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

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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.

Resources

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.


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.


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 - Feb 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.


CETA: EU approves trade deal with Canada

Global News - Feb 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 - Feb 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 - Jan 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 - Jan 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 - Jan 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 - Jan 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 - Nov 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 - Nov 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 - Apr 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 - Dec 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 - Nov 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 - Nov 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 - Oct 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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