Changing Trade Winds How Regional Trade Pacts and Other Trade Developments Are Impacting the Americas

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2 Changing Trade Winds How Regional Trade Pacts and Other Trade Developments Are Impacting the Americas PANEL DISCUSSION 10:30 12:00 MODERATOR: Edward Lebow, Counsel, Haynes and Boone, LLP PANELISTS: Jesus Colunga, Associate, Basham, Ringe y Correa, S.C. Jose Evenor Taboada, Chairman, Consortium Legal Nicaragua Uriel Mendieta, Partner, Hunton & Williams LLP Pierre Marc Johnson, Counsel, Lavery, de Billy

3 Changing Trade Winds How Regional Trade Pacts and Other Trade Developments Are Impacting the Americas Jesus Colunga, Associate, Basham, Ringe y Correa, S.C.

39 Changing Trade Winds How Regional Trade Pacts and Other Trade Developments Are Impacting the Americas Jose Evenor Taboada, Chairman, Consortium Legal Nicaragua

40 Geographic Region: 501,182 km2 This is Central America Population: (2015) millions of inhabitants. Nominal GDP : (2014) US$ Billion Trade: (2015) Imports: US$ 50.5 Billion Exports: US$ 21.6 Billion Source: The World Factbook ( SIECA TRADE MONITOR FOR CENTRAL AMERICA (THIRD TRIMESTER, 2015)

Indicators of Central America Indicators of the Region

2014) 375.8 GDP growth (constant prices in %) (est.

2014) (3, 300-19,000) Total Population (millions of

53 Labor Force (millions of persons) (est. 2014) 17.

41 Indicators of Central America Indicators of the Region Totals and % GDP at current prices (US$ Billion) (est. 2014) GDP growth (constant prices in %) (est. 2014) 3.78 GDP per capita (in US$) (est. 2014) (3, ,000) Total Population (millions of inhabitants) (est. 2015) Labor Force (millions of persons) (est. 2014) 17.6 FDI (US$ Billion) (est. 2014) 10.4 Source: 1. World Bank Group ( 2. The World Factbook ( 3. United Nations Economic Commission for Latin America and the Caribbean - ECLAC -

42 EU and C.A DR- CAFTA Chile and C.A Panama and C.A. Domin. Rep. and C.A C.A Mexico and C.A Northern Triangle Colombia AELC-C.A. Canada Singapore Peru Taiwan Mexico Unnited States Venezuela Colombia CARiCOM FREE TRADE AGREEMENT OF THE REGION Country Association Agreements Free Trade Agreements by Region Bilateral Free Trade Agreements Partial Scope Agreements GT ES HN NI CR PA

6 Billion Intra-regional Exports increased by 2.0% Extra-regional Exports decreased by 10.

43 EXPORTS IN THE CENTRAL AMERICAN REGION Trade Region Intra-regional IMPORTS IN THE CENTRAL AMERICAN REGION Intra-regional imports Extra-regional Exports 68% Extra-regional Imports Intra-regional Exports Total exports: US$ 21.6 Billion Intra-regional Exports increased by 2.0% Extra-regional Exports decreased by 10.5% Intra-regional Imports Total imports of goods: US$ 50.5 Billion Intra-regional imports decreased by 2.2% Extra-regional imports decreased by 5.7%. SIECA TRADE MONITOR FOR CENTRAL AMERICA (THIRD TRIMESTER, 2015)

Free Trade Agreements (FTAs): Objectives FTAs

Consolidation of markets Harmonization of

Improvement of competitivity in exports Increase

prices Generation of jobs New technologies and

44 Free Trade Agreements (FTAs): Objectives FTAs pursue: Prosperity and Poverty reduction Consolidation of markets Harmonization of regulations Development of production chains Improvement of competitivity in exports Increase in the efficiency of investments Reduction of prices Generation of jobs New technologies and education Environmental regulation Institutional improvement Dr. Aldo Defilippi. Vice-President of AACCLA. Business Magazine No. 93 Year 18 Sept-Oct Free Trade Agreements Conference

45 Central American Free Trade Agreements CACM DR-CAFTA Opening to members markets Promotion of regional integration Creation of free trade zones WHAT DO THEY HAVE IN COMMON? Trade extension and diversification between the parties Application of rules of origin to products of origin Facilitation of cross-border movement of goods and services Creation of procedures for the application and compliance with the Treaties as well as for dispute settlements Tax benefits CA-EU Source: SIECA. Status of Economic Integration in Central America. March,

46 Central American Free Trade Agreements TREATIES CACM DR-CAFTA CA-EU CORE PILLARS 1-Commercial Opening 1-Commercial Opening 2-Cooperation 1-Commercial Opening 2-Cooperation 3- Political Dialogue

47 Cooperation: Rule of law Good governance Democracy Migration Equality of opportunities and equality of gender Reduction of poverty and social cohesion Human Rights Promotion and protection of the rights of communities and indigenous people

48 The political dialogue includes: Good governance on Tax matters Migration Environment Disarmament Fight against terrorism Safety

49 Institutional effects of the implementation of treaties in Central America The following laws were passed or amended: GUATEMALA: Government Procurement, Intellectual Property, Copyright and Trademarks, Telecommunications, Arbitration, Briberies, among others. EL SALVADOR: Customs, Customs Fractions, Trademarks and other Signs, Animal and Vegetable Health, Telecommunications, among others. HONDURAS: Intellectual Property, Sanitary and Phytosanitary Regimes, Copyrights and Related Rights. NICARAGUA: Bribery felonies, Foreign Trade Felonies, Trademarks and Patents, Copyrights and Protection of Satellite Signals. COSTA RICA: Protection to Local Representatives of Foreign Entities, Telecommunications, Criminal Code, Insurance Markets, Trademarks and Other Signs, Geographical indications and Designations of origin, Access to textiles. Source: SP

Arbitration in Central America Arbitrations: Year 2014: Costa Rica vs. El Salvador Treatment to products of origin from Costa Rica Year 2013: Guatemala vs.

50 Arbitration in Central America Arbitrations: Year 2014: Costa Rica vs. El Salvador Treatment to products of origin from Costa Rica Year 2013: Guatemala vs. USA The Arbitral Procedure was suspended by the agreement on an Execution Plan for improving labor legislation as the USA had requested Source: SIECA.

51 Evaluation of the implementation of the treaties in Central America CENTRAL AMERICA COMMON MARKET: ACHIEVEMENTS A great number of Central American enterprises operate directly by the exchange of products Advancement of Commercial Regulation through Reolutions of the Central American Econonomic Integration Secretariat (COMIECO) Creation of Dispute Settlement mechanisms Creation of the Central American Uniform Customs Code (CAUCA) and its Regulation (RECAUCA) Source: pág 8-9, 19 pág 106 :

Evaluation of the implementation of the treaties in Central America DR-CAFTA: Achievements Central American commercial growth from US$ 2 thousand millions to US$ 14,5 thousand millions in the region

52 Evaluation of the implementation of the treaties in Central America DR-CAFTA: Achievements Central American commercial growth from US$ 2 thousand millions to US$ 14,5 thousand millions in the region DR-CAFTA: Challenges Greater diversification in the agriculture and agro-export sectors. Reduce the condition of net food importers FDI has shown a growing dynamism Creation of Jobs Enactment - Amendment of Laws More investment in agriculture: infrastructure, techhnology, market information and financing. Greater compliance with the implementation of Laws related to labor and environmental protection. Improvement of the investment climate in member states. Source: AMCHAM Nicaragua Busineess Magazine Edition No. 93 Year 18, September October Dr. Mario Arana Results up to date.

53 Central America: income growth from FDI Central America: Growth in income from Foreign Direct Invest (by recipient states) (in millions of dollars and percentage variations) a Absolute Variation (Amount) Relative Variation (percentages) Central America Costa Rica El Salvador Guatemala Honduras Nicaragua Panamá a. Average Source: United Nations Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official figures and estimates for May Growth in income from Foreing Direct Invest (Central America) United Nations Economic Commission for Latin America and the Caribbean - ECLAC. Foreign Direct Investment in Latin America and the Caribbean Chapter I: Overview of foreign direct investment in Latin America and the Caribbean Page 38

Evaluation of the implementation of the treaties in Central America CA-EU: Achievements Elimination of most import tariffs Improved access to government procurement, services and investment markets

54 Evaluation of the implementation of the treaties in Central America CA-EU: Achievements Elimination of most import tariffs Improved access to government procurement, services and investment markets Better conditions for trade Strengthening of regional integration Support for sustainable development, including consultation to civil society CA-EU: Challenges Creation of a Unified Tariff Document Harmonization of customs procedures and requirements Improvement of infrastructure and personnel conditions at theborders Customs modernization to correspond with the speed that commerce develops including technology systems Creation of regulations that include sanitary and phytosanitary measures Source: The Economist August-September Year 6 80, Saavedra, Maria. Velasco, Sandra. Regional Customs Union against the clock

55 Challenges To improve the business climate, to strengthten institutionally as nations To move forward with the regional integration and coordination To diversify national production to be exported by each member state Education To reduce the number of necessary documentation by exchanging information between agencies, using technology and standardizing formats To speed up control systems with risk analysis and inspections performed simultaneously To improve telematic systems for the transmission of informatinon between customs authorities To allow anticipated dispatch To continue improving the systems and services through unified offices To release the obligation of customs agents High Standards Source: Doing Business en Centroamerica y Republica Dominicana pag

Other treaties that may impact Central America: TPP Trans-Pacific Partnership Agreement (TPP) which has the purpose of creating a platform for potential

countries It was formally executed on February 4, 2016 The Trans-Pacific Strategic Economic Partnership Agreement (P4) is its direct background TPP has 30

e-commerce; State purchases; Intellectual property; Labor aspects; Environment; Dispute settlement; among others.

56 Other treaties that may impact Central America: TPP Trans-Pacific Partnership Agreement (TPP) which has the purpose of creating a platform for potential economic integration in the region of Asia-Pacific It will be the foundation for a future Free Trade Area of the Asia-Pacific (FTAAP) It is formed by 12 countries It was formally executed on February 4, 2016 The Trans-Pacific Strategic Economic Partnership Agreement (P4) is its direct background TPP has 30 chapters that include: Commerce of goods and customs; Sanitary and phytosanitary measures; Corrective comercial measures; Investment; services; e-commerce; State purchases; Intellectual property; Labor aspects; Environment; Dispute settlement; among others. Source: Integration System on Foreign Trade ( Bartesaghi, Ignacio, (2015) TPP effectts in Asia- Pacific and Latin America, Foreign Affairs Latin America Vol 15. Available at:

TPP and its possible impact in Central America As a partnership: Member states together represent 11% of world population.

varied economic sectors Have signed many bilateral agreements between them as well as other agreements in which they negotiate WTO Plus matters Impact on Central

few because their main export market is the USA Difficulty to overcome underdevelopment, allowing even more competitivity for the production with existing added

57 TPP and its possible impact in Central America As a partnership: Member states together represent 11% of world population. They represent 40 % of GDP 23 % of world exports 27 % of world imports 32% of FDI income 42 % of FDIs Present in several regional integration processes in the most varied economic sectors Have signed many bilateral agreements between them as well as other agreements in which they negotiate WTO Plus matters Impact on Central America As a competitor, because the export of most manufactured products are to the USA If Central America joined the partnership, exports to Asia would only be a few because their main export market is the USA Difficulty to overcome underdevelopment, allowing even more competitivity for the production with existing added value Source: Integration System on Foreign Trade ( Bartesaghi, Ignacio, (2015) TPP effects in Asia the Pacific and Latin America, Foreign Affairs Latin America Vol 15. Available at:

58 Thank You

59 Changing Trade Winds How Regional Trade Pacts and Other Trade Developments Are Impacting the Americas Key Trade Agreements in South America Uriel Mendieta, Partner, Hunton & Williams LLP

60 Changing Trade Winds How Regional Trade Pacts and Other Trade Developments Are Impacting the Americas Pierre Marc Johnson, Counsel, Lavery, de Billy

61 PRESENTED AT HOUSTON, TEXAS, THE 26 TH OF FEBRUARY 2016 Comprehensive Economic and Trade Agreement (CETA)

62 62 Canada/EU Negociations started in 2009 Deal struck late 2014 Legal «scrub» and translations ongoing, then ratification process

63 Basis for an agreement between Canada & EU Trading Rule of Law Bilingualism Civil & Common Law Role of the Government 63

64 Assumptions Free trade is good Canada s interest is economic & political EU s interest is economic, political & the value of a precedent We are not waiting for the WTO 64

65 The Actors - European Union Largest trading entity in the world (over 23% of world GDP in 2013) Population = millions (2014) GDP = $18, billions (2014) Exports/GDP = 42% (2014) Imports/GDP= 39.3% (2014) > Source: World Bank Data 65

66 66 The Actors - Canada Population = million (2014) GDP = $1, billion (2014) Exports / GDP = 31.6 % (2014) Imports / GDP = 32.5 % (2014) > Source : World Bank Data Canada's Main exports of Goods (2013) % goes to EU: > Resources (e.g. energy, ores, metal & minerals) % > Industrial Goods (e.g. chemicals, machinery, vehicles) % > Consumer Goods % Forestry - 7% > Agri-foods and Fish - 5.8% > Electronic/electrical equipment - 4.7% Source : Global Affairs Canada

67 CETA - Overview Goods (Abolition of Tariffs, and dealing with RoOs, Certification, Reduction of TBTs) Public sector Procurements Cross-Border Trade in Services (negative list, mobility of people) Promotion, Protection and Stability of Investment Environment Various committees to ease trade 67

68 Anticipated Impacts 20% Increase in bilateral trade > fluidity of trade of Goods including Agri-food > Geographic Indications Protection > Development of new Technologies > Manpower Mobility > Pharmaceuticals patent life 68

69 69 Abolition of Tariffs EU Canada Upon entry into force 98% 98.4% After 7 years 99% 98.8% The rest is agri-foods and agricultural goods

70 70 Public Procurements In Canada : > Federal Government > Provinces and Territories > Municipalities > State-owned Enterprises > Hospitals > Schools In EU : > Main European Institutions > Governments of all 28 Member States > Thousands of regional, municipal and local institutions (schools, hospitals, municipalities, etc.)

71 Cross-Border Trade in Services Canada and the EU already enjoy significant cross-border trade in services CETA : > will make the markets more open, transparent and predictable coverings all services unless specifically excluded e.g. health care, public education and other social services Service sector in Canada = 70 % of Canada s GDP Canada s cross-boarder trade in services in 2014 : > Imports (worldwide): US$ 107 billions > Exports (worldwide): US$ 86 billions Source : International Trade Center; World Bank Data 71

72 72 Financial Services Abolition of restrictions for the purchase by the consumer of financial services and insurance products Solicitation (e.g. by insurance companies) not covered under CETA

73 73 Investment All sectors are liberalized except for telecommunications and culture Review (Investment Canada Act): threshold raised to CA $ 1.5 billion ISDS

74 What's next? Ratification Implementation (customs, immigration, call for tenders, etc.) Implementation of Committee Activities > Joint Committee > Trade in Goods > Agriculture > Wines and Spirits > Pharmaceuticals 74

75 Goings On More undergoing trade and investment agreement negotiations... TPP TIPP 75

76 Trans-Pacific Partnership Australia, Brunei Darussalam, Chile, Canada, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, United States and Vietnam. Over 800 million consumers - Combined GDP of US$28.1 trillion in 2012 (39.0% of World GDP) U.S.-TPP Trade: $1.8 trillion in goods and private services in 2012 (37% of total)- up 46% in the last 3 years ( ) Top U.S. Markets in TPP: Canada ($354 billion), Mexico ($243 billion), Japan ($116 billion) U.S. Exports to TPP Countries > Goods : $689.1 billion (45% of total U.S. goods exports) > Agricultural Exports: $59.2 billion in 2012 > Services : $172 billion in

77 77 TTIP Transatlantic Trade and Investment Partnership

78 78 Our offices Montreal 1 Place Ville-Marie Suite 4000 Montreal, Quebec H3B 4M4 Tel.: Fax: Quebec 925 Grande-Allée West Suite 5000 Quebec City, Quebec G1S 1C1 Tel.: Fax: Sherbrooke Cité du Parc 95 Jacques-Cartier Blvd. South Suite 200 Sherbrooke, Quebec J1J 2Z3 Tel.: Fax: Trois-Rivières 1500 Royale St. Suite 360 Trois-Rivières, Quebec G9A 6E6 Tel.: Fax: Ottawa Suite Albert Street Ottawa, Ontario K1R 7X7 Tel.: Fax: LAVERY.CA *** All rights reserved Any us of this text is prohibited without the written consent of Lavery, de Billy. This text does not constitute a legal opinion. No action should be based solely on the information contained therein.

79 Changing Trade Winds How Regional Trade Pacts and Other Trade Developments Are Impacting the Americas Edward Lebow, Counsel, Haynes and Boone, LLP

80 HAYNES AND BOONE, LLP The Trans-Pacific Partnership Sailing Into Strong Headwinds in the USA 2015 Haynes and Boone, LLP 2015 Haynes and Boone, LLP 80

81 The TPP Is Very Large Total TPP Population: 800 million TPP Population As A Percentage Of World: 11.4% 24% of Global Exports TPP GDP (including US): $27.64 Trillion 40% of Global GDP Current Trade Among TPP Countries: $1.5 Trillion in Goods $242 Billion in Services 2015 Haynes and Boone, LLP Haynes and Boone, LLP

82 Trade Agreements Are Hard to Sell Harmed Interests Are Focused and Here Now Beneficiaries May Not Yet Exist Benefits Are Diffuse Polarized Politics and Gerrymandered Districts Empower Extreme Voices Data Show Increasing Trade Deficits 2015 Haynes and Boone, LLP 2015 Haynes and Boone, LLP

83 Trade Agreements Are Easy Targets 2015 Haynes and Boone, LLP 2015 Haynes and Boone, LLP 83

84 And Not Just on the US Side of the Border 2015 Haynes and Boone, LLP 2015 Haynes and Boone, LLP 84

85 Aggregate US Trade 2015 Haynes and Boone, LLP

86 US Trade Deficit 2015 Haynes and Boone, LLP

87 US Trade Deficit as % of GDP 2015 Haynes and Boone, LLP

88 US NAFTA DEFICIT 2015 Haynes and Boone, LLP

89 Opposition to TPP from the Left Environmental Labor (e.g. HWM Ranking Member Sandy Levin) Insufficient Mechanisms for Enforcement: Vietnam, Malaysia and Mexico Investor/State Arbitration Provisions Tufts and Other Studies Denying Macro Benefits Bernie and Hillary 2015 Haynes and Boone, LLP Haynes and Boone, LLP

90 And from the Right Insufficient Patent and Data Exclusivity Terms Tobacco Excluded from Arbitration Mechanism Banking Locked Out from Prohibition on Data Localization Trump, Economic Nationalists and Nativists Reflexive Opposition to Obama Rubio Has Been in Favor, but Lately in Hiding 2015 Haynes and Boone, LLP Haynes and Boone, LLP

91 Complex Agreement and Many Parties Means Compromise TPP Exceeds 2000 Pages 29 Chapters Not Your Father s Trade Agreement Tariff Reductions and National Treatment Rules of Origin Customs Administration Sanitary and Phytosanitary Measures Cross-Border Trade in Services Financial Services Government Procurement E-Commerce, Internet State-Owned Enterprises Competition, IP, Labor, Environment, Etc Haynes and Boone, LLP Haynes and Boone, LLP

92 Negotiators Made Several Improvements Investor/State Arbitration Three-Year Statute of Limitations Public Pleadings and Hearings Restrictions on Forum Shopping Early and Expedited Review Tribunals May Retain Experts Settlement Review of Awards Precedent Labor ILO Standards Collective Bargaining Elimination of Forced Labor and Child Labor Penalties for Non-Compliance 2015 Haynes and Boone, LLP Haynes and Boone, LLP

93 Realistic Trade Compromises Japan Rice Canada Dairy US Sugar Auto Local Content Many Countries, Many Issues, Many Compromises Easy for Critics to Focus on One Issue and Argue Sub-Optimal Result 2015 Haynes and Boone, LLP Haynes and Boone, LLP

2016 Americas Forum ABA Section of International Law

2016 Americas Forum ABA Section of International Law Mandarin Oriental Miami March 1, 2016 CAFTA v. NAFTA or the TPP? Which is the better deal? Peter Quinter, Attorney Customs & International Trade Law