NAFTA renegotiations could focus on specific sectors

As the Trump administration officially indicated today its desire to renegotiate the 1993 North American Free Trade Agreement, trade lawyers began preparing for what will come next.

Geoffrey Kubrick, Ottawa-based national chair of the international trade practice at McMillan LLP, says some companies have expressed worry over the possibility of impending NAFTA negotiations.

“There’s a lot of concern about the negotiations, but it’s not so much about the negotiations, as what is being reported about what is going to be covered,” says Kubrick. “For example, there are things like border taxes, and those things are never going to happen. What people should be focusing [on] is what really could change under NAFTA.”

Kubrick says he believes negotiations could focus on specific sectors, where there were exceptions or reservations taken by Canada and Mexico.

“I think that’s where people should be focusing, but right now, there’s a lot of talk about things that probably aren’t going to happen,” he says.

He says when he recently reviewed NAFTA, he discovered that “about two-thirds of NAFTA is actually exclusions, reservations and exceptions, and most of those are for Canada and Mexico.”

“So, I fear that President Donald Trump was correct, in that the United States gave up more than Canada and Mexico did,” he says.

Kubrick says in his opinion, industries that could see changes include the dairy industry and the chicken and egg industry.

“Where the United States will likely target is where Canada has claimed a variety of exceptions. . .,” he says, such as where Canada has imposed punitive tariffs on imports.

“Canada allows a small amount of imports, tariff-free, in accordance with our [World Trade Organization] obligations, but after that, we have duties of over 200 per cent on these products, so the United States wants to sell dairy products in Canada and probably they’ll go after chicken and eggs, as well.”

Changes could also impact the telecommunications and entertainment industries, digital services such as cloud computing, and liquor rules. Kubrick predicts in certain areas the U.S. government will look to have “Canadian exclusions and exceptions and reservations removed or reduced,” like for dairy and egg products.

“That will certainly be a topic of discussion, and if we want to keep it, we’re going to have to give the Americans something else,” he says.

Kubrick, who has been practicing for nearly 30 years, says the negotiations could mean more work for lawyers.

“What a lawyer can do at this stage is assist [their clients] in communicating concerns and developing a strategy to push the Canadian team to strengthen their resolve in maintaining these protections,” he says.
He says lawyers should let their clients know there are concerns related to certain sectors and encourage their clients to get their message before government.

“The real issue for lawyers comes after the negotiation, on implementation,” he says. “When the rules change, there’s always more work for lawyers. . . if you have new laws, you have new rules, and they have to be tested to see where they stand.”

This is especially true for international trade lawyers.

“The more trade you have, the more trade disputes you tend to have,” he says.

“When there’s more competition coming from abroad, there’s more concern about that competition, and how you deal with it.”

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