Trade Agreements: Why should I care? What should I know?

1. Trade Agreements: Why should I care? What should I know? CLE 6.4 – International Trade & Investment DisputesCBA Conference, St. John’s NewfoundlandAugust 2006 J.E. McLandress, General Counsel, Canadian Wheat Board

2. GATT GATS TRIPs TRIMs FIPAs TICAs TECAs SPS BITs CVD AD SCM DSU AB MFN GIs FLC NTB TPA TRQ PDQ SNAFU… STOP!!!!!!! Introduction

3. Agenda • Key Canadian agreements • Context • Trade treaties in general • Key concepts • What you need to know • Why it matters to you • What you really need to know

4. Trade Treaties: Key Canadian Agreements • WTO • NAFTA • Bilateral/Regional Agreements

5. Trade Treaties: Key Canadian Agreements • WTO • Based on GATT ’47 • 149 members • Headquarters - Geneva, Switzerland • www.wto.org • Implemented in Canada by “World Trade OrganizationImplementation Act, S.C., 1994, c. 47”

6. Trade Treaties: Key Canadian Agreements • NAFTA • CUSTA, January 1,1989 • NAFTA, January 1,1994 • Offices of NAFTA Secretariat - Ottawa, Washington, D.C. & Mexico City • www.nafta-sec-alena.org • Implemented in Canada by “North American Free Trade Agreement Implementation Act, S.C., 1993, c. 44”

7. Trade Treaties: Key Canadian Agreements • Bilateral/Regional Agreements • Current FTAs • Chile [Implemented July 5, 1997] • Costa Rica [Implemented Nov. 1, 2002] • Israel [Implemented January 1, 1997] • FTAs Under Negotiation • The Americas (FTAA) [34 countries in North, South & Central America] • Central America Four [El Salvador, Guatemala, Honduras and Nicaragua] • European Free Trade Association (EFTA) [Iceland, Norway, Switzerland, & Liechtenstein] • Republic of Korea • Singapore • Andean Community Countries [Bolivia, Colombia, Ecuador, Peru & Venezuela] • CARICOM [15 Caribbean countries] • Dominican Republic

8. Trade Treaties: Key Canadian Agreements • Bilateral/Regional Agreements (cont’d) • FIPAs [“Foreign Investment Protection and Promotion Agreements”] • Current FIPAs • Argentina Panama • Armenia Philippines • Barbados Poland • Costa Rica Romania • Croatia Thailand • Czech & Slovak Federal Republic Trinidad & Tobago • Ecuador Ukraine • Egypt Uruguay • Hungary USSR • Latvia Venezuela • Lebanon

9. Trade Treaties: Key Canadian Agreements • Bilateral/Regional Agreements (cont’d) • FIPAs under negotiation • China • India • Peru • TICAs • “Trade and Investment Cooperation Arrangements” • TECAs • “Trade and Economic Cooperation Arrangements” • Agreement on Internal Trade

10. Context: Free Trade & Its Origins “What is prudence in the conduct of every private family, can scarce be folly in that of a great kingdom. If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better we buy it of them with some part of the produce of our own industry…” Adam Smith (1723-1790), The Wealth of Nations

11. Context: Europe

12. Context: The USA

13. Context: 1945

14. Context: Post-War

15. Context: 20 Largest Companies in 2006 CompanyCountryRev. ($US billions) 1 Exxon Mobil USA 339.9 2 Wal-Mart Stores USA 315.7 3 Royal Dutch Shell Netherlands 306.7 4 BP UK 267.6 5 General Motors USA 192.6 6 Chevron USA 189.5 7 DaimlerChrysler Germany 186.1 8 Toyota Motor Japan 185.8 9 Ford Motor USA 177.2 10 ConocoPhillips USA 166.7 11 General Electric USA 157.2 12 Total France 152.4 13 ING Group Netherlands 138.2 14 Citigroup USA 131.0 15 AXA France 129.8 16 Allianz Germany 121.4 17 Volkswagen Germany 118.4 18 Fortis Netherlands 112.4 19 Crédit Agricole France 110.8 20 American Intl. Group USA 108.9 Source: Fortune 500, 2006

16. Context: Unease

17. What do I need to know? Trade Treaties - Basics • What is a “trade treaty” and what is it supposed to achieve? An agreement between sovereign states that is designed to achieve an acceptable measure of • Security • Stability • Predictability • Transparency • Equity with respect to the flow of trade across national and international boundaries. • How do they become law in Canada? • While binding in international law, a treaty does not alter the domestic law of Canada except to the extent that legislation effecting such alterations is enacted. [Council of Canadians v. Canada (OSCJ, 2005)]

18. What do I need to know? Trade Treaties - Scope • Goods (WTO, GATT, NAFTA) • Investment (NAFTA, TRIMs, FIPAs/BITs) • Agriculture (CUSTA, Agreement on Agriculture) • Textiles (Agreement on Textiles & Clothing) • Services (GATS) • Intellectual Property (TRIPs) • Sector specific (e.g., Civil Aircraft, Dairy)

19. What do I need to know? Trade Treaties - Key Concepts • Non-discrimination • “MFN” or “Most Favoured Nation” • National Treatment • Dispute Resolution • Market Access • Unfair Trade Practices • Anti-avoidance Rules • Sector Specific

20. What do I need to know? Trade Treaties - Typical Complaints • Anti-dumping • Countervailing Duty (“CVD”) • National Treatment • MFN • Agreement specific, e.g., • NAFTA Chap. 11 • SCM art. 6 - “serious prejudice”

21. Why should I care?

22. So what do I really need to know? • The system has a long way to go, but the basic premise is sound -- selling stuff beats dropping bombs. • Trade treaties exist for most, if not all, of Canada’s key markets. • They establish a set of rules designed to enhance trade. • The rules generally work well. • If your client runs into a problem there’s probably a remedy, but it’s likely to be neither cheap nor fast. • There are lots of valuable resources for information. DFAIT’s website at www.international.gc.ca is a good place to start. • Ignoring the rest of the world is not an option. • This stuff is not rocket science.