Canada: What Will The U.S. Be Fighting For And What Direction Canada Canadian Businesses Take?

Last Updated: July 25 2017
Article by Heather Innes

Twitter: @HeatherTradeLaw

Reports in today's press indicate that the first round of NAFTA renegotiation talks will begin on August 16, 2017 in Washington, D.C.   Each country has conducted or is in the process of conducting consultations with its stakeholders.  The U.S. Congress has now received the U.S. Summary of Objectives for the NAFTA Renegotiation (the "US Objectives"). Global Affairs Canada also extended a request for submissions from all Canadians that were due on July 18, 2017.  As in the U.S. where over 12,000 submissions were received, we understand that there has been a strong response from Canadian stakeholders to the Global Affairs Canada request for input.

The US Objectives provide important information and start to give shape to the many objectives informally voiced by President Trump and his Administration.  Although the US Objectives did not include many of the details needed to better inform organizations and permit them to plan for potential change, they do provide a better sightline into what the U.S. will pursue.

Many of the objectives set forth general principles, often citing or implying  "American first"  and reducing U.S. trade deficits as objectives, without specifying the industry or sector that is targeted (see: Summary of US NAFTA Objectives).

Much has been written over the last couple of days about those of the US Objectives that are likely to be the most contentious, including: i/ elimination of Chapter 19 binational panel reviews of anti-dumping/countervailing duty decisions; ii/ removal of all restrictions on the "Buy American" requirements at the state and municipal level including on all federally funded programs; iii/ elimination of the NAFTA global safeguard exclusion that currently restricts the application to Canadian and Mexican products, of U.S. safeguard duties.  These are duties imposed when a U.S. domestic industry is seriously injured by an unexpected flood of imports; iv/ elimination of all barriers to U.S. investment in NAFTA country industries and identification of both the telecommunications, and financial services sectors as targets for change; and v/ elimination of non-tariff barriers to U.S. agricultural exports, including restrictive administration of tariff rate quotas.

Certain of the U.S. objectives make sense.  General objectives calling for increased transparency, cooperation, consultation and regulatory compatibility seem appropriate in the context of modernizing NAFTA. Objectives calling for science-based sanitary and phytosanitary measures, and updated and streamlined customs procedures (including immediate release of compliant shipments) also seem appropriate.  Of course, the "devil is in the detail" and what appears eminently reasonable may prove contentious if the U.S. seeks requirements and restrictions that apply only to Mexico and Canada and not to the U.S.

Other U.S. Objectives are too generally worded to clearly identify the target industry or sector.  However, when these objectives are read together with previously stated US Administration and industry positions and goals, we can surmise that certain Canadian industries and sectors are likely priorities for the U.S. negotiators:

  • dairy, poultry and eggs – supply management programs – elimination of barriers to U.S. agricultural products;
  • health services, cultural industries – elimination of investment restrictions & service supplier restrictions & the call for a narrow negative list approach to excluded services;
  • government procurement (at least at the Federal level) – seek greater access for U.S. providers/vendors but preserve U.S. Buy America requirements in State and local programs;
  • retail sector, e-commerce/digital trade and Tech products – seeking increase of de minimus to $800 for duty free entry and commitments to not impose customs duties on digital products (e.g. software, music videos, e-books). They are also seeking a limitation of restrictions on cross border data flows and elimination of data localization requirements.  These objectives could be both harmful and helpful to Canadian retailers and digital trade organizations, depending on their product offerings, competition and markets ;
  • softwood lumber industry – eliminate Chapter 19 binational panel provisions which means that industries like softwood lumber will need to seek recourse in the U.S. courts or the WTO; and
  • fisheries industry – prohibit harmful fisheries subsidies.

As important as what is included in the US Objectives, is what is missing.  The missing elements themselves may provide hints that something may not be a priority.  Or, the missing details may simply indicate that the U.S. is not yet ready to tip their hand on the details of what they will seek.  For example, the following items were provided in vague terms or were omitted from the U.S. list, leaving Canadian organizations unable to prepare their businesses or to provide suitable alternatives to the Canadian negotiators:

  1. rules of origin – the U.S. Objectives seek to "update and strengthen" "as necessary to ensure that the benefits of NAFTA go to products genuinely made in the United States and North America". Many U.S. industries and/or their unions have highlighted changes that they would like to see including: (i) changes/increases to the content required for vehicles and changes to address the fact that steel used in vehicles is not subjected to the rule of origin (ROO) tracing requirements; (ii) tougher ROO's for the oil sands sector; (iii) improvements to competitive opportunities for U.S. textile and apparel product exports.  Does this mean that the U.S. is looking for a loosening of ROO's for textiles and apparel?;
  2. labour mobility – the U.S. Objectives are silent on labour mobility enhancements. Important enhancements are needed to address the movement of business persons within North America including: (i) intra-company transfers; (ii) enhanced entry for a broader list of specialists; and (iii) recognition of professional credentials.  It is unclear whether these issues will be stuck in the mire of U.S. immigration policy or will be addressed as the important improvements that they represent for all three countries;
  3. Chapter 11 – binational panel review provisions relating to investment measures are not specifically identified in the U.S. Objectives and they have not otherwise been called out as a priority for the U.S. While the US Objectives generally call for a general review and revision of the dispute settlement process and specifically call for the elimination of Chapter 19, it is unclear whether this includes a review and revision of Chapter 11;
  4. Protection of personal data and anti-spam laws: while reference is made to regulatory compatibility, seeking commitments that the NAFTA countries not impose measures to restrict cross-border data flows and elimination of data localization requirements, the U.S. Objectives are silent on the protection of personal information and compliance with anti-spam laws (CASL).  U.S. laws generally are less restrictive and less demanding that Canadian laws, leaving Canadian industry at a disadvantage when developing products and services for a North American market.  Any effort by the U.S. to dilute the robust protections applied to Canadian generated data or Canadian requirements set out in CASL are likely to prove contentious.  Silence on these issues is difficult to interpret.
  5. Measures and assistance for small & medium sized enterprises (SME's): the US Objectives call for the maintenance of U.S. domestic preferential purchasing programs for small businesses. Otherwise, the US Objectives are very general, calling for the sharing of information, cooperation on SME issues and the establishment of an SME committee.  While this is generally positive, it begs the question of whether more ambitious provisions could be contemplated.  For example, specific cooperative measures that could support the growth of SME's within North America, reducing their NAFTA driven costs.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.