Importers' and Exporters'
Strategic Use of International Trade
and Investment Agreements
John W. Boscariol
jboscariol@mccarthy.ca
Day 2
January 24, 2007
12th Annual
Customs Compliance and Supply Chain Security
Using Regulations to Your Company's Best Advantage
Conference: January 23 and 24, 2007
Overview
• international trade agreements
• World Trade Organization agreements
• North American Free Trade Agreement
• foreign investment protection
agreements
• ongoing negotiations
• role in strategic decision-making process
John W. Boscariol, McCarthy Tétrault LLP, International Trade and Investment Law Group
Slide 1
International Trade Agreements
• Agreements of the World Trade
Organization
• North American Free Trade Agreement
• other regional and bilateral trade
agreements
• Canada-Chile
• Canada-Israel
• Canada-Costa Rica
• Agreement on Internal Trade
John W. Boscariol, McCarthy Tétrault LLP, International Trade and Investment Law Group
Slide 2
Before the World Trade Organization
• General Agreement on Tariffs and Trade
1947
• basic principles
• most-favoured-nation treatment
• national treatment
• trade in goods
• reduction in tariffs and quantitative
restrictions
John W. Boscariol, McCarthy Tétrault LLP, International Trade and Investment Law Group
Slide 3
Before the WTO (cont’d)
• deficiencies in dispute resolution
• establishment of Panels
• adoption of Panel reports
• enforcement and sanctions
• integration
John W. Boscariol, McCarthy Tétrault LLP, International Trade and Investment Law Group
Slide 4
Establishment of the WTO
• Uruguay Round negotiations (19861994), in force January 1, 1995
• 150 member countries accounting for
over 90 percent of international trade
• scope and enforcement of obligations
• review of WTO Member trade policies
John W. Boscariol, McCarthy Tétrault LLP, International Trade and Investment Law Group
Slide 5
John W. Boscariol, McCarthy Tétrault LLP, International Trade and Investment Law Group
Slide 6
Scope of the WTO Agreements
• trade in goods and reduction of NTBs
• market access, tariff reduction
• technical barriers to trade
• sanitary and phytosanitary measures
• customs valuation
• anti-dumping, subsidization, safeguards
• rules of origin
• sectoral trade measures - eg. agriculture,
textiles
• import licensing
John W. Boscariol, McCarthy Tétrault LLP, International Trade and Investment Law Group
Slide 7
Scope of the WTO (cont’d)
• trade in services
• including telecommunications, financial
services, air transportation, and professional
services
• ongoing negotiations
• trade-related investment measures
John W. Boscariol, McCarthy Tétrault LLP, International Trade and Investment Law Group
Slide 8
Scope of the WTO (cont’d)
• government procurement of goods and
services
• trade-related aspects of intellectual
property rights (TRIPS)
• protection of patents, copyright, trademarks,
industrial designs, etc.
John W. Boscariol, McCarthy Tétrault LLP, International Trade and Investment Law Group
Slide 9
WTO Trade Policy Review Mechanism
• periodic review and reporting on trade
legislation and policies of each WTO
Member
• Canada’s customs and trade policies are
reviewed and reported on every two years
• transparency
• due diligence
John W. Boscariol, McCarthy Tétrault LLP, International Trade and Investment Law Group
Slide 10
WTO Dispute Settlement
• integration of the dispute settlement
process
• administration by Dispute Settlement Body
• Panel and Appellate Body reports
• establishment of Panel
• adoption of reports
John W. Boscariol, McCarthy Tétrault LLP, International Trade and Investment Law Group
Slide 11
WTO Dispute Settlement (cont’d)
• implementation and enforcement
• “prompt compliance with recommendations or
rulings”
• “mutually acceptable compensation”
• “suspension of the application to the Member
concerned of concessions or other obligations
under the covered agreements”
John W. Boscariol, McCarthy Tétrault LLP, International Trade and Investment Law Group
Slide 12
WTO Dispute Settlement (cont’d)
• since January 1, 1995:
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356 complaints notified to the WTO
100 Appellate Body and Panel Reports adopted
57 mutually agreed solutions
29 other settled or inactive cases
presently 25 active panels
• compliance panels
• 9 Appellate Body and Panel Reports adopted
• 15 authorization of suspension of concessions
• presently 4 active panels
John W. Boscariol, McCarthy Tétrault LLP, International Trade and Investment Law Group
Slide 13
Canada and the WTO
• strong supporter of the WTO system
• dispute resolution - opening up / protecting
export markets
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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)
John W. Boscariol, McCarthy Tétrault LLP, International Trade and Investment Law Group
Slide 14
Canada and the WTO (cont’d)
• auto part tariffs (vs. China)
• subsidies for corn and other agricultural products
(vs. US)
• 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)
John W. Boscariol, McCarthy Tétrault LLP, International Trade and Investment Law Group
Slide 15
Canada and the WTO (cont’d)
• regional aircraft (Brazil)
• measures re exports of wheat and treatment of
imported grain (US)
• excise tax breaks for Canadian beer and wine
(US)
John W. Boscariol, McCarthy Tétrault LLP, International Trade and Investment Law Group
Slide 16
Leading Issues at the WTO
• China accession (December 11, 2001)
• Doha Declaration
• trade in services
• agriculture
• trade facilitation
• Suspension of the Doha Round
• intellectual property and developing countries
• access to patented pharmaceuticals
• dispute settlement
John W. Boscariol, McCarthy Tétrault LLP, International Trade and Investment Law Group
Slide 17
NAFTA
• relationship with WTO
• “WTO plus”
• services
• investment
• anti-dumping and countervailing
determination review
• rules of origin
• energy goods
John W. Boscariol, McCarthy Tétrault LLP, International Trade and Investment Law Group
Slide 18
NAFTA (cont’d)
• rules of origin
• Chapter 4 sets out the rules for determining
whether goods originate
• Chapter 5 establishes customs procedures
that must be followed by CCRA / US Customs
• certificates of origin
• record keeping
• origin verification audits
• advance ruling programs
• origin/customs working groups
John W. Boscariol, McCarthy Tétrault LLP, International Trade and Investment Law Group
Slide 19
NAFTA (cont’d)
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investment (Chapter 11)
trade in services (Chapter 12)
financial services (Chapter 14)
dispute resolution
• Chapter 19
• review of anti-dumping and countervail
determinations
• Chapter 20
• US challenge against agricultural tariffs
John W. Boscariol, McCarthy Tétrault LLP, International Trade and Investment Law Group
Slide 20
NAFTA Chapter 20 Dispute Settlement
Procedures
• government-to-government settlement
procedures for disputes arising under
NAFTA
• consultation procedures regarding actual
or proposed measures that might affect
the operation of NAFTA (NAFTA Article
2006)
John W. Boscariol, McCarthy Tétrault LLP, International Trade and Investment Law Group
Slide 21
NAFTA Chapter 20 Dispute Settlement
Procedures (cont’d)
• establishment of arbitral panel (NAFTA Article
2008)
• issuance of Panel Report that includes
• findings of facts
• determination as to whether measure is or would be
inconsistent with the obligations of NAFTA or cause
nullification or impairment
• recommendations for resolution of a dispute
John W. Boscariol, McCarthy Tétrault LLP, International Trade and Investment Law Group
Slide 22
NAFTA Chapter 20 Dispute Settlement
Procedures (cont’d)
• implementation of final report (NAFTA
Article 2018)
• wherever possible, resolution shall be nonimplementation or removal of the offending
measure
John W. Boscariol, McCarthy Tétrault LLP, International Trade and Investment Law Group
Slide 23
NAFTA Chapter 20 Dispute Settlement
Procedures (cont’d)
• suspension of benefits (NAFTA Article 2019)
• if Panel determines that measure is
inconsistent with NAFTA and there has been no
“mutually satisfactory resolution”, the
complaining NAFTA Party “may suspend the
application … of benefits of equivalent effect
until such time as they have reached
agreement on a resolution of the dispute”
John W. Boscariol, McCarthy Tétrault LLP, International Trade and Investment Law Group
Slide 24
Foreign Investment Agreements
• foreign investment protection and
promotion agreements (FIPAs)
• national treatment
• most favoured nation treatment
• minimum standard (fair and equitable)
• performance requirements
• expropriation and compensation
John W. Boscariol, McCarthy Tétrault LLP, International Trade and Investment Law Group
Slide 25
Foreign Investment Agreements
(cont’d)
• exceptions and carve-outs
• e.g., subsidies, cultural industries, tax
measures
John W. Boscariol, McCarthy Tétrault LLP, International Trade and Investment Law Group
Slide 26
Foreign Investment Agreements
(cont’d)
• Canada’s current FIPAs:
Poland
Russia
Czech and Slovak
Argentina
Hungary
Philippines
Ukraine
Latvia
Philippines
Trinidad & Tobago
Barbados
Chile
Ecuador
Egypt
Venezuela
Panama
Thailand
Romania
Croatia
Lebanon
John W. Boscariol, McCarthy Tétrault LLP, International Trade and Investment Law Group
Armenia
Costa Rica
Uruguay
Peru
Slide 27
Foreign Investment Agreements
(cont’d)
• FIPAs signed but not yet in force
• South Africa, El Salvador
• FIPAs currently being negotiated
• India
• China
• Trade and Investment / Economic Cooperation
Arrangements (TICAs or TECAs)
• Andean Community (Bolivia, Colombia, Ecuador, Peru and
Venezuela)
• Mercosur (Argentina, Brazil, Paraguay, Uruguay)
• Australia
• Norway
John W. Boscariol, McCarthy Tétrault LLP, International Trade and Investment Law Group
Slide 28
Foreign Investment Agreements
(cont’d)
• South Africa
• Switzerland
• Iceland
• key element of FIPAs - dispute settlement
• investor-state dispute mechanism - investors may sue
host country governments for losses or damages
arising out of a breach of the FIPA
• up until 1994, developing countries or NICs
John W. Boscariol, McCarthy Tétrault LLP, International Trade and Investment Law Group
Slide 29
NAFTA Investor-State Claims
• investor-state dispute mechanism (NAFTA
Chapter 11, Part B)
• investors may sue NAFTA country governments
for losses or damages arising out of a breach
of NAFTA
Chapter 11
• submission of claim before arbitral
tribunal
John W. Boscariol, McCarthy Tétrault LLP, International Trade and Investment Law Group
Slide 30
NAFTA Investor-State Claims (cont’d)
• award of monetary damages and
applicable interest to claimant
• investor-state claims against customs and
border measures
• S.D. Myers – Canadian ban on exports of PCBs
John W. Boscariol, McCarthy Tétrault LLP, International Trade and Investment Law Group
Slide 31
NAFTA Investor-State Claims (cont’d)
• Pope & Talbot/Ketcham and Tysa – Canadian
enforcement of export fees levied on softwood
lumber
• Ethyl Corporation – Canadian ban on
importation and inter-provincial sale of MMT
• Sunbelt Water – Canadian restrictions on
export of fresh water from British Columbia
John W. Boscariol, McCarthy Tétrault LLP, International Trade and Investment Law Group
Slide 32
NAFTA Investor-State Claims (cont’d)
• Doman/Canfor/Tembec/Terminal Forest – U.S.
application of anti-dumping and countervailing
duties on Canadian softwood lumber
• Canadian Cattlemen for Fair Trade – U.S. ban
on importation of live Canadian cattle
• Karpa (Feldman) – Mexican denial of export
tax rebates on cigarettes
John W. Boscariol, McCarthy Tétrault LLP, International Trade and Investment Law Group
Slide 33
NAFTA Investor-State Claims (cont’d)
• Corn Products/Archer Daniels Midland –
Mexican tax on soft drinks containing high
fructose corn syrup
• Merrill & Ring Forestry L.P. – export
restrictions on timber harvested from private
lands
• GL Farms LLC – Ontario restrictions on export
of milk
John W. Boscariol, McCarthy Tétrault LLP, International Trade and Investment Law Group
Slide 34
Why Do International Trade and
Investment Agreements Matter?
• coverage of obligations
• enforcement mechanisms
John W. Boscariol, McCarthy Tétrault LLP, International Trade and Investment Law Group
Slide 35
Coverage of Trade and Investment
Agreements
• Canadian government, including CBSA
and CITT, must comply with customs
obligations, for example:
• valuation – WTO Valuation Code
• origin – NAFTA Chapters 4 and 5
• classification – World Customs Organization
John W. Boscariol, McCarthy Tétrault LLP, International Trade and Investment Law Group
Slide 36
Expansion of Obligations Beyond Existing
Agreements
• negotiation of new trade and investment
agreements
• Central American Four (El Salvador, Guatemala,
Honduras, and Nicaragua)
• European Free Trade Association (Iceland, Norway,
Switzerland, and Liechtenstein)
• Republic of Korea
• Singapore
• Free Trade Area of the Americas
• investment agreements with China and
India
John W. Boscariol, McCarthy Tétrault LLP, International Trade and Investment Law Group
Slide 37
Expansion of Obligations Beyond Existing
Agreements (cont’d)
• exploratory discussions and consultations
regarding trade agreements
• Andean Community (Bolivia, Colombia, Ecuador, Peru,
and Venezuela)
• CARICOM (Caribbean Community and Common Market)
• Dominican Republic
• European Union
John W. Boscariol, McCarthy Tétrault LLP, International Trade and Investment Law Group
Slide 38
Expansion of Obligations Beyond Existing
Agreements (cont’d)
• accession of new members to existing trade
agreements (WTO)
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China
Saudi Arabia
Russia
Vietnam
• expansion of obligations under existing trade
agreements (WTO)
• agriculture
• non-agricultural market access
• services
• trade facilitation
• trade and environment
• intellectual property
• dispute settlement
• e-commerce
John W. Boscariol, McCarthy Tétrault LLP, International Trade and Investment Law Group
Slide 39
Role in Strategic Decision-Making Process
• due diligence mechanism – positive and negative
impact on your organization
• benefits of participation
• identifying market opportunities
• tools to address market access and competitive issues
• preparation for negative impact
- e.g., retaliation for Byrd Amendment
John W. Boscariol, McCarthy Tétrault LLP, International Trade and Investment Law Group
Slide 40
Role in Strategic Decision-Making Process (cont’d)
• opportunities for participation in the process
• negotiation of trade agreements
• dispute resolution
• government-to-government
• U.S. “Section 301” mechanism
• EU Trade Barriers Regulation
• Department of Foreign Affairs and International Trade
• private investor-state mechanism
• NAFTA Chapter 11
• foreign investment protection agreements
• retaliation consultations
John W. Boscariol, McCarthy Tétrault LLP, International Trade and Investment Law Group
Slide 41
John W. Boscariol
Partner
McCarthy Tétrault LLP
Suite 4700
Toronto Dominion Bank Tower
Toronto-Dominion Centre
Toronto, Ontario M5K 1E6
www.mccarthy.ca
Direct Line: 416-601-7835
E-mail: jboscariol@mccarthy.ca