Key International Trade Issues

Transcription

1 Key International Trade Issues June 13, 2006, British Columbia

2 OVERVIEW Introduction John Boscariol Simon Potter Orlando Silva Brenda Swick Overview of International Trade & Investment Issues: 1. Customs Enforcement and Appeals Representation on full range of customs issues that arise on the importation of goods into Canada: - CBSA audits (and appeals to Canadian International Trade Tribunal and Federal Court) - Customs valuation - Customs classification - Rules of origin - Seizures - Duty remission and drawback - Compliance Programs - Administrative Monetary Penalty System - Cross-border security measures.

3 OVERVIEW 2. Trade Remedies Anti-dumping, countervail and safeguard actions before: Canada Border Services Agency ( CBSA ) Canadian International Trade Tribunal ( CITT ) Federal Court of Appeal NAFTA Panels WTO Dispute Settlement Panels. Affected parties could include domestic producer experiencing financial difficulties, or an exporter, importer, purchaser or end-user. Are you experiencing difficulty competing in the Canadian market?

4 OVERVIEW 3. Import & Export Controls and Embargos Are you importing or exporting goods, services or technology? Import, export and transaction controls and economic sanction programs impact the activities of clients doing business in Canada and abroad: -Import Permits (agriculture, steel products, textiles, weapons/munitions) - Export Permits for goods on Export Control List Agricultural products Refined Sugar, Sugar-containing Products and Peanut Butter Textiles and Clothing Military, Strategic Dual-use Goods Nuclear Energy Materials and Technology Missile, Chemical or Biological Goods of Non-proliferation Concern Softwood Lumber, Logs Miscellaneous Goods including Goods of U.S.-origin All Goods Destined for Countries on the Area Control List: Myanmar - Compliance with obligations when doing business in jurisdictions with conflicting sanction and transaction control regimes. - US controls on doing business with or investing in Cuba.

5 OVERVIEW 4. Government Procurement All aspects of federal, provincial and municipal government contracting in Canada, including: - bid preparation - contract negotiation - regulatory compliance - bid challenges and litigation. NAFTA Chapter 10 and Chapter 5 of the Agreement on Internal Trade sets out requirements that governments, crown corporations, government enterprises must satisfy in the procurement of goods and services: - technical specifications, - supplier qualifications - design and issuance of Request for Proposal - tender Evaluation - contract awards - bid challenges. Have you lost a sale to the Government?

6 OVERVIEW 5. Investment Disputes Investment disputes under investment treaties which provide investors with a right of action for damages against the host government. Bilateral Investment Treaties NAFTA Chapter Eleven Has your investment in Canada or in a foreign jurisdiction been harmed by action taken by the host Government?

7 OVERVIEW 6. WTO Agreements and Regional Free Trade Agreements WTO Agreements and Regional Free Trade Agreements are increasingly relevant to business decision making, strategy and public relations. i) WTO Business have an interest to know what can be achieved by resorting to the WTO. We advise clients on whether measures comply with WTO commitments; and Dispute Settlement: we represent client before governments in the challenge or defence of a country s laws. Scope of coverage: not just liberalization of rules on goods: now cross-border trade in services, (including professional, financial, telecommunications and air transport services).

8 OVERVIEW Red Flags: - Your product or service is suddenly banned from entering a foreign market - Your competitor is receiving advantages that it is not entitled to. - The rules for getting access to a foreign market seem excessive or ambiguous. - Experiencing difficulty competing in foreign market or in Canada - Competitor s product in the foreign market is not subject to the same specifications as yours - Ability to supply services to a foreign market is restricted - Facing discriminatory tax treatments - Foreign investment laws require you to make certain undertakings that discriminate against foreign goods or services

9 OVERVIEW ii) Regional Free Trade Agreements Many countries are now negotiating bilateral free trade agreements. Canada is negotiating 6 (including South Korea). These agreements are very important to global sourcing strategies of clients. The proliferation of FTAs worldwide creates opportunities to optimize sourcing and manufacturing location decisions, and to service regional markets from single locations.

10 ITILG Investment Treaties and FTA Investment Chapters June 13, 2006

11 What are BITs or FIPAs Bilateral Treaty Promotion of Foreign Investments Reciprocal Protection for Investors Ensures a stable predictable environment for inward and outward flows of FDI Provides business with alternative recourse to domestic host legal system direct access to international arbitration

12 BIT Activity Statistical Trends From 300 BITs in 1990 to over 2400 today 1987 first BIT case under U.K /Sri Lanka BIT (ICSID) By April 1998 only 14 cases had been brought before ICSID involving BIT claims only two awards and two settlements had been issued Since late 1990s enormous increase in number of BIT cases Cumulative number of BIT cases up to at least 229 by end of before ICSID, - 67 before UNCITRAL - 27 before other arbitration forums Examples of Largest monetary awards to date: - Ceskoslovenská obchodní banka, A.S. (Czech Republic) v. The Slovak Republic (ICSID) US$ 820 M (December 2004) - CME Czech Republic B.V. (Netherlands) v. The Czech Republic (UNCITRAL) - US $270 M (March 2003) - CMS Gas Transmission Company (U.S) v. Argentina (ISCID) - US$ 133 million May 2005)

13 BIT Activity Known BIT Arbitrations (cumulative and newly instituted cases, by year- end 2005) *Source: UNCTAD

14 NAFTA Chapter 11 Investment Chapter NAFTA s Investment Chapter Chapter 11 NAFTA now in force for over a dozen years Cases commenced to date: 13 against Canada 15 against Mexico 16 against United States Other FTA Investment Chapters e.g. Canada-Chile, Canada-Costa Rica

15 Substantive Coverage BITS/FTA Investment Chapters General Principles and Definitions Standing as Investor Natural person possessing Canadian citizenship in Canada Enterprise incorporated in Canada Investments Broad definition any kind of asset Non-exhaustive list of examples including claims to money and intangible rights to undertake any economic or commercial activity Definition changed under Canada s new 2004 Model FIPA/BIT

16 Substantive Coverage BITS/FTA Investment Chapters Five Basic Obligations national treatment most favoured nation treatment fair and equitable treatment general concept without a precise definition expropriation and compensation mechanism for dispute settlement international arbitration

17 Substantive Coverage BITS/FTA Investment Chapters Key Element of BITS Investor has option International Arbitration - Institutional World Bank ICSID - Ad hoc under UNCITRAL Rules Domestic Courts Investors may sue host country governments for losses or damages arising out of a breach of the BIT

18 Canada s BITs In Force (First 5 based on OECD Model) Poland Barbados Armenia Russia Chile Costa Rica Czech and Slovak Ecuador Uruguay Argentina Egypt Hungary Venezuela (Remaining - NAFTA Light ) Philippines Ukraine Latvia Trinidad & Tobago Panama Thailand Romania Croatia Lebanon

19 Canada s New 2004 Model BIT Key Changes Definition of Investment narrowed Replaces previous open asset-based definition with a closed list of defined investments Definition of Returns and protections for returns of investors removed Clarification of MFN and fair and equitable treatment obligations Minimum standard Limits ability of Canadian investors to benefit from the host government s MFN obligations including potential to benefit from more favourable BITS negotiated by the host government with 3rd countries

20 Canada s New 2004 Model BIT Current Negotiations China Round of negotiations held in September 2004 in Beijing Follow-up round of negotiations was held in Ottawa on May 31 and June India Rounds of negotiations held in September 2004 and February 2005 in Delhi Peru 3 rd round of negotiations held in Ottawa/Lima by teleconference in 2005 Canada and Peru reported to have been near to finalization of BIT in May 2006

21 Examples of McCarthy BIT/NAFTA Chapter 11 Cases EnCana v. Ecuador (BIT) US $200 M claim denial of VAT refunds Bank of Nova Scotia v. Argentina (BIT) US $600 M claim plus - asymmetric pesification UPS v. Canada (NAFTA Chapter 11) US $160 M claim - anti-competitive and monopolistic practices of Canada Post Feldman v. Mexico (NAFTA Chapter 11) Judicial Review of US $1M arbitral tribunal award

22 ITILG Canada s International Trade Agreements June 13, 2006

23 Overview World Trade Organization - Forum for i) trade negotiations; and ii) settlement of disputes. - Comprehensive legal framework of legal obligations that member countries have implemented into domestic law. - Rules that 143 members apply to ensure unencumbered access for foreign goods and services. - Binding dispute settlement process to compel compliance with WTO rules. - Rules-based approach.

24 WTO Legal Framework - Single legal framework including several subsidiary agreements - WTO Agreements contain rules governing countries laws on Trade in Goods Agriculture Standards Subsidies Trade Related Investment measures Import and Export Controls State Trading Enterprises Aircraft Trade In Services Banking Insurance Telecommunications Transportation Intellectual property Patent protection Data protection - Government Procurement - Dispute Settlement - Enforcement compliance with WTO obligations - Binding domestic implementation of WTO Panel Decision - Remedies for non-compliance

25 WTO Legal Framework WTO Dispute Settlement: since January 1, 1995: 330 complaints notified to the WTO 89 Appellate Body and Panel Reports adopted 46 mutually agreed solutions 28 other settled or inactive cases presently 27 active panels compliance panels 12 Appellate Body and Panel Reports adopted 15 authorization of suspension of concessions presently 6 active panels

26 WTO Legal Framework Two Fundamental Principles: Most Favoured Nation Treatment Advantages/privileges granted by a foreign government to goods or services of one country must be given unconditionally to goods of another country. National Treatment Imported goods sold in a foreign country must receive as favorable treatment as that accorded to domestic products in that foreign country. Subject to exceptions.

27 WTO Legal Framework Canada Strong advocate of the WTO system dispute resolution - opening up / protecting export markets beef hormones (vs. EU) salmon (vs. Australia) asbestos (vs. EU) anti-dumping and countervail measures (vs. US) softwood lumber (vs. US) regional aircraft (vs. Brazil) genetically modified organisms (vs. EU) Auto-parts (vs. China)

28 WTO Legal Framework Canada Challenges to Canadian law and policy split-run magazines (US) term of patent protection (US) patent protection for pharmaceuticals (EU) automotive measures (Japan / EU) dairy import and export measures (US / New Zealand) regional aircraft (Brazil) measures re exports of wheat and treatment of imported grain (US) grain corn (US)

29 Ongoing Trade Negotiations The Sixth WTO Ministerial Conference was held in Hong Kong, China, from December 13 to 18, Liberalization in Agriculture Trade Facilitation Services

30 Representation of Clients Trade Negotiations - Monitor negotiations. - Protect and promote clients interests. Dispute Settlement - Identify Offending Measure. - Providing legal advice on compatibility of foreign laws with WTO commitments..- Bringing a case to the attention of the Government. - Providing industry assistance to government in providing facts, drafting submissions and pleading cases before WTO. - Protection and promoting clients interests through disputes and during domestic implementation of Panel results. Influence the process so your interests are protected.

31 ITILG Trade Remedies June 13, 2006

32 Overview of Trade Remedies Mechanisms designed to protect domestic production against imports anti-dumping countervail (anti-subsidization) safeguard measures Administration Canada Border Services Agency Canadian International Trade Tribunal Department of Finance

33 Anti-dumping/Countervail Key Concepts goods have been dumped/subsidized (CBSA) Canadian industry has been injured (CITT) the dumping has caused or threatens to cause injury (CITT) if missing any one of these elements, the case fails

34 The Dumping/Subsidy Calculation Dumping: goods sold into Canada at prices below the exporter s home-market selling price or below the exporter s cost of production plus an amount for profit remedy is an anti-dumping duty to offset amount of dumping Subsidy: a financial contribution by a government... that confers a benefit to persons engaged in the production, manufacture, growth, processing, purchase, distribution, transportation, sale, export or import of goods the subsidy must be specific in order to be subject to countervailing duty action limited to a particular enterprise or industry or group of industries, or prohibited (e.g., subsidy is contingent on export performance) remedy is a countervailing duty to offset amount of subsidization

35 Safeguard Measures increased imports into Canada causing or threatening serious injury to Canadian production (CITT) not necessary to demonstrate dumping or subsidization recommendation from CITT to Finance Canada Finance Canada must be lobbied remedy is imposition of surtax, quota or some combination China-specific safeguard (accession of China to WTO in 2001) market disruption inquiries trade diversion inquiries

36 Anti-dumping and Countervailing Investigation and Inquiry Process Canada Border Services Agency (CBSA) Canadian International Trade Tribunal (CITT) Property documented complaint 30 Days End of proceedings if insufficient evidence of dumping/subsidizing or injury, or if insufficient support Start of dumping or subsidizing investigation 90 Days Preliminary decision of dumping/subsidizing (Temporary duty imposed on imports) 90 Days Final decision of dumping/subsidizing Anti-dumping/countervailing duty imposed on dumped/subsidized imports Termination if no dumping/subsidizing or no injury Possibility of accepting undertakings and suspending investigation Termination if no dumping/subsidizing Start of injury inquiry 60 Days Preliminary decision of injury Injury inquiry continues 90 Days Public hearings 30 Days Final injury decision Injury Reimbursement of temporary duty Termination of proceedings No injury Potential Public Interest Inquiry

37 Current Countervail Findings Historically very few CVD complaints or findings 22 cases since implementation of SIMA (vs. approx. 140 antidumping) Approximately half have been successful Products currently covered - hot-rolled steel - steel fasteners - refined sugar - steel wire - laminate flooring

38 Current Anti-dumping Findings Findings currently in place cover approximately 25 products Many involve steel or agricultural products Other manufactured products - bicycles - steel fasteners - cigarette tubes - x-ray contrast media - footwear - laminate flooring - refined sugar - wood slats (for blinds) - xanthates

39 China Safeguard Measures Canadian complaints to date apparel tobacco household furniture barbeques - October 2005 recommendation of 15% surtax for three year period - Federal Government declined to follow

40 Global Safeguard Measures Re cent Global Safeguard decisions certain steel goods (July 2002) bicycles (September 2005) - recommended surtax of 30%, 25%, and 20% for first, second and third years - Federal Government declined to follow