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Bulletin

The Federal Budget 2018 - Spotlight on Trade Issues

Fasken
Reading Time 4 minute read
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International Trade and Customs Law Bulletin

The 2018 Budget saw the Canadian government announce noteworthy trade initiatives. These center around four main themes: (1) legislative proposals and litigation; (2) initiatives for women-led businesses to expand exports; (3) consolidation of export programs under the Trade Commissioner Service; and (4) increasing the government's regulatory approach regarding Canadian corporate social responsibility including in foreign jurisdictions.

Trade Law Proposals and Trade Litigation

The government announced its intention to amend the Canadian International Trade Tribunal Act "to ensure that it continues to effectively deliver upon its mandate". The government did not provide any details of the changes being considered. However, as the mandate of the Tribunal includes hearing complaints, conducting inquiries, and issuing decisions in the areas of anti-dumping, federal government procurement and customs matters, each of which may have a significant impact on corporate revenues, the announcement could portend changes that have a significant impact on company operations and opportunities.

The government also announced its intention to amend the Customs Tariff to simplify its structure and administration to reduce the regulatory burden for affected businesses. The Customs Tariff sets out rates for goods imported into Canada that determine amounts that must be paid to import goods, but also how to obtain relief from or defer payment of these amounts. The details of these changes could have a significant impact on the time, cost and resources needed to import goods into Canada. 

The government also announced the allocation of $191 million over the next five years to softwood lumber producers affected by the ongoing World Trade Organization and NAFTA softwood lumber disputes. Details have not been provided, but the allocation signals the government does not believe this dispute will likely be resolved soon.

Business Integrity

One of the recommendations from the Report of the Standing Committee on Foreign Affairs and International Development regarding Canada's sanctions regime is that the government provide comprehensive, publically available, written guidance to the public and private sectors regarding the interpretation of sanctions regulations in order to maximize compliance. Budget 2018 announces plans to allocate $22.5 million over the next five years to develop sanctions policy, to coordinate with international partners, and to provide guidance to Canadians with respect to their sanctions obligations.

Prior to Budget 2018 the government announced the creation of the Canadian Ombudsperson for Responsible Enterprise to work with Canadian firms who do business abroad to "exercise leadership in ethical, social, and environmental practices". Budget 2018 announced government spending of $6.8 million over the next 6 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 US and the UK in dealing with white collar crime, defer prosecution in exchange for the defendant agreeing to fulfill certain requirements including 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.

Women-Led Exporting Businesses

The 2018 budget 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 CETA, Canada's free trade agreement with Europe, and the recently concluded Comprehensive and Progressive Agreement for Trans-Pacific Partnership, the successor to the TPP.

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 United States.

Conclusion

As is customary, the 2018 budget does not set out the government's implementation plans in great detail. Nevertheless, although seemingly modest, the initiatives contained in the budget may have a significant effect on individual businesses or industry sectors. We advise and encourage companies to stay informed of future government announcements regarding these budget announcements, as appropriate. We will continue to monitor the implementation of these proposals and report on significant new details when they become available.

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