Canadian Lawyer InHouse

JULY 2016 34 INHOUSE I n d u s t r y S p o t l i g h t TWO HUGE international trade agree- ments will offer Canada's manufacturers un- paralleled access to markets around the world, but companies must balance the opportuni- ties that the pacts will bring with the risk of extra competition, and prepare for different business models and new trade relationships. Once the Trans-Pacifi c Partnership and the Comprehensive Economic and Trade Agreement between Canada and the Euro- pean Union are ratifi ed, Canada will be the only major economy with guaranteed pref- erential access to both the 28 member coun- tries of the European Union and to the 12 TPP member countries, a list that includes giant economies such as the United States and Japan, as well as smaller ones such as Peru, New Zealand, and Brunei. It opens up a new supply chain for the manufacturing sector, raising the possibil- ity of cheaper inputs for products made in Canada. But at the same time, a host of new countries will win preferential access to the Canadian market, both for their own prod- ucts and as an investment opportunity that exceeds what they have at home. A Greek or German company with a Canadian sub- sidiary, for example, might win access to a Vietnamese or Mexican market that goes far beyond the parent company's access. "These agreements will allow for increased foreign direct investment from places like Europe and TPP countries into Canada, which should create greater economic opportunities," says Philip Turi, general counsel and director, global business services, with industry group Canadian Manufacturers and Exporters. "Canada with both TPP and CETA would have preferential access to well over three- fourths of the world's economy. There are signifi cant opportunities." Turi says the biggest risk for exporters is failing to prepare adequately for these new markets, or failing to do due diligence on the markets or on what the trade deals themselves mean. Arbitration rules will differ from those a company is used to in North America, and the legal framework could be different, too. And there are many different business models that could work, depending on the company, including local hires, partnership deals, or working with agents, distributors, and dealers. "If you are corporate counsel in a large company and your company is now starting to look at the European market or the TPP markets, it's going to be important that you ensure you have relationships in that market with local counsel, because you are going to have to leverage their expertise and their understanding of the legal systems," he says. "Get to know procurement rules for foreign markets, especially if your company can bid on government contracts, and get to know local counsel in these markets because you will have to use them to close the deal." Both TPP and CETA have been contro- versial from the start, amid concerns about how Canadian companies will be able to Trade deals offer opportunities and risks The TPP and CETA open up a new supply chain for the manufacturing sector, raising the possibility of cheaper inputs for products made in Canada. BY JANET GUTTSMAN

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