While 2015 saw numerous international trade and investment developments, the year’s biggest story was the October completion of negotiations on the Trans-Pacific Partnership (TPP).
The TPP is an ambitious economic and free trade agreement between Canada and 11 other countries — including the United States, Australia and Japan — who represent one-third of all international trade and over 775 million consumers. Like the 2014 Comprehensive Economic and Trade Agreement between Canada and the European Union, the TPP goes well beyond tariff reductions and other standard subject-matters, addressing new areas such as e-commerce and intellectual property, among others. Although the TPP has been executed, it still must undergo legal review to ensure the final version of the agreement clearly and accurately reflects negotiated outcomes. Then it must be ratified before it can become effective. This process should take at least one year.
Other developments in 2015 include the coming into force of the Canada-Korea Free Trade Agreement, Canada’s first trade agreement with an Asian trading partner and conclusion of negotiations of the Canada-Ukraine Free Trade Agreement. The Agreement Between Canada and the Republic of Serbia for the Promotion and Protection of Investments also came into effect, and the foreign investment promotion and protection agreements with Burkina Faso and Guinea were signed.
We anticipate the new Government of Canada will continue the previous government’s pursuit of free trade and investment agreements with selected trading partners.
TWO | CANADIAN ECONOMIC SANCTIONS
The Government of Canada has actively implemented economic sanctions consistent with its foreign policies and in concert with major trading partners such as the U.S. and the EU. We anticipate this continuing.
In 2015, Canada imposed new sanctions and expanded existing sanctions. Economic sanctions imposed on dealings with Russia were amended twice in 2015, adding names to the list of designated persons subject to an asset freeze and including additional entities subject to financing-related prohibitions and others dealing in new debt of longer than 90 days’ maturity. Ukraine sanctions were also extended to apply to 26 additional individuals and 15 additional entities, and broad additional sanctions were imposed regarding Ukraine’s Crimea region. Further, Canada extended sanctions against South Sudan to incorporate the provisions of United Nations Security Council Resolution 2206, which impose an asset freeze on certain designated persons.
It is not clear whether the new government will be as keen as the previous government to implement unilateral sanctions.
THREE | TRADE REMEDIES
Canadian manufacturers and producers remained active participants in the trade remedy system. During 2015, the Canada Border Services Agency (CBSA) either commenced or concluded trade remedy investigations regarding five commodities imported from 11 countries. These investigations mainly involved various types of steel products. The CBSA also conducted five reinvestigations of existing dumping and subsidy measures covering various findings involving copper and steel products. Further, it conducted expiry reviews regarding steel grating, refined sugar, greenhouse bell peppers and whole potatoes to determine whether measures should be allowed to expire or continue for five additional years.
The Canadian International Trade Tribunal (CITT) established an Advisory Committee to improve fairness, transparency and accessibility in the administration of Canada’s trade remedy system. The committee is tasked with advising the CITT on whether the CITT’s rules and procedures are practical and reflect commercial realities of Canadian producers and businesses.
FOUR | CUSTOMS DEVELOPMENTS
Importers and the CBSA continue to argue over valuations of imported goods for duty assessment purposes. In 2015, a long-standing issue concerning post-importation price adjustments was the subject of a CBSA formal policy pronouncement and will lead to future issues for CITT consideration. On January 19, 2015, the CBSA issued Customs Notice 15-001 announcing its adoption of new policies to comply with the CITT’s decision in Hudson’s Bay Company v. President of the Canada Border Services Agency. More specifically, the CBSA acknowledged that post-importation downward price adjustments made pursuant to an agreement in effect at the time of importation could be factored in when calculating the “price paid or payable” for the imported goods. Regarding vendor/related purchaser transfer-price agreements, the CBSA explained that it will take the intercompany transfer price to be the uninfluenced price paid or payable if corrections to the declared value for duty are submitted to the CBSA when the net total transfer-price adjustments are identified.
Another pivotal customs development concerned the CBSA’s Single Window Initiative, which will transform how goods are imported into Canada. On March 29, 2015, the CBSA launched a new electronic interim accounting release service as an alternative to the existing Pre-Arrival Review System and Release on Minimum Documentation services. The interim service, the Integrated Import Declaration, allows importers and brokers to submit and obtain electronic release of certain goods regulated by several other government departments, not just those regulated by the CBSA.
The CITT issued a number of precedent-setting decisions in 2015. In DeRonde Tire Supply, Inc. v. President of the Canada Border Services Agency, the CITT had to decide whether certain goods qualify for duty-free treatment under the North American Free Trade Agreement (NAFTA) based on the exporter’s “personal knowledge” versus formal certificates signed by the actual producer. By rejecting the CBSA’s insistence that evidence of origin must come from the actual producer, the CITT’s decision opens the door for exporters to rely on alternative ways to support NAFTA origin claims regarding goods shipped to Canada.