Canadian Lawyer InHouse

December/January 2021

Legal news and trends for Canadian in-house counsel and c-suite executives

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32 www.canadianlawyermag.com/inhouse FEATURE AS THE COVID-19 pandemic shut borders, forced businesses to close and upended global supply chains, many Canadian companies were forced to reassess cross-border trade and investments with their U.S. neighbours. Together with political uncertainty south of the border, the pandemic has created a more complex environment for cross-border transactions than ever before. While we await a vaccine to restore normality, experts warn that the volatile cross-border landscape could be with us for the long term. Businesses should not assume that a switch will be flicked as soon as we have a viable vaccine. "We don't know when the pandemic will end, but even if it ends in the spring, the effects of the pandemic will carry on for a long time and they will impact our trading relationship because both countries will be absorbed internally and domestically in improving their own economies," says Darrel Pearson, senior partner and head of international trade and investment at Bennett Jones LLP. While the recently ratified Canada-United States-Mexico Agreement has not had a significant impact on the substantial trading relationship between Canada and the U.S., in Pearson's opinion, it did introduce new rules of origin in the auto sector that will be Weakened economies threaten cross-border transactions challenging to monitor and apply well. Pearson says he anticipates that the auto industry will be less reliant on those rules in terms of assessing whether goods meet the rules of origin. While China and the U.S. are engaged in an economic and political war, in-house counsel should be prepared to be nimble during the months ahead, says Pearson. "It's going to be very important for Canadian businesses to diversify their destinations of goods and services," says Pearson. "It's important for companies that are looking to diversify and find opportunities that they really prepare themselves for new export destinations if they want to do business in technology." The market for cross-border investments has also been upended in recent months. Governments have become more active in the Landscape for cross-border trade and investments faces unprecedented volatility, amid political and pandemic-driven turmoil regulatory space, creating further difficulties for investors. Evaluating a potential target is more challenging, according to Kathleen Orysiuk, assistant general counsel, corporate, at Siemens Canada Ltd. "When evaluating the performance of a potential target, how do you adjust 2020 results to reflect the impact of COVID?" asks Orysiuk. "How do you analyze revenue projections? There is a lot of uncertainty. Where projects have been awarded, will they be delayed?" With restrictions on travel and meetings, Orysiuk says, good communication can be a significant challenge. Remote communication makes it harder to establish trust between buyer and seller. "Communication isn't all verbal," she says. "Nothing can replace face-to-face interac- tion, eye contact and a handshake. Parties "When evaluating the performance of a potential target, how do you adjust 2020 results to reflect the impact of COVID?" Kathleen Orysiuk, Siemens Canada Ltd.

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