • In October 2016, Canada meets with counterparts in the EU to address additional concerns.
  • On October 13, 2016, a German Court dismisses a legal case brought to block CETA.
  • On October 14, 2016, Wallonia’s Parliament indicates they will veto CETA.
  • Canada and the EU work on a joint declaration to clarify the CETA and reinforce some important points in an attempt to alleviate the concerns of Wallonia.
  • On October 21, 2016, the negotiations break-down due to demands by Wallonia.
  • On October 22, 2016, Martin Schultz has meetings with Canada and Wallonia and announces that more time is needed.

Where are we now?

On October 21, 2016, Mr. Paul Magnette attempted to extract more concessions out of Canada because he believed that he had Canada backed in a corner.  At this point. Canada’s Trade Minister Chrystia Freedland walked out of the negotiations (as she should).  She issued the following statements:

  • “Canada has worked, and I personally have worked very hard, but it is now evident to me, evident to Canada, that the European Union is incapable of reaching an agreement even with a country with European values such as Canada, even with a country as nice and as patient as Canada.”
  • “Canada is disappointed and I personally am disappointed, but I think it’s impossible. We are returning home. At least I will see my three children tomorrow at our home.”

She indicated that she was heading home to Canada – but stayed in Belgium overnight to attend meetings in the morning of October 22.

As at 8:30 AM on October 22, 2016, Canada’s Trade Minister Chrystia Freedland correctly stated that “[t]he ball is in Europe’s court and it’s time for Europe to finish doing its job.”  Canada is not prepared to reopen the CETA again so that Wallonia can extract further concessions.

Where do we go from here?

There is not much that Canada can do while the European Union addresses their internal issues.  Canadians are patient.  We have come this far, we can give the EU some time to determine the appropriate internal compromise (understanding that Canada is not willing to renegotiate the CETA).  Also, we can wait for the European Court of Justice (“ECJ”) decision regarding the EU-Singapore challenge on ISDS (Investor State Dispute Settlement).

To the extent that Wallonia is worried about a future trade negotiation with the Untied States, Canada cannot fight that ghost of the future.  It is unlikely that President Clinton or President Trump will be able to commence comprehensive negotiations with the EU (especially in light of Brexit) and even less likely that the United States will be the giver in the negotiations. The United States is not going to just sign on to accede to CETA – that will never happen.

That being said, it is important for Canada to understand the specific concerns that need to be addressed and whether further clarifications (not concessions) are in Canada’s best interests. If Canada determines that further language relating to the Investment Chapter would benefit Canadians, it may possible to offer such clarifications to allow Wallonia to save face.  If Canada determines that there are benefits to Canada by addressing additional concerns, why wouldn’t we.  What might hold Canada and the EU back in Article XXIV of GATT, which requires that in any new free trade agreement “the duties and other restrictive regulations of commerce (except, where necessary, those permitted under Articles XI, XII, XIII, XIV, XV and XX) [must be] eliminated on substantially all the trade between the constituent territories in products originating in such territories.”

For more information, please contact Cyndee Todgham Cherniak at 416-307-4168 or by email at cyndee@lexsage.com.  Please look at additional articles posted on the LexSage website.

Canada Acknowledges Antidumping Proceedings Hurt Consumers

Posted in Antidumping, Canada's Federal Government, Trade Remedies

Gypsum BoardThis has never happened before.  This is very important.  Trade lawyers outside Canada (and inside Canada) will be shocked by the steps being taken in Canada during an active antidumping proceeding.

On October 16, 2016, the Department of Finance asked the Canadian International Trade Tribunal to commence a section 18 (of the Canadian International Trade Tribunal Act) reference concerning the effect of preliminary and final antidumping duties on gypsum board (also called drywall and wall board) from the United States into Western Canada (British Columbia, Alberta, Saskatchewan, Manitoba and the Yukon and Northwest Territories). The antidumping proceedings at the center of the request are the Canada Border Services Agency (“CBSA”) dumping investigation that commenced on June 8, 2016 and the Canadian International Trade Tribunal (“CITT”) injury inquiry that commenced on September 6, 2016.  The CITT issued a preliminary determination of injury on August 8, 2016. On September 9, 2016, the CBSA made a preliminary determination of dumping and imposed antidumping duties at rates ranging from 105.2% – 276.5%. On September 28, 2016, the CBSA released its reasons for the preliminary determination of dumping.

The preliminary duties at 275.6% have been difficult for many Canadians, especially in Fort McMurray, Alberta and other communities which have experienced forest fires and flooding.  The Department of Finance has responded to the concerns that have been raised about the increases in prices of drywall and the lack of supply of drywall in Western Canada.  The Department of Finance states:

“Concerns were raised that anti-dumping duties on imported drywall were leading to price increases and supply shortages of the product. Imposed to address unfair trade, these duties may be having unintended impacts, including delays in the reconstruction of Fort McMurray.”

This is important. This statement recognizes that antidumping duties can hurt consumers.

On October 17, 2016, the CITT commenced a reference inquiry in response to the Department of Finance request.  What is happening is that the CITT is combining the final injury inquiry and the reference.  A new schedule for the final injury inquiry was issued.  The hearing has been moved up one week to accommodate 2 weeks of testimony (sometimes there is only one day of testimony in an injury inquiry hearing).  The CITT anticipates many new parties joining an already large group of participants in the injury inquiry (I must admit that I am representing a US producer of gypsum board and its Canadian subsidiary importer).

The relevant portion of the CITT Notice which sets out the terms of reference for the Reference states:

“Further, on October 13, 2016, His Excellency the Governor General in Council, on the recommendation of the Minister of Finance, pursuant to section 18 of the Canadian International Trade Tribunal Act (CITT Act),

(a) referred to the Canadian International Trade Tribunal the matter of whether the imposition of provisional duties or duties, applicable to gypsum board imported from the United States for markets in Manitoba, British Columbia, Saskatchewan, Alberta, Yukon and the Northwest Territories, is contrary to Canada’s economic, trade or commercial interests, and specifically whether such an imposition has or would have the effect of substantially reducing competition in those markets or causing significant harm to consumers of those goods or to businesses who use them; and

(b) directed that the Tribunal report to the Governor in Council on those matters no later than January 4, 2017, and submit to the Governor in Council, within 15 days after that date, its findings and recommendations on any remedy that could be taken.

Pursuant to section 18 of the CITT Act, the Tribunal will inquire into and report on the matter referred to it by His Excellency the Governor General in Council.”

Given that both inquiries must be concluded by January 4, 2017, the Tribunal will combine them to provide for a more expeditious process in accordance with rule 6.1 of the Canadian International Trade Tribunal Rules and section 35 of the CITT Act.

This has never happened before.  Usually, a public interest inquiry may be commenced after a final determination of injury by  the CITT.  In the present case, since winter is coming and people in Western Canada need drywall, the Department of Finance and the CITT are expediting the process.  We are in new procedural territory with this combined proceeding.

Anyone who is affected by the new drywall antidumping duties needs to know that if they do not come forward, the CITT cannot know how the drywall duties are affecting people.  The CITT needs to hear from homeowners, businesses, contractors, drywall suppliers, and construction industry associations in Western Canada.  Please write to the CITT at Registrar, Secretariat to the Canadian International Trade Tribunal, 15th Floor, 333 Laurier Avenue West, Ottawa, Ontario K1A 0G7, 613-993-3595 (telephone), 613-990-2439 (fax), citt-tcce@tribunal.gc.ca (e-mail).  Notices of Participation are due by October 31, 2016.  Submissions are due November 17, 2016 by noon (Ottawa time). The hearing starts on November 28, 2016.  Share this information with others who have information to provide to the CITT.

If you have any questions about Canada’s antidumping laws, please contact Cyndee Todgham Cherniak at 416-307-4168 or email cyndee@lexsage.com. There is information on the LexSage web-site about antidumping procedings (scroll to the bottom of the page).

Why Should You Know About Canada’s Export Controls and Economic Sanctions Laws?

Posted in Aerospace & Defence, Border Security, Canada's Federal Government, Controlled Goods Program, Corporate Counsel, Cross-border trade, Export Controls & Economic Sanctions, Exports

smiley-vector-illustration-puzzled_X1AqT-_LI am often asked why export controls and economic sanctions are important.  The simple answer is that if you export a controlled good or export goods to a sanctioned country, your company could become front page news.  If that should happen because your company manufactured and sold goods that are used to kill a Canadian soldier, your company’s reputation (and maybe your reputation) will be damaged.

Even if no one dies, your company’s reputation may suffer damage to its brand.  Or, customer trust in your company may be damaged.  Things may never be the same.

Your company may lose business opportunities.  For example, and this is a real possibility, if your company is under investigation, Canada may not issue your company other export permits.  You might not be able to sell your goods into export markets if you cannot get an export permit.  Other countries (e.g., the United States) may learn that you have breached Canada’s export controls and/or economic sanctions laws and put your company on the SDN (Specially Designated Nationals) List. If this should happen, U.S. companies will not be able to sell goods to your company. Also, financial institutions will not want to enter into transactions involving your company.

Let’s go back to U.S. companies not being able to sell to your company.  This could shut down your production if you cannot obtain the inputs you require to manufacture your goods.  This slowdown in the supply chain may take place for many months as you work to resolve the issues.

Resolving the issues will likely mean money spent on lawyers.  There will be hours on internal investigations.  The RCMP could come and raid your offices. You may see documents leave your premises in evidence boxes.

Resolving the issues may mean new reporting requirements.  You may have to spend significant amounts of money on new software. You may have to change how you do business.  You may have to pay penalties for the non-compliance. There could be a public criminal trial.

Have I convinced you yet that export controls and economic sanctions laws should be taken very seriously? Export controls and economic sanctions are possibly the number one non-financial risk an export business faces.

For more information about Canada’s export controls and economic sanctions laws, please contact Cyndee Todgham Cherniak at 416-307-4168 or email cyndee@lexsage.com. Also, we have more information on the LexSage web-site.

Canada Continues To Impose Economic Sanctions Against Liberia

Posted in Canada's Federal Government, Cross-border trade, Export Controls & Economic Sanctions, Exports

iStock_000019169483XSmallCanada imposed economic sanctions against Liberia to implement United Nations Security Council Resolution 1521 (2003).  The multilateral economic sanctions are imposed pursuant to the United Nations Act and the Regulations Implementing the United Nations Resolutions on Liberia.  However, on May 25, 2016, the United Nations unanimously adopted resolution 2283 (2016) deciding to terminate all arms, travel and financial sanctions against Liberia with immediate effect.  Canada has done nothing to implement UN Security Council Resolution 2288 (2016).  In other words, the Canadian economic sanctions remain in effect despite the fact that the underlying UN Security Council Resolution has ended.  Global Affairs must continue to apply the law as it is on the books.

Canada’s economic sanctions against Liberia include:

  • a prohibition on the export of arms and related material to any person in Liberia;
  • a prohibition on the provision, to any person in Liberia, of any technical assistance related to the provision, manufacture, maintenance or use of arms and related material;
  • an assets freeze against persons designated by the UN committee established by Resolution 1521 (2003) to oversee the sanctions against Liberia (the “1521” Committee); and
  • a travel ban against persons designated by the 1521 Committee.

There are exceptions.

Other countries have ended their economic sanctions against Liberia. For example, back in 2015,  President Obama lifted the U.S. sanctions against Liberia.  The EU lifted their sanctions against the Liberia in June 2016.

What this means is that Canadian businesses are not able to take advantage of business opportunities.  It also means that Canadian individuals working for U.S companies (who are no longer subject to U.S. sanctions) may breach Canadian law when they comply with U.S. law.  There is an inconsistency between Canadian economic sanctions and other countries’ sanctions laws.

There is a real impact on Canadian businesses.  There is an increased burden.  There are divergent sanctions.  They must review numerous lists. There is increased risk.

For more information about Canada’s economic sanctions, please contact Cyndee Todgham Cherniak at 416-307-4168 or email cyndee@lexsage.com.

Canada Continues To Impose Economic Sanctions Against Ivory Coast

Posted in Canada's Federal Government, Cross-border deals, Cross-border trade, Export Controls & Economic Sanctions, Exports, Uncategorized

globe and calculatorCanada imposed economic sanctions against Ivory Coast to implement United Nations Security Council Resolution 1572.  The multilateral economic sanctions are imposed pursuant to the United Nations Act and the United Nations Côte D’Ivoire Regulations.  However, on April 28, 2016, the United Nations unanimously adopted resolution 2283 (2016) deciding to terminate all arms, travel and financial sanctions against Ivory Coast with immediate effect.  Canada has done nothing to implement UN Security Council Resolution 2283 (2016).  In other words, the Canadian economic sanctions remain in effect despite the fact that the underlying UN Security Council Resolution has ended. Global Affairs must continue to apply the law as it is on the books.

Canada’s economic sanctions against Ivory Coast include:

  • a prohibition on the export of arms and related material to any person in Côte d’Ivoire;
  • a prohibition on the provision to any person in Ivory Coast of technical assistance related to military activities;
  • an assets freeze against persons designated by the UN committee established pursuant to paragraph 14 of Resolution 1572 (2004) (the “1572 Committee”), persons designated by the 1572 Committee who are acting on behalf of, or at the direction of, another person designated by the committee, and entities owned or controlled by a person designated by the 1572 Committee; and
  • a travel ban against persons designated by the 1572 Committee.

There are exceptions.

Other countries have ended their economic sanctions against Ivory Coast. For example, on September 14, 2016, President Obama lifted the U.S. sanctions against Ivory Coast.  The EU lifted their sanctions against the Ivory Coast in June 2016.

What this means is that Canadian businesses are not able to take advantage of business opportunities.  It also means that Canadian individuals working for U.S companies (who are no longer subject to US sanctions) may breach Canadian law when they comply with U.S. law.  There is an inconsistency between Canadian economic sanctions and other countries’ sanctions laws.

There is a real impact on Canadian businesses.  There is an increased burden.  There are divergent sanctions.  They must review numerous lists. There is increased risk.

For more information about Canada’s economic sanctions, please contact Cyndee Todgham Cherniak at 416-307-4168 or email cyndee@lexsage.com.

Hanjin Claim Deadline Approaching

Posted in Corporate Counsel, Cross-border deals, Transportation

Hanjin has published on its website information about how to file claims in the Korean bankruptcy case (called a rehabilitation proceeding ).  Details can be found on the Hanjin website at http://hanjin.com/hanjin/CUP_HOM_1001.do. See also the attached file – 8254715.

The deadline to file claims is October 25, 2016, so do not delay. Referrals to Korean counsel can be provided.