The 2018 Budget saw the Canadian government announce noteworthy trade initiatives. These center around four main themes: (1) China and Asia; (2) initiatives for women-led businesses to expand exports; (3) increasing the government's regulatory approach regarding Canadian corporate social responsibility including in foreign jurisdictions; and (4) consolidation of export programs under the Trade Commissioner Service.
China and Asia
In Budget 2018, the government stressed its focus on actively deepening trade relationships, through modern, progressive free trade agreements in fast-growing markets in Asia. The government announced that it will spend $75 million over the next five years for Global Affairs to strengthen Canada's trade support and diplomatic presence in China and other Asian markets.
This follows on Canada and China having set a goal of doubling their bilateral trade by the year 2025. Although Canada and China have not begun formal free trade negotiations, exploratory discussions were held between the two nations in 2017. Canada has also held a public consultation on the prospect of a free trade agreement between Canada and China, with the consultation results published in November 2017.
The government also touted the recently concluded Comprehensive and Progressive Agreement for Trans-Pacific Partnership, the successor to the TPP, as solidly anchoring Canada's place in the Asian market. The CPTPP, the largest regional trade deal in history, will establish access to markets representing 450 million people with a combined GDP of $11.5 trillion. While the foregone tariff revenues related to the CPTPP will amount to over $2 billion over the first four years after the agreement is implemented, the CPTPP will likely be a boon for Canadian companies and sectors.
Women-led exporting businesses
The 2018 budget as a whole had a strong focus on women, and international trade was no exception. The advancement of women entrepreneurs has been a priority of this government, and the budget states the goal is to support their growth "into competitive, sustainable world-class companies."
To this end, the government announced it will make available $250 million through Export Development Canada over the next three years in financing and insurance funds to women-led businesses that are exporting or looking to export. The government also allocated $10 million over five years for women-led businesses to support export opportunities through the Business Women in International Trade Program. The program will focus on trade opportunities under the CPTPP and CETA, Canada's free trade agreement with Europe.
In addition to these commitments, the government also announced it would lever government procurement to support women-owned businesses. As it stands, of the small and medium-sized businesses that take part in federal procurement, only one in 10 are women-led. Government business can provide the steady revenue stream and validation of the quality of products or services provided that businesses need to start looking to expand into foreign jurisdictions.
Prior to Budget 2018, the government announced the creation of the Canadian Ombudsperson for Responsible Enterprise to work with Canadian firms that do business abroad to "exercise leadership in ethical, social, and environmental practices." Budget 2018 announced government spending of $6.8 million over the next six years to fund this department.
The government also announced and will provide details later of its plan to introduce legislation to permit Canadian Deferred Prosecution Agreements to be implemented through Judicial Recommendation Orders. Such agreements, used in the U.S. and the U.K. in dealing with white-collar crime, defer prosecution in exchange for the defendant agreeing to fulfill certain requirements. These include the payment of fines, implementing corporate reforms, and fully cooperating with any investigation, which if carried through may then result in dismissal of the charges.
Export program consolidation
The government announced that it will update the Trade Commissioner Service (TCS), which provides companies with advice, connections and funding to help them export to foreign markets. The 2018 budget update will result in the consolidation of a number of export-related government programs under one TCS umbrella. These include CanExport, Going Global Innovation, Canadian Technology Accelerators and the Canadian International Innovation Program. All will now exist within TCS. The intent of the changes is to simplify access to these programs.
The government also announced spending of $10 million over five years to renew the Canadian Technology Accelerators program, which provides assistance to high-growth Canadian technology companies in exporting to the U.S.
As is customary, the 2018 budget does not set out the government's implementation plans in great detail. We advise and encourage companies to stay informed of future government announcements regarding these budget announcements, as appropriate. With ongoing NAFTA negotiations and the ever-present threat of new protectionist American trade policies, we will continue to monitor Canadian trade policy and report on significant new details when they become available.
Clifford Sosnow is a partner with the Fasken Ottawa and Toronto offices. He is an internationally recognized expert on cross-border anti-bribery and foreign corruption law, economic sanctions, export/import compliance, investment arbitration and foreign investment reviews.
Robin Edger is an associate with the Fasken Ottawa office who practices in the areas of government relations, ethics and political law and international trade law. He has previously worked with the Government of Ontario in both civil servant and political staff capacities.
Kevin Massicotte is an articling student with the Fasken Ottawa office. He is a graduate of the University of Ottawa, Faculty of Law and an award-winning cyclist who has competed internationally with Team Canada.
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