Managing the Trump effect

By Ann Macaulay September 5, 20175 September 2017

Managing the Trump effect

 

Donald Trump has been president of the United States for just eight months but many Canadian lawyers have already started to see the impact of his protectionist policies on their practices. And that impact will likely continue to affect Canadian businesses and their lawyers as more policies are unveiled.

Where many are seeing doom and gloom, however, at least one Canadian lawyer sees opportunity.

“This is the best time to be a trade lawyer and to be able to go out there and make a difference,” says Cyndee Todgham Cherniak of LexSage, a boutique international trade law and sales tax firm in Toronto. She points to renegotiation of the North American Free Trade Agreement, continuing softwood lumber issues and Trump’s Buy-American policy as creating a significant increase in legal work recently.

Trump’s protectionist bent has some Canadian companies looking to move to the U.S., and American companies that have set up operations in Canada considering pulling up stakes and moving home, says Todgham Cherniak. “And if the tax reforms go through in the U.S., there’s going to be a greater incentive for Canadian companies to open branch operations in the U.S.”

Even Trump’s sanctions on Iran, North Korea and Russia have affected Canadian businesses as their lawyers revisit their companies’ compliance programs.

NAFTA, regulations and Buy American

Renegotiating NAFTA could be a good thing for Canada, says Todgham Cherniak. In some areas, such as textiles, the rules were drafted very restrictively, and other sectors, such as electronic commerce, hadn’t even been imagined when the agreement was drawn up in the early 90s. “There’s a lot of improvement that can be made, and with improvement there’s great opportunity for Canadian businesses.”

The dispute settlement mechanism is one area lawyers should watch very carefully in the NAFTA renegotiation, says David McFadden, counsel in Gowling WLG’s Toronto office, who works in energy and infrastructure. That was a critical point in the original agreement and “Canada would never have signed the Canada-U.S. Free Trade Agreement in 1988 if there had not been a dispute settlement mechanism.” If it’s terminated, Canada and Mexico would “have to be really worried about being governed by U.S. courts,” he says.

Trump has also called for an expansion of public-private partnerships in infrastructure, which McFadden says “could lead to more work for Canadian law firms who work for companies that want to get into infrastructure development in the United States, whether it’s financing infrastructure, building infrastructure or operating and managing it.”

Trump’s “Buy American and Hire American” executive order is one significant issue that will have a negative impact, says Todgham Cherniak. She fully expects to see more Buy-American provisions, which could exclude Canadian companies from doing business in the U.S. She foresees it having a ripple effect on Canadian businesses and their lawyers.

Another area to watch is Trump’s plan to remove a number of government regulations. The two countries have talked about harmonizing regulations, says Todgham Cherniak, so she questions which ones Canada will have to get rid of or harmonize with the U.S. to avoid a negative impact on Canadian businesses or subsidiaries of U.S. businesses wanting to stay in Canada.

Immigration, NEXUS and Canada’s preclearance bill

Perhaps the most discussed policy change has been in the immigration area as a result of Trump’s travel ban for several countries.

Henry Chang, co-chair of Blaney McMurtry’s International Trade and Business Group in Toronto, says American consulates have been implementing Trump’s promise of extreme vetting, while border officers have been “a lot more aggressive than they used to be.” He and his colleagues are seeing a higher level of scrutiny for port-of-entry permits that formerly were easily approved and are now being sent back at least once or twice.

Todgham Cherniak says several of her Canadian clients have had their NEXUS cards taken away by U.S. Customs in the past few months, despite having done nothing that would warrant their passes being revoked. Since Trump took power, she has not been able to successfully overturn a decision by the U.S. to revoke a NEXUS pass. It’s extremely difficult for Canadians to get their passes back, she says, “and it’s almost impossible to find out the real reason why they took your NEXUS card away.”

Although Todgham Cherniak says she has no firm evidence, “it looks to me as if there is a policy in place that targets particular individuals and the U.S. government is overriding what was decided previously, jointly, by the U.S. and the Canadian governments.”

One big issue that Chang says has not been high on the radar is the Canadian preclearance bill, which revises existing legislation that allows American customs and border protection officers on Canadian soil to inspect travellers before boarding a plane. The new bill would give them extremely broad powers, says Chang.

Currently, travellers can decide not to travel to the U.S., and agents “can’t force an answer, they can’t detain you because you’re on Canadian soil.” But under the new Canadian preclearance bill, if someone finds a question inappropriate, American agents “can say no, you are legally required to answer this question,” Chang says. “Once the new bill passes, if you don’t answer a question, they can have you criminally charged with obstructing a preclearance officer.”

If the preclearance bill passes, Chang foresees constitutional litigation resulting over whether it violates the Charter. The bill was put through when Barack Obama was president, adds Chang, but Trump’s anti-immigrant policies have resulted in “a lot of Canadians and even permanent residents or workers who are on his hit list. They would be subject to greater scrutiny because they’re from Muslim countries. It’s bad enough that it happens at the borders and at US airports—do we want to sit by and allow them to do it in Canada?”

(Note: For more on the preclearance bill, see the CBA submission and CBA Influence blog.)

Despite any uncertainty and anxiety caused by ongoing policy changes made by Trump’s administration, Canadian lawyers should stay focused on the opportunities that are presented, says Todgham Cherniak. “We can’t look at everything that the Trump administration says as being negative. Any seed can grow into an abundance of opportunities.”

Ann Macaulay is a regular contributor.

 

 

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