How NAFTA, CETA, TPP could impact cross-border trade

Cargo shipment - Vancouver


Canadian companies that engage in cross-border business pursuits both with the United States and internationally should be mindful of several cross-border trade initiatives that may have a profound impact on their business objectives, including the North American Free Trade Agreement (NAFTA), the Canada-European Union Comprehensive Economic and Trade Agreement (CETA) and the Trans-Pacific Partnership (TPP).

Perhaps most notably, Canadian businesses are waiting to find out how U.S. President Donald Trump’s plan to renegotiate NAFTA will impact cross-border commerce. Now that Trump has officially taken office at the White House, the future of NAFTA — a trilateral free-trade agreement between Canada, the U.S. and Mexico which came into effect January 1, 1994 — is now shrouded with uncertainty as Trump repeatedly vowed to renegotiate the agreement throughout his election campaign. During a recent visit by Canadian Prime Minister Justin Trudeau to the White House, Trump said he only plans to “tweak” NAFTA with Canada but said he would engage in more extensive negotiations with Mexico. The extent of these proposed changes has yet to officially be determined. Canadian businesses have been left with many questions as a result. Any such alterations to NAFTA could have a profound impact on Canadian companies and investors with ties to cross-border trade between Canada, Mexico and the U.S.

Significant changes to NAFTA’s current structure — in which there are no tariffs on all covered goods between the countries — or rules of origin could have a widespread ripple effect on multiple industries ranging from the auto sector to the agricultural sector, which could vastly impact North American and even global supply chains. While the scope of Trump’s proposed changes is still uncertain, Canadian companies should be mindful of how the cross-border economic landscape may evolve and be ready to integrate these investment rules into their business strategies to remain competitive.

Other key cross-border trade initiatives Canadian businesses need to be cognizant of include CETA, which has been cleared by the EU parliament and is pending approval in Canada. CETA would not only reduce and ultimately eliminate tariffs between Canada and the EU, but for example open up vast new opportunities for Canadian businesses in the EU government procurement sector. 

Trump also recently pulled the U.S. out of the TPP — the 12-country Pacific Rim trade agreement — which leaves the original deal dead and the remaining signatories scrambling to see whether something else could take its place.  

Osler’s team of international trade experts is well-equipped to answer your questions surrounding the potential economic and legal impact of updates to agreements that govern cross-border commerce. Here we provide a working framework using timely insight to help you understand more about trade issues. As new potential trade initiatives take shape, we will continue to provide updated reports so continue to visit this page for useful information.

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Resources


Donald Trump says what Canada has ‘done to our dairy farmers is a disgrace’

The Toronto Star - April 20, 2017

U.S. President Donald Trump said Canada was “taking advantage” of U.S. workers, and denounced the North American Free Trade Agreement as a “disaster.” Read more.


International trade brief: Trump’s "Buy American, Hire American" Executive Order, the transition towards CFTA and more

Osler, Hoskin & Harcourt LLP - April 20, 2017

In this brief, we discuss the CFTA’s forward-looking initiatives, U.S. President Donald Trump’s “Buy American, Hire American” Executive Order, and more. Read more.


Trump’s latest Buy American order mostly rhetoric but could harm Canadian businesses: experts

National Post - April 18, 2017

U.S. President Donald Trump’s new Buy American policies could hurt Canadian businesses, according to some experts. Read more.


Donald Trump signs ‘Buy American, Hire American’ order

Financial Times - April 18, 2017

U.S. President Donald Trump signed an executive order aimed at forcing U.S. government agencies to buy more domestically produced products. Read more.


Trump targets ‘unfair’ Canadian dairy rules in fiery trade speech

CBC - April 18, 2017

While promoting his “Buy American, Hire American” policies, U.S. President Donald Trump took aim at Canadian dairy regulations, saying that NAFTA trade rules between the U.S. and Canada are a “total disaster” for the U.S. Read more.


International trade brief: The Canadian Free Trade Agreement, the U.S.-China 100-day plan and more

Osler, Hoskin & Harcourt LLP - April 17, 2017

In this brief, we discuss the new Canadian Free Trade Agreement, comprehensive trade dialogue between the U.S. and China, and how the now defunct TPP provisions could find their way into the NAFTA renegotiations. Read more.


Meeting with U.S. NAFTA point man Ross ‘reassuring’: Ambrose

The Globe and Mail - April 11, 2017

Canada’s Opposition leader Rona Ambrose says she is feeling reassured after discussing the Canada-U.S. business relationship with U.S. President Donald Trump’s trade point man and Commerce Secretary Wilbur Ross. Read more.


Trump team frustrated by go-slow approach on NAFTA by U.S. Congress

CTV News - April 9, 2017

U.S. Commerce Secretary Wilbur Ross says he wants U.S. lawmakers to pick up the pace in launching the NAFTA renegotiation process. Read more.


International trade brief: Trump administration takes aim at Chapter 19 of NAFTA, U.S. wish list for NAFTA renegotiations and more

Osler, Hoskin & Harcourt LLP - April 6, 2017

In this week’s brief, we look at the U.S. administration’s wish list for NAFTA renegotiations — along with the draft notice and its parallels to the Trans-Pacific Partnership — the Trump administration taking aim at Chapter 19 of NAFTA, the U.S. border tax proposal, as well as the NAFTA Rules of Origin. Read more.


International trade brief: President Trump’s trade enforcement budget, Lighthizer’s confirmation hearing as U.S. Trade Representative and more

Osler, Hoskin & Harcourt LLP - March 29, 2017

We look at President Trump’s trade enforcement budget, how Robert Lighthizer’s confirmation as U.S. Trade Representative will impact cross-border trade, and Canada’s NAFTA chapter 11 win. Read more.


Liberal green light for Chinese takeover deal a turning point for Canada: experts

The Globe and Mail - Mar 28, 2017

Peter Glossop, a partner in Osler’s competition and foreign investment group, tells The Globe and Mail that Prime Minister Justin Trudeau’s government appears willing to consider investments by firms with ties to China. Read more.


OFAC fines China-based ZTE $1.2 billion: Implications for Canadian companies

Osler, Hoskin & Harcourt LLP - March 27, 2017

On March 7, 2017, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced a record-breaking fine against Chinese telecommunications giant ZTE Corp. and its subsidiaries as part of a settlement following a five-year joint investigation by the Departments of Treasury, Commerce, and Justice. Canadian companies, whether in the financial sector or other sectors that have links to the U.S., that incorporate U.S. components or technology in their products, or use U.S. currency in their transactions, can be subject to investigation and possibly enforcement action under several U.S. trade and anti-terrorism laws. Read more.


Canada’s NAFTA arbitration victory is a win for sovereignty and fair trade

Osler, Hoskin & Harcourt LLP - March 23, 2017

Proponents of sovereignty and fair trade can finally breathe a sigh of relief. Last week, the Canadian Government emerged victorious in its five-year battle with Lilly. With over $15 million in legal bills between the parties, a NAFTA tribunal found no merit to Lilly’s claims and awarded approximately $5 million in costs to Canada. The good news is that we no longer need to worry that trade tribunals will become supranational courts of appeal over domestic property law disputes. Read more.


International trade brief: Timing for NAFTA renegotiations, the TPP summit in Chile and the U.S. border tax

Osler, Hoskin & Harcourt LLP - March 22, 2017

We look at the Canadian government’s response to NAFTA renegotiations, how TPP provisions could shape NAFTA renegotiations, and the issues with the proposed U.S. border tax. Read more.


With CETA, Canada and the EU face protectionism as strategic partners

The Globe and Mail - March 19, 2017

The Comprehensive Economic and Trade Agreement is an ambitious deal that helps Canada and the EU face the threat of rising protectionism in global trade pacts. Read more.


International trade brief: President Trump’s trade policy agenda, “tweaking” Canada-U.S. bilateral relationship and more

Osler, Hoskin & Harcourt LLP - March 16, 2017

We look at the Trump administration’s recently released trade policy agenda document, the administration’s indication that it will ignore international trade rules and rulings it disagrees with, and the next steps for “tweaking” the Canada-U.S. bilateral relationship in the NAFTA renegotiations. Read more.


Trans-Pacific Partnership members look for ‘progressive’ way forward

The Globe and Mail - March 15, 2017

The remaining members of the TPP are seeking ways to move forward on the trade pact in the wake of the U.S. pulling out of the deal. Read more.


NAFTA renegotiations: Key issues to consider

Osler, Hoskin & Harcourt LLP - March 14, 2017

There are several key issues Canadian businesses who engage in cross-border commerce need to consider with respect to potential amendments to NAFTA. The following is a list of some of these issues. Read more.


The Canada-Europe Free Trade Agreement: Advantages for Canadian and European businesses

Osler, Hoskin & Harcourt LLP - Feb 27, 2017

After some difficult last minute negotiations, the Canada-European Union Comprehensive Economic and Trade Agreement (CETA or the Agreement) is now awaiting final implementation. CETA presents important business opportunities for Canadian and EU businesses. CETA will confer significant tariff and non-tariff trading advantages over competitors in countries who are not entitled to the benefits of CETA. In addition, CETA can also potentially benefit EU and non-EU companies who invest in Canada and then use Canada as a “gateway” to conduct business on a free trade basis in both North America (using the North American Free Trade Agreement or NAFTA) and the EU (using CETA). Read more.


Freeland’s statement standing by Mexico on NAFTA suggests politeness not policy, says Trade expert

Financial Post - February 22, 2017

Chrystia Freeland, Canada’s Foreign Affairs Minister, said that Canada won’t negotiate with U.S. President Donald Trump on NAFTA without Mexico, but some experts say that may just be posturing. Read more.


Without TPP, Canada looks for new Asian trade deal

Global News - February 22, 2017

Canada is looking for a new “coalition of the willing” for trade links in Asia after U.S. President Donald Trump decided to kill the Trans-Pacific Partnership. Read more.


CETA to cost average working Canadian $2,460 in lost income: report

The Huffington Post - February 21, 2017

A new report says the Comprehensive Economic and Trade Agreement (CETA) was made on the basis of unrealistically optimistic economic models. Read more.


Against all odds, CETA, Canada’s trade deal with Europe, moves forward. Now what?

The Globe and Mail - February 15, 2017

The Comprehensive Economic and Trade Agreement (CETA) passed its last major hurdle and was approved by the European Parliament. Read more.


CETA: EU approves trade deal with Canada

Global News - February 15, 2017

The European Union’s parliament approved the Canada-European Union Comprehensive Economic and Trade Agreement (CETA), and the free-trade pact is now pending approval in Canada. CETA would reduce and ultimately eliminate tariffs between Canada and the EU. Read more.


Trump says NAFTA deal with Canada will only be 'tweaked'

CTV News - February 13, 2017

After his first official meeting with Canadian Prime Minister Justin Trudeau in February, U.S. President Donald Trump said he would only “tweak” NAFTA with Canada but that he had more extensive changes to make with Mexico. Read more.


Trump withdraws from TPP, but offers Canada hope on NAFTA

The Globe and Mail - January 23, 2017

U.S. President Donald Trump made good on his campaign promise, officially pulling the United States out of the 12-country Trans Pacific Partnership in January. Read more.


‘We want an open market’: Why it’s time for Canada to tear down its (dry)walls

Osler, Hoskin & Harcourt LLP - January 20, 2017

Having anti-dumping measures in place between Canada and the United States is “one of the failures of” the North American Free Trade Agreement (NAFTA), Osler international trade law expert Riyaz Dattu tells Financial Post. Read more.


Auto sector gears up for potential changes to NAFTA’s rules of origin

Osler, Hoskin & Harcourt LLP - January 18, 2017
Changes to the rules of origin under the North American Free Trade Agreement (NAFTA) could “wreak havoc on supply chains,” especially in the auto sector, Osler international trade law expert Riyaz Dattu tells The Globe and Mail. Read more.


Trump names China critic Lighthizer as U.S. trade representative

Reuters - January 3, 2017
U.S. President Donald Trump named Robert Lighthizer, who is a critic of China’s trade practices, as the chief trade representative for the U.S. Read more.


A note on the impact of the Trump presidency on cross-border businesses

Osler, Hoskin & Harcourt LLP - November 10, 2016

The election of Donald Trump as U.S. President could have a profound impact on both U.S. and domestic foreign policy. One of the areas where we anticipate profound and early refocusing is tax policy. With republicans controlling the House of Representatives and the Senate, as well as the White House, the prospects for meaningful domestic and international tax reform are strong. Here we analyze the impact on Trump’s presidency on cross-border business. Read more.


Trumpism doesn't play in Canada, which just eased foreign takeover rules — Bloomberg

Osler, Hoskin & Harcourt LLP - November 4, 2016

Prime Minister Justin Trudeau’s plan to ease foreign takeover rules signals Canada is opening its doors to more foreign direct investment, according to an article in Bloomberg. Osler partner Peter Glossop comments on the implications for Canadian business. Read more.


Investment court plan gets mixed reviews

Osler, Hoskin & Harcourt LLP - April 12, 2016

A recent article by Luis Millan in The Lawyers Weekly examines the pros and cons of the new court-like system that has been introduced for settling disputes between investors and states under the European Union-Canada Comprehensive Economic and Trade Agreement (CETA). Osler’s Riyaz Dattu offers his insight. Read more.


TPP and CETA: Landmark trade deals that Canadian businesses need to understand

Osler, Hoskin & Harcourt LLP - December 9, 2015

The Canada-EU Comprehensive Economic and Trade Agreement (CETA), which was entered into in 2014, is part of the previous federal government’s Global Market Action Plan to diversify Canada’s international trade and investment relationships. Osler’s Riyaz Dattu and Nathaniel Lipkus offer in-depth analysis. Read more.


Osler IP expert discusses the intellectual property provisions of TPP

Osler, Hoskin & Harcourt LLP - November 17, 2015

Osler partner Nathaniel Lipkus provides commentary on the intellectual property provisions of the Trans-Pacific Partnership, a multilateral agreement covering 40 % of the global economy. Read more.


Analysis of the Canada-EU Comprehensive Economic and Trade Agreement: A call for revising strategic business plans

Osler, Hoskin & Harcourt LLP - November 2013

Businesses looking to fully and effectively compete in the global marketplace need to monitor ever-changing trade rules and incorporate these rules into their strategic business plans. Few, if any, major Canadian businesses can avoid being buffeted by the rising and shifting tides of global trade, including NAFTA and CETA. Read more.


Landmark Canada/EU trade agreement could have major implications for miners

Osler, Hoskin & Harcourt LLP - October 23, 2013

A major trade agreement between Canada and Europe could provide significant protection from expropriation, among other things, to Canadian companies investing in Europe and vice versa. Probably the most significant development in the Comprehensive Economic and Trade Agreement (CETA) for miners on both sides of the Atlantic is the inclusion of an investor-state provision that, in practice, ensures foreign companies a process to recoup damages in cases of expropriation or instances where political process is grossly discriminatory against a foreign company. Read more.


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Key Contacts

Riyaz Dattu

Riyaz Dattu
rdattu@osler.com
tel: 416.862.6569

Peter Glossop

Peter Glossop
pglossop@osler.com
tel: 416.862.6554

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