Canadian Lawyer InHouse

17 CANADIANLAWYERMAG.COM/INHOUSE NOVEMBER/DECEMBER 2018 uring a news confer- ence on Oct. 1 to discuss the trade agreement no lon- ger to be known as NAFTA, Prime Minister Justin Trudeau repeatedly stressed its potential benefits to Canadians and especially the middle class. "We now have a path forward," said Trudeau about the United States Mexico Canada Agreement. The prime minister was flanked by Foreign Affairs Minister Chrystia Freeland, who played a significant role in the sometimes-fractious negotia - tions leading up to the agreement, and de- scribed it as a win for all Canadians. The announcement that an agreement had been reached followed weeks of nearly daily coverage by the Canadian media about the negotiations and threats by U.S. Presi - dent Donald Trump to impose tariffs be- yond those already on steel and aluminium. Often, reporters were camped outside the Washington office of the U.S. Trade Rep- resentative, waiting for updates from Free- land. The last time a trade agreement received this level of media coverage in Canada was after the initial free trade agreement with the U.S. was negotiated by the Conserva - tive government of Brian Mulroney. In a heated exchange during the 1988 federal election debate, Liberal leader John Turner suggested the pact would turn Canada into a "colony" of the U.S. Mul - roney scoffed at the claim and that he would agree to any trade treaty that would impact Canadian sovereignty. "You do not have a monopoly on Canadian patriotism," said Mulroney. Three decades later, the optics of enter - ing into agreements with other countries to reduce trade barriers does not appear to be controversial anymore in Canada. The agreement with the U.S was followed by NAFTA in 1994 and, since then, many more trade agreements have been signed with other countries or regions. The most recent was the Comprehensive and Pro - gressive Agreement for Trans-Pacific Part- nership, which Canada signed earlier this year with 10 other countries after the U.S pulled out of the original deal. As well, in answering questions about the USMCA at that news conference, one of the people thanked by Trudeau was Mulroney. What has fundamentally changed the trade landscape, however, is the Trump presidency. While he also praised the USMCA, Trump claimed the agreement was reached ultimately because of tariffs he imposed and the threat of more trade sanc - tions. "Without tariffs, we wouldn't have a deal," Trump said. Freeland described the goal of trade agreements as something that is supposed to be a "win win" for all coun- tries. For Trump and economic nationalist groups in other democratic countries, it is a zero sum game, at least in the public state- ments made about trade. The USMCA is expected to come into force early next year, if it is approved by the legislatures of all three countries. While it has a new name, in reality, much of what is already in NAFTA will be the same, said most analysts both in the U.S. and Canada, after the details were made public. Canada will provide slightly more access to the do - mestic dairy market than what was agreed to in the CPTPP. But there are protec- tions for the auto industry, cultural exemp- tions and other provisions that Canada de- manded, including a 16-year sunset clause for the agreement, instead of the five years that the U.S. suggested. After six years, the three countries will hold talks to determine whether to extend the USMCA beyond the 16-year period. The agreement, assuming it is ratified, brings some long-term stability to cross- border trade. The wild card, however, re - mains the impulsiveness of Trump and his administration. "There is still a great deal of uncertainty" in the current climate, says Riyaz Dattu, an international trade lawyer and partner in the Toronto office of Osler Hoskin & Har - court LLP. "There is also a need to be able to react much more quickly." That view is shared by Jesse Goldman, a partner at Borden Ladner Gervais LLP in Toronto, who specializes in international trade law and investment. "There are great - er impulses to be protectionist. As well, the World Trade Organization has ceased to be an effective arbiter. Uncertainty is the name of the game. Things can turn very quickly," says Goldman. "We are in uncharted waters. Not only for industry but for government officials as well," says Greg Tereposky, an international trade lawyer and founding partner of Tere - posky & DeRose LLP in Ottawa. The unusual environment has even ex- tended to disagreements over factual data. In the negotiations leading up to the agree- ment, U.S. Trade Representative Robert Lighthizer stated earlier this year that Can- ada had an US$87-billion trade surplus with his country. That claim was contradicted in data posted online by his own officials. It stated that the goods trade deficit was actu- ally US$17.1 billion and, when services were included as well, the U.S. had an overall sur- plus of nearly US$8 billion last year. Despite the conflicts over data and the an- ti-Canada rhetoric by Trump, the strength of the U.S. economy and its currency has clearly been good for cross-border trade in D TRADE: BY THE NUMBERS 75 8 4 2 2 ILLUSTRATION: GARY NEILL PERCENTAGE OF ALL MERCHANDISE TRADE EXPORTED TO THE U.S. IN JULY 2018 PERCENTAGE OF ALL MERCHANDISE TRADE EXPORTED TO THE E.U. IN JULY 2018 PERCENTAGE OF ALL MERCHANDISE TRADE EXPORTED TO CHINA IN JULY 2018 RANK OF THE UNITED KINGDOM IN TERMS OF MOST EXPORTS FROM CANADA TO OTHER G7 COUNTRIES RANK OF GERMANY IN TERMS OF MOST IMPORTS INTO CANADA FROM OTHER G7 COUNTRIES

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