NAFTA AT 21 Successes, Controversies, and Lessons Learned: Canadian Perspective ABA Section of International Law, Fall Meeting October 22, 2015 Practice Experience Knowledge Education

We Are Now In The Future Leadership Calm Compliance

Successes in Canada ∞Increased Transparency – some published Advance Customs Rulings by the CBSA (but not like US) ∞CBSA has ben publishing/revising D- Memorandum and Customs Notices ∞Access to Justice – Government Procurement Bid Challenges – Simplified Procedure at CITT Customs Transparency Access to Justice

Successes in Canada – Duty Refunds on Overpayments ∞January 19, 2015 Customs Notice “Treatment of Downward Price Adjustments in Value for Duty Calculations” ∞Follows Hudson’s Bay Company vs President of the CBSA decision ∞CDN importers (NR importers) may be eligible for a refund of customs duty if price of goods adjusted downward after importation ∞NOTE: 48(5)(c) of Customs Act still applies Customs Compliance Valuation

Controversies – NAFTA Rules of Origin ∞Many Canadian importers claim MFN instead of NAFTA ∞Documentation requirements are burdensome ∞NAFTA verifications by US CBP are considered to be intrusive ∞NAFTA limits ability to change supply sourcing ∞Internal communications within manufacturers Customs Law Knowledge Experience

Controversies – Rules of Origin in Antidumping Context ∞Havelock Metal Products Inc. v. President of the CBSA; Ideal Roofing Company Limited v. President of the CBSA ∞Goods (screws) further manufactured in USA (over 60% value in USA) ∞Potentially met NAFTA rules of origin (UST) ∞Met MFN rule of origin (USA origin) ∞CITT used dictionary definition for “originating” ∞CITT determined it was inappropriate to use NAFTA Regs. or MFN Regs. Customs Law Experience

Settlement ∞Canada does not have a perfect win record ∞Clayton/Bilcon of Delaware Inc. v. Government of Canada ∞Against Canada/Government of Nova Scotia ∞Re proposal to operate a quarry and a marine terminal in Nova Scotia at Whites Point in Digby Neck ∞Tribunal found breaches of NAFTA Articles 1102 and 1105 ∞Deferred compensation determination ∞AbitibiBowater Inc. v. Government of Canada ∞Against Canada/Government of Newfoundland/Labrador ∞Consent Award: December 15, 2010 ∞Payment $130 Million Customs Law Experience

Controversies – Investor State Dispute Settlement ∞Bilcon statement by Tribunal: ∞“It may bear reiterating, therefore, the Tribunal’s view that under NAFTA, lawmakers in Canada and the other NAFTA parties can set environmental standards as demanding and broad as they wish and can vest in various administrative bodies whatever mandates they wish. Errors, even substantial errors, in applying national laws do not generally, let alone automatically, rise to the level of international responsibility vis-à-vis foreign investors. The trigger for international responsibility in this particular case was the very specific set of facts that were presented, tested and established through an extensive litigation process.” Investment Disputes Experience

Lessons Learned – Trusted Traveller and Border Security ∞February 4, 2011 – Beyond the Border Initiative ∞The Declaration established a new long-term partnership built upon a perimeter approach to security and economic competitiveness ∞July 21, 2014 – trusted traveler and trusted trader enhancements ∞NEXUS pass request for reconsideration process Risk Management Compliance Security

Lessons Learned – TPP Changes to NAFTA ∞Trans-Pacific Partnership Agreement signed on October 6, 2015 ∞Updates rules of origin ∞Updates autos rules of origin ∞Updates dairy market access ∞Updates ISDS rules ∞Updates government procurement rules ∞Updates IP rules ∞New SME Chapter ∞New Electronic Commerce Chapter Risk Management Compliance Practical

Lessons Not Learned – Complacency ∞NAFTA has been law for 21 years – some importers and exporters are complacent ∞Some importers and exporters do not have internal controls ∞Some importers/exporters do not keep proper documentation ∞Often document information cannot be matched ∞Some importers/exporters do not consider questions of origin ∞Some importers/exporters do not determine proper tariff classifications ∞Some importers/exporters do not ask valuation questions Risk Management Compliance Practical

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