CANADA ECONOMICS

TPP

Global Affairs Canada. January 29, 2018. Minister Champagne highlights benefits of Comprehensive and Progressive Agreement for Trans-Pacific Partnership

Ottawa, Ontario - Diversifying Canada’s trade relationship with the fast-growing Asia-Pacific region is central to a progressive trade agenda and to the good, well-paying middle-class jobs that it will create.

On January 23, 2018, the Honourable François-Philippe Champagne, Minister of International Trade, announced that Canada and 10 members of the Trans-Pacific Partnership had concluded discussions on a new Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). From making machinery, equipment and business services more competitive, to protecting and preserving Canada’s unique culture, the CPTPP will benefit all Canadians by providing Canadian businesses with preferential market access to what will be one of the largest trading blocs in the world. The CPTPP will benefit a wide range of sectors and industries across Canada, from agriculture, automobiles, beef and seafood to forestry products.

Sector-based fact sheets and frequently asked questions (FAQs) are now available on the Global Affairs Canada website to help explain why the agreement is important to Canada and Canadian workers and how key industries will benefit. The CPTPP will help Canadian businesses create good, middle-class jobs, including in the automotive, cultural, intellectual property, broad labour and agricultural sectors, to name a few.

Beginning in November 2015, the Government of Canada conducted extensive consultations with Canadians on the TPP and a potential CPTPP. The consultations included interactions with more than 650 stakeholders from across Canada, including businesses, associations, unions, farmers, students, Indigenous groups, civil society organizations and academics. The consultations helped inform the government’s negotiating position.

In addition to listening to the views of a broad range of stakeholders in the lead-up to the CPTPP, the Government of Canada has continued to articulate the significant benefits that the agreement will deliver by holding a series of round tables with industry leaders.


Quotes

“Our government stood up for Canadian interests, and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership meets our objectives of creating and sustaining growth, prosperity and well-paying middle-class jobs today and for generations to come. We wanted a good deal, and that’s what we got. By securing key concessions on intellectual property and culture, making improvements on automotive-industry issues, and preserving and protecting key labour rights, we delivered important gains for Canada and for Canadians.”

- François-Philippe Champagne, Minister of International Trade

Quick Facts

• The CPTPP will be one of the largest trading blocs in the world, with 11 member countries. CPTPP countries represent 495 million people and have a combined GDP of $13.5 trillion, or 13.5% of global GDP.
• Canadian imports from and exports to the 10 other CPTPP countries accounted, respectively, for $72.5 billion and $31.5 billion in 2016.
• The CPTPP will also mean that Canada will have a free trade agreement with all of the G7 countries.

FULL DOCUMENT: https://www.canada.ca/en/global-affairs/news/2018/01/minister_champagnehighlightsbenefitsofcomprehensiveandprogressiv.html

NAFTA

Global Affairs Canada. January 30, 2018. Foreign Affairs Minister to Speak at Council on Foreign Relations in New York

The Honourable Chrystia Freeland, Canada’s Minister of Foreign Affairs, will participate in an armchair discussion on Canada-U.S. Relations. The event will be hosted by the Council on Foreign Relations.

FULL DOCUMENT: https://www.canada.ca/en/global-affairs/news/2018/01/foreign_affairs_ministertospeakatcouncilonforeignrelationsinnewy0.html

The Globe and Mail. 30 Jan 2018. Lighthizer rejects Canada’s NAFTA proposal. Auto-content pitch sharply criticized by the U.S. Trade Representative
ADRIAN MORROW, MONTREAL
GREG KEENAN, TORONTO

The Trump administration is pouring cold water on Canada’s proposal for breaking the logjam over crucial auto-content requirements in the renegotiation of NAFTA – but is willing to keep talking.

United States Trade Representative Robert Lighthizer shredded Ottawa’s proposed compromise on autos, arguing it would lead to less vehicle content made in North America and cause job losses in both Canada and the United States.

He also slammed Canada for its “massive attack” on U.S. trade laws in a sweeping World Trade Organization case filed earlier this month and said his country’s deficit in the trade of goods with its northern neighbour is seven times greater than the U.S. government has previously calculated.

But on the final day of the sixth round of talks on renegotiating the North American freetrade agreement, Mr. Lighthizer credited Canada for finally offering to deal on his top NAFTA demands and said he hoped there would be progress toward a revised pact over the next month.

“We finally began to discuss some of the core issues. So this round was a step forward, but we are progressing very slowly,” he said at a joint press conference with Canadian Foreign Minister Chrystia Freeland and Mexican Economy Minister Ildefonso Guajardo Monday. “We will go where these negotiations take us.”

In a later briefing for reporters, Mr. Lighthizer said Canada’s willingness to compromise was “a reason for guarded optimism, but you know, I’m never really that optimistic.”

The three sides will reconvene in Mexico City in late February for a seventh round of talks; Ms. Freeland said a further session would be scheduled for April in Washington. The three countries are also progressing on less contentious matters, concluding a deal to add anti-corruption language to NAFTA and moving close to agreement on telecommunications, food safety and customs chapters.

The Trudeau government, which for months had refused to give any ground on Mr. Lighthizer’s toughest protectionist demands, switched strategies for the Montreal talks in hopes of breaking the bargaining gridlock. In addition to the auto issue, Canada also offered compromises on Chapter 11 – a mechanism that allows corporations to sue governments in front of special trade panels – and on a process for amending NAFTA in future.

Canada’s auto pitch revolved around changing the way North American content requirements are calculated on vehicles made in the NAFTA zone to include virtually everything, most importantly software development and new technologies for autonomous vehicles. The proposal would also allow auto manufacturers to receive credits toward their content requirement for building new assembly plants and expanding existing ones. Ottawa hoped to persuade Washington to back off its demand that all vehicles made in Canada and Mexico contain 50 per cent U.S. content.

But Mr. Lighthizer argued that adopting Canada’s plan would simply allow auto makers to fulfill their North American content requirement with work they are already doing in the NAFTA zone – such as marketing, research and sales – while moving manufacturing jobs overseas.

Ms. Freeland acknowledged that autos were currently the toughest sticking point in the deal, but vowed to find another way to break the impasse.

“That is a core issue. Possibly the most important and the hardest. We have been working really, really hard to understand what our counterparties are looking for,” she said.

Parts of the Canadian proposals are backed by the auto industry, including Fiat Chrysler Automobiles NV chief executive officer Sergio Marchionne, who said last week that the Canadian proposals could provide a path toward a settlement .

“The best way to move autos forward is for [the U.S. Trade Representative ] to do what Canada and Mexico have committed themselves to over the past few months and that is meet with industry directly, which [the U.S.] hasn’t done,” Automotive Parts Manufacturers Association of Canada president Flavio Volpe said Monday after listening to the statements by the three politicians.

Mr. Lighthizer took aim at Canada’s goods trade surplus with the United States, arguing it is $87-billion and not the $12.1billion his own office has previously calculated. He said the previous calculation counted goods transiting through the United States en route to Canada as American exports.

He also slammed Ottawa’s WTO case, which attacks the United States’ system of slapping punitive tariffs on imports it deems are unfairly subsidized – ranging from softwood lumber to Chinese steel. Mr. Lighthizer said such an action only proved that his desire to do away with binding dispute resolution was warranted.

Ms. Freeland hinted that she was willing to strike a bargain to withdraw the case.

“I have a very clear response and a clear offer, which is: Let’s sit down and let’s negotiate a softwood lumber deal,” she said. “I’m happy to start this afternoon.”

The Globe and Mail. 30 Jan 2018. Ottawa pushes back against NAFTA ruling. Department of Justice lawyer says arbitration panel overstepped its jurisdiction with award
SHAWN McCARTHY

This case makes it clear Chapter 11 jeopardizes Canada’s ability to enforce our own regulations. 

CATHERINE ABREU EAST COAST ENVIRONMENTAL LAW ASSOCIATION BOARD MEMBER

Lawyers representing the federal government were in court on Monday arguing to quash a $500-million NAFTA arbitration award to an American company in a case that highlights the ability of foreign investors to challenge Canada’s environmental approvals process under the North American free-trade agreement.

In the federal court hearing, Department of Justice lawyer Roger Flaim said the three-person NAFTA arbitration panel overstepped its jurisdiction when it concluded a federalprovincial review panel had discriminated against Bilcon of Delaware Inc. and recommended against approving the quarry it planned to build on Nova Scotia’s Digby Neck.

The NAFTA arbitrators found the review panel did not follow Canadian law during the proceedings, a determination that would properly be made in domestic courts, Mr. Flaim argued. Bilcon lawyers are scheduled to make their arguments defending the NAFTA arbitrators’ decision on Tuesday.

The court hearing came as Liberal Foreign Affairs Minister Chrystia Freeland met her American and Mexican counterparts in Montreal for a session on NAFTA renegotiation. Canada is proposing an improved chapter on investor-state disputes that Ottawa says would create more experienced and professional arbitration panels that would be less likely to exceed their authority.

American negotiators have indicated the United States wants to opt out of the Chapter 11 investor-state regime, but Ottawa is proposing to keep it in place for Canada and Mexico, while not allowing American companies to seek redress in this country or Mexico unless the United States is fully committed to the system, The Globe and Mail’s Adrian Morrow reported on Monday.

Environmental groups – which were granted intervenor status in the federal court hearing on Monday – said the Bilcon case demonstrates why Canada should scrap Chapter 11 altogether, rather than trying to improve it.

“Being able to regulate our own environmental impacts is essential to Canadians wellbeing and way of life, so anything that jeopardizes that is totally out of step with our values,” Catherine Abreu, a board member with East Coast Environmental Law association, said outside the courtroom. “And this case makes it clear Chapter 11 jeopardizes Canada’s ability to enforce our own regulations.”

Even if Federal Court Justice Anne Mactavish overturns the NAFTA arbitration award, American corporations continue to have access to a route for challenging Canadian environmental regulations that is unavailable to domestic companies, said Gretchen Fitzgerald, director of the Atlantic branch of the Sierra Club Canada Foundation.

Canada has lost several Chapter 11 suits and more than $200million to claimants, leaving critics to question Ottawa’s insistence on maintaining the so-called investor-state dispute settlement mechanism. However, Canadian resource companies are major investors in developing countries and Ottawa has championed such protections in all its trade-and-investment agreements.

In the Bilcon case, the federal-provincial review panel concluded that a quarry and marine terminal would cause adverse environmental impacts but was also not in keeping with “core community values” of the people who lived on the rustic Digby Neck, a spit of land jutting into the Bay of Fundy.

The NAFTA arbitrators seized on the panel’s use of “core community values,” and said such concept was nowhere included in federal or provincial environmental assessment regulations, which do, however, require assessment of social-economic and cultural issues.

However, Mr. Flaim argued the NAFTA chapter only guarantees companies that they will be granted a minimum standard of treatment that is customary under international laws. That protection does not permit arbitrators to assess whether domestic laws are properly enforced.

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LGCJ.: