NAFTA AT 21Successes, Controversies, and Lessons Learned:Canadian Perspective

ABA Section of International Law, Fall MeetingOctober 22, 2015

Practice Experience

Knowledge

Education

We Are Now In The Future

Leadership

Calm

Compliance

Successes in Canada

∞ Increased Transparency – some published Advance Customs Rulings by the CBSA (but not like US)

∞ CBSA has ben publishing/revising D-Memorandum and Customs Notices

∞ Access to Justice – Government Procurement Bid Challenges – Simplified Procedure at CITT

Customs

Transparency

Access to Justice

Successes in Canada – Duty Refunds on Overpayments

∞ January 19, 2015 Customs Notice 13-001 “Treatment of Downward Price Adjustments in Value for Duty Calculations”

∞ Follows Hudson’s Bay Company vs President of the CBSA decision

∞ CDN importers (NR importers) may be eligible for a refund of customs duty if price of goods adjusted downward after importation

∞ NOTE: 48(5)(c) of Customs Act still applies

Customs

Compliance

Valuation

Controversies – NAFTA Rules of Origin

∞ Many Canadian importers claim MFN instead of NAFTA

∞ Documentation requirements are

burdensome

∞ NAFTA verifications by US CBP are

considered to be intrusive

∞ NAFTA limits ability to change supply

sourcing

∞ Internal communications within

manufacturers

Customs Law

Knowledge

Experience

Controversies – Rules of Origin in Antidumping Context∞ Havelock Metal Products Inc. v. President

of the CBSA; Ideal Roofing Company Limited v. President of the CBSA

∞ Goods (screws) further manufactured in USA (over 60% value in USA)

∞ Potentially met NAFTA rules of origin (UST)

∞ Met MFN rule of origin (USA origin)∞ CITT used dictionary definition for

“originating”∞ CITT determined it was inappropriate to

use NAFTA Regs. or MFN Regs.

Customs Law

Experience

Settlement∞ Canada does not have a perfect win record∞ Clayton/Bilcon of Delaware Inc. v. Government of

Canada

∞ Against Canada/Government of Nova Scotia

∞ Re proposal to operate a quarry and a marine terminal in

Nova Scotia at Whites Point in Digby Neck

∞ Tribunal found breaches of NAFTA Articles 1102 and 1105

∞ Deferred compensation determination

∞ AbitibiBowater Inc. v. Government of Canada

∞ Against Canada/Government of Newfoundland/Labrador

∞ Consent Award: December 15, 2010

∞ Payment $130 Million

Customs Law

Experience

Controversies – Investor State Dispute Settlement

∞ Bilcon statement by Tribunal:

∞ “It may bear reiterating, therefore, the Tribunal’s view that under NAFTA, lawmakers in Canada and the other NAFTA parties can set environmental standards as demanding and broad as they wish and can vest in various administrative bodies whatever mandates they wish. Errors, even substantial errors, in applying national laws do not generally, let alone automatically, rise to the level of international responsibility vis-à-vis foreign investors. The trigger for international responsibility in this particular case was the very specific set of facts that were presented, tested and established through an extensive litigation process.”

Investment Disputes

Experience

Lessons Learned – Trusted Traveller and Border Security

∞ February 4, 2011 – Beyond the Border Initiative∞ The Declaration established a new long-term

partnership built upon a perimeter approach to security and economic competitiveness

∞ July 21, 2014 – trusted traveler and trusted trader enhancements

∞ NEXUS pass request for reconsideration process

Risk Management

Compliance

Security

Lessons Learned – TPP Changes to NAFTA

∞ Trans-Pacific Partnership Agreement signed on October 6, 2015

∞ Updates rules of origin∞ Updates autos rules of origin∞ Updates dairy market access∞ Updates ISDS rules∞ Updates government procurement rules∞ Updates IP rules∞ New SME Chapter∞ New Electronic Commerce Chapter

Risk Management

Compliance

Practical

Lessons Not Learned – Complacency

∞ NAFTA has been law for 21 years – some importers and exporters are complacent

∞ Some importers and exporters do not have internal controls

∞ Some importers/exporters do not keep proper documentation

∞ Often document information cannot be matched∞ Some importers/exporters do not consider questions of

origin ∞ Some importers/exporters do not determine proper tariff

classifications∞ Some importers/exporters do not ask valuation

questions

Risk Management

Compliance

Practical

Cyndee Todgham Cherniak

cyndee@lexsage.comMobile: (416) 389-8999

The Gooderham "Flatiron" Building 49 Wellington Street East , Suite 501Toronto, Ontario  M5E 1C9

Phone: 416-307-4168/416-760-8999Main Office: 647-290-4249Fax: 416-760-899