Posted by Michael Woods on Apr 17, 2015

In our recent note on the national security exception, we reviewed the text of GATT Article XXI, a controversial provision, and its implications in international trade.  The exception under Article XXI distinguishes itself from other traditional exception clauses in international agreements in that it is purely self-declaratory in nature. Based on the rationale of preserving state sovereignty, a country’s decision to invoke Article XXI is subjective and has not typically been reviewable by international regulatory bodies like GATT or WTO. Canada has previously invoked the national security exception to defend government procurement complaints in Lotus Development Canada Limited, Novell Canada, Ltd. and Netscape Communications Canada Inc. [File Nos.: PR-98-005, PR-98-006 and PR-98-009]. The matter was decided by the Canadian International Trade Tribunal (CITT)   pursuant to the Government Procurement provisions of the NAFTA, the WTO Agreement on Government Procurement (AGP) and the Agreement on Internal Trade (AIT).  This 1998 complaint was filed by Lotus Development Canada Limited (Lotus) concerning the acquisition by the Department of Public Works and Government Services (PWGSC), on a sole source basis from Microsoft Corporation, of a Microsoft NT server, a back-office server and back-office client access licences for the Department of Foreign Affairs and International Trade (DFAIT). Lotus (joined later by Novell Canada, Ltd. and Netscape  Communications Canada Inc.)  took issue with the fact that the normal competitive procurement process had been  side-tracked when the Government  decided to  proceed on a sole source basis.  Canada responded that this action was justified  as the procurement was urgent and the urgency was a matter of national security. It cited NAFTA Article 1018(1), Article XXIII(1) of the WTO’s AGP and Article 1804(b) of the AIT, all being similar provisions. NAFTA  Article 1018(1) reads:  Nothing in this Chapter shall be construed to prevent a Party from taking any action or not disclosing any information which it considers necessary for the protection of its essential security interests relating to the procurement of arms, ammunition or war materials, or to procurement indispensable for national security or for national defense purposes. The CITT reviewed the matter and determined that seeing as the security exceptions of the various agreements had been invoked by...

Posted by Gordon LaFortune on Apr 13, 2015

Recent reports on the Trans Pacific Partnership (TPP) negotiations have suggested that unless Canada makes changes to its supply management system for dairy, poultry and eggs, it will be asked to leave or will be forced out of the negotiations.  U.S. Chief Agricultural Negotiator, Ambassador Darci Vedder, has been quoted as saying that Canada has to make a substantive offer on supply management to remain in the negotiations.  Ambassador Vedder apparently noted, “it is difficult for me to see how we close a market access chapter with Canada that doesn’t include market access.” The response to the apparent move to force Canada to make substantial changes to supply management as the cost of joining the TPP has been entirely predictable and underlines one of the chief problems with discussions surrounding trade policy.  For the most part, public commentators can be divided into either free trade supporters or free trade opponents.  The actual agreement at issue becomes largely irrelevant as these groups tend to discuss free trade from the ideological perspective of whether or not the concept is a good one.  However, this dangerously narrow perspective ignores the more important question of whether a particular agreement is beneficial or not for Canada and how the Government of Canada should decide on this issue. Free Trade Agreements are generally intended to liberalize the conditions of trade between the parties to the agreement with the objective of increasing economic benefits.  The proposition that all Free Trade Agreements are good or bad is a simplistic analysis that adds no value to the dialogue.  The better approach is to consider whether a specific agreement is good or bad for the parties involved – a question that can only be answered by considering the terms and conditions of the agreement, or proposed agreement, in context. Taking the TPP and Supply Management as an example, the reports conclude that Canada is faced with the stark choice of either making concessions on supply management or withdrawing entirely from the TPP negotiations.  To make this decision, Canada must weigh the potential benefit of the agreement to the overall Canadian economy against the potential negative impact of offering concessions...

Posted by Woods LaFortune LLP on Apr 2, 2015

With businesses increasingly entering and operating in new international markets, proper and effective IP protection in the global marketplace has become a growing concern for many Canadian SMEs. IP can often be a company’s most valuable asset – it can strengthen your position in export markets and increase enterprise value. It is therefore very important to take the necessary steps to properly protect your IP before entering a foreign market. Don’t wait until you are faced with infringement or a legal dispute before thinking about IP protection for your business. Be proactive and plan ahead! Failure to properly research and know about IP rules and regulations in the market in which you are conducting business could expose you to unnecessary costs and higher risks that could ultimately have a detrimental impact on your bottom line. One of the most important things for businesses to know about IP in international markets, is that IP protection is not universal.  Thinking that a successful application for IP protection in Canada automatically grants protection in any other country is perhaps the most common mistake made by Canadian SMEs. IP protection only expands as far as the national border in which it is registered. So, if you register your IP in Canada, you are only protected in Canada, and are not afforded extended protection in any other international market. IP rights are territorial and national IP offices can only grant protection for their respective national jurisdiction. Therefore, before entering a new international market, it is crucial for Canadian businesses to seek and ensure proper IP protection in all of the international markets in which your business will operate to ensure the best commercial results from ownership of your business IP. So how do you protect you IP in multiple international markets? Typically, there are two main options: (1) a series of individual national applications; and (2) international applications. 1- National Applications – The national application route requires the applicant to seek IP protection in each individual country in which they plan to conduct business according to each country’s domestic laws and regulations (i.e. by applying directly to the respective national Industrial/Intellectual Property Offices of...

Posted by Gordon LaFortune on Mar 31, 2015

The February 2015 discovery of a single cow with mad cow disease (BSE) in Alberta, the first Canadian case since 2011, and the decision by some countries to close their borders to Canadian beef, raises the question of whether WTO Members only adopt sanitary and phytosanitary measures (SPS measures) to protect themselves from imported diseases or whether these measures are sometimes used to protect their domestic commercial interests instead. WTO members have the right to take action to prevent the transmission of disease through imported products.  GATT 1994 Article XX(b) allows Members to take action necessary to protect human, animal or plant life or health, but this is an exception to GATT rules that may only be applied to the extent necessary to achieve the legitimate objective of protecting human, animal or plant life or health.  In addition, these measures may not be applied in a manner that would constitute arbitrary or unjustifiable discrimination between countries where the same conditions prevail or raise a disguised restriction on international trade.  Thus, the purpose of Article XX(b) is to allow Members to protect human, animal or plant life or health without imposing unnecessary restrictions on trade. The WTO Agreement on the Application of Sanitary and Phytosanitary Measures (the SPS Agreement) expanded on GATT 1994 Article XX(b).  SPS Article 2provides that WTO Members have the right to take sanitary and phytosanitary measures necessary for the protection of human, animal or plant life or health, but again only to the extent necessary to protect human, animal or plant life or health and not in a manner that discriminates between countries or raises disguised restrictions on international trade.  In addition, SPS Article 2(2) requires that the SPS measure not be maintained without sufficient scientific evidence, except as provided for in SPS Article 5(7), which imports the precautionary principle into the Agreement by allowing members to take action on the basis of available pertinent information when scientific evidence is not available.  SPS Article 5 also requires that Members ensure that their SPS measures are based on an assessment of the risks to human, animal or plant life or health.  Thus, the SPS Agreement confirmed the...

Posted by Woods LaFortune LLP on Mar 17, 2015

With the aim of increasing international business and investment between the two countries, China announced in November 2014 that Canada would be designated as an official Renminbi (RMB) currency trading hub. In simple terms, an RMB currency trading hub is a centre authorized to complete RMB transactions at stable and predictable exchange rates. The formal launch ceremony for Canada’s Toronto-based RMB clearing hub is scheduled for March 23, 2015. The process of internationalization of the RMB began in 2008 and rapidly accelerated in 2009 when China established its dim sum bond market and expanded its Cross-Border Trade RMB Settlement Pilot Project, to help promote the establishment of pools of offshore RMB liquidity. The internationalization process continued to move forward with the conclusion of China’s various currency swap agreements with countries such as Argentina, Brazil, the UK and recently Canada, to name a few. This is the first time in decades that a national currency makes an attempt at internationalization since the Japanese Yen in the late 1990’s, which generated lukewarm success. With the RMB having recently emerged as the second most prominent currency in trade finance after the U.S. dollar, countries around the globe have been aggressively competing and bidding against one another to establish their own RMB trading centers. China has become a key growth market for Canadian companies and the importance of China’s economy, now standing firm as the second largest economy in the world, cannot easily be overlooked. For instance, in 2013, Canada-China merchandise trade totalled $73.2 billion, and China was Canada’s second largest export destination worldwide. In terms of investment, Canadian FDI into China in 2013 totalled $4.9 billion in 2013, making it Canada’s 19th largest destination for FDI, and Chinese FDI into Canada totalled $16.7 billion, making in the 8th largest source of FDI in Canada. The RMB trading hub will bring with it important advantages for Canadians conducting business in, or investing in China including: First-Mover Advantage – The Toronto centre, set for launch on March 23rd, 2015, will be the first RMB trading hub in the Americas. This represents an opportunity for the Canadian financial sector, and specifically for Canadian financial institutions...

Posted by Woods LaFortune LLP on Mar 12, 2015

At Woods, LaFortune LLP, we are preparing with great anticipation for next week’s #CanadaBizGoGlobal Seminar Series presentation on “Doing Business in Turkey”, which will be held on March 20th, 2015 in Toronto.  We are honoured to be working with Allam Advisory Group on this event and are delighted that the highly regarded Aylin Şule Songül, of the Istanbul-based law firm Songül Unuvar, has agreed to join us as a co-presenter, addressing the legal aspects of doing business in Turkey.  [For details,see: http://canadabizgoglobal-seminar-series.evolero.com/doing-business-in-turkey] Strategic partners for this event include the Canadian Turkish Business Council, the Embassy of the Republic of Turkey in Ottawa, the Republic of Turkey Prime Ministry Investment Support and Promotion Agency (ISPAT), as well as Export Development Canada. Why should you attend?  If you are interested in expanding your business horizons via international markets, this event could be just the catalyst you need. We have previously witten about the opportunties that the Canada-Korea Free Trade Agreement (CKFTA) coud generate for Canadian business in the context of the “gateway” it creates to the Asia-Pacific.  In the context of Turkey itself, the country is one that is srong economically, and with a young  and entrepreneurial population, it is a very dynamic market.  In its Global Markets Action Plan, the Department of Foreign Affairs, Trade and Development (DFATD) identified Turkey as an emerging market of broad interests to Canada and a top priority for international education, and infrastructure. Michael Woods, Senior Partner at Woods, LaFortune LLP, had the opportunity to travel to Turkey over the course of his bourgeoning career as a diplomat. Napoleon had called it the centre of world.  Indeed, as the New York Times pointed out: Turkey is not just another country, after all, but the heir of empires, classical as well as Ottoman, and the first secular republic in the Islamic world. Both in his intellectual work, which argues for the extraordinary status Turkey enjoys by virtue of its history and geographical position … The country’s current leader, Prime Minister Ahmet Davutoğlu, explained the uniqueness of Turkey this way:  …  the geographical continuity … Turkey is right at the centre of Afro-Euro-Asia, having multidimensional characters of geopolitics....