Canadian Lawyer InHouse

19 CANADIANLAWYERMAG.COM/INHOUSE NOVEMBER/DECEMBER 2018 MERCHANDISE TRADE EXPORTS (IN BILLIONS OF DOLLARS) Source: Statistics Canada GOODS & SERVICES TRADE SURPLUS/DEFICITS WITH G7 COUNTRIES IN 2017 (IN BILLIONS OF DOLLARS) FRANCE -1.5 GERMANY -11.2 ITALY -4.5 JAPAN -2.1 U.K. +9.0 U.S. +26.2 CANADIAN FREE TRADE AGREEMENTS (IN FORCE) WITH OTHER COUNTRIES/ REGIONS Source: Government of Canada Source: Statistics Canada NOTE: YEAR LISTED IS THE YEAR THE AGREEMENT CAME INTO FORCE. 1989 - U.S. 1994 - U.S./MEXICO (NAFTA) 1997 - ISRAEL 1997 - CHILE 2002 - COSTA RICA 2009 - EUROPEAN FREE TRADE ASSOCIATION 2009 - PERU 2011 - COLOMBIA 2012 - JORDAN 2013 - PANAMA 2014 - HONDURAS 2015 - SOUTH KOREA 2017 - EUROPEAN UNION 2017 - UKRAINE the past year. Exports to the U.S. rose by just more than three per cent in July and 15.8 per cent on a year-to-year basis, according to Statistics Canada. The merchandise trade surplus with the U.S. in July was $5.3 billion — the largest monthly total in a decade. The challenge, says Goldman, is how to be "nimble" in this climate. "Now, more than ever, you need to pay attention regularly to which way the winds are blowing. You have to watch what politicians are say - ing and manage your government relations." According to Tereposky, that means being much more proactive in this area than in the past. "For many years, if not decades, things have been stable on the trade front. Rules were respected. It was not a top- of-shelf issue for in-house counsel. All of that has gone out the door. You can no longer wait to see if you are going to be adversely affected." For internal legal departments, that should mean an increase in resources devoted to trade and understanding the rules that govern these issues, says Dattu. "The federal government is well served by its in-house lawyers. But the development of legal talent in this area has been lacking within Canadian businesses. The backgrounds [of in-house counsel] have traditionally been in corporate law, M&A or securities. That is short-sighted. You will always be in a reactive mode." "While companies spend considerable time on tax planning, I do not understand why they do not put a fraction of the same effort on international trade planning. The potential impact on companies can run into the millions for failing to ensure compliance with tariff clas - sification rules and rules of origin," says Dattu. "Once you understand the [trade] rules, you can put in a mitiga- tion strategy and deal with potential risk issues," he adds. As well, the frameworks already in place for trade agreements are still going to be the basis for how rules are likely to be interpreted, he says. "It is not as if the whole landscape will be different." One key aspect that remains un- changed, at the insistence of the Canadian government, is the dispute resolution process known as chapter 19 under NAFTA. Cyndee Todgham Cherniak, a Toronto-based international trade lawyer, agrees that more legal resources should be devoted internally in this area. "If you are in-house, you are managing the business people. You are expected to have the answers, so you need to be ready to know the questions. Issues can be coming out of the blue. "You need to have a team that knows how you might be impacted," says Todgham Cherniak, who founded LexSage, a boutique trade and tax law firm. The range of issues that must be addressed in this area can be very broad and sometimes unexpected, says Dan Ujczo, who is of counsel and cross-border (Canada-U.S.) practice group chairman at Dickin - son Wright LLP based in Columbus, Ohio. "We are all struggling to get some certainty and control over events of which we may have no control. Mobility restrictions remain challenging for a cross-border workforce because trade treaties have not been updated to reflect a very different type of workforce," he says. The "temporary entry" system under NAFTA is not going to be sub - stantively amended under the USMCA to reflect a changing workforce, especially in the area of information technology, so that may continue to be an obstacle for some companies. 2013 2017 UNITED STATES 357.9 414.6 CHINA 20.4 23.6 U.K. 13.9 17.7 JAPAN 10.6 11.8 MEXICO 5.4 7.8 SOUTH KOREA 3.5 5.3 INDIA 2.8 4.3

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