Lexpert Magazine

LEXPERT MAGAZINE | JUNE 2017 59 | INTERNATIONAL TRADE | cal for Canada if it seeks a real foothold on the other side of the Pacific. "Under TPP11, Canada would have preferential access to markets that the U.S. companies find attractive, including Ma- laysia, Vietnam and Japan," they wrote in a Globe and Mail piece. "Even if Mr. Trump were able to negotiate individual bilateral agreements with these countries, Canada would still be in a better position with one set of rules for a group of 10 markets around the Pacific. is would give Cana- dian firms an ability to join new, larger sup- ply and production chains — something that would be difficult for the Americans with a hodgepodge of agreements, each with different rules." Matthew Kronby of Bennett Jones LLP in Toronto says that Japan's presence in a renewed TPP is itself sufficient reasons for Canada to pursue it. "ere's no downside here," he says. "And a deeper trade relation- ship with Japan would be a big prize." It's not, however, as if the TPP is univer- sally popular in Canada. e automotive industry, in particular, remains opposed. "e TPP in its current manifestation and with its current rules is dead and won't be resuscitated," Swick says. "From the per- spective of the Canadian government, there's not enough consensus from business and too much political cost." e better route, Swick believes, is for Canada to continue promoting bilateral agreements. "e debate about the TPP is a debate about the strategy of manag- ing the Asia-Pacific market," she says. "Canada should build on what has been achieved despite the agreement's collapse, and concentrate on relationships with in- dividual countries." In the case of China, that may be easier said than done. It is true that a proposed Canada-China FTA saw its second round of exploratory talks in Ottawa in late April. But to say there was a lack of popular sup- port would be an understatement. e Council of Canadians is opposed. And a Nanos research survey, also conducted in April, found that 88 per cent of Canadians were at least somewhat uncomfortable with allowing Chinese state-owned enterprises to buy high-tech firms or invest in oil and gas; 66 per cent believe commitments from China regarding human rights should be part of any agreement. ese findings are directly contrary to key demands that China regards as the underpinnings of any agreement. So it's unlikely that an FTA is in the cards soon. "We're talking in genera- tional terms, if at all," says Swick. As usual, the wild card is President Trump. Notwithstanding his recent over- tures to Xi Jinping, the decided absence of principled policy in his administration to date could reignite tensions that might af- fect Canada's relationship-building efforts with the Chinese. "e US is at some point going to say that giving Canada preferential access to the American market is directly opposed to exporting things made with Chinese goods to the US," says Dan Ujczo, an international trade lawyer in Dickinson Wright's Columbus, Ohio, office who has worked for both the Canadian and US governments. "[Prime Minister] Trudeau needs to make a choice between doubling down on being competitive in the US and the North American market or trying to be the bastion of free trade and impairing our access to our largest trading partner." As Ujczo sees it, the decision is a no- brainer. "Canada should go all in to en- sure preferential access to the US because that will be Canada's best chip in drawing companies and investment from around the world and encouraging them to create more value-added activity right here." It's a delicate balancing act. "If we get too close to the US, we're going to get burned domestically and if we're not close enough, they'll shut us out," says Paul Moen of Earnscliffe Strategy Group, a Canadian policy consultancy. "Still, I think the cur- rent environment will create new business opportunities for Canada if we continue to manage it in a coordinated, well thought- out manner." Julius Melnitzer is a freelance legal-affairs writer in Toronto. CORNERING THE GREEN Canadian marijuana stands to benefit from cross-border policy discord As Lexpert went to press, the Trudeau government introduced its marijuana liberaliza- tion legislation. When in force, the legislation will make Canada one of the first indus- trialized countries with fully legalized recreational and medical cannabis. Lawyers at Cassels Brock & Blackwell LLP in Toronto see this as a trade opportunity for Canada. In this regard, the firm's Jonathan Sherman notes that the US may be heading in the op- posite direction, emulating the gulf that exists between the two countries on trade policy. While individual states have been moving towards legalization, Vice-President Mike Pence and Attorney-General Jeff Sessions have long been opposed to cannabis legalization. New Supreme Court Justice Neil Gorsuch once ruled that police were justified in assuming that a suspect was armed merely because he was growing cannabis. In Gorsuch's view, this justi- fied the police using a taser to kill merely because he was growing cannabis. The likelihood of federal support, then, for former President Obama's hands-off approach appears tenuous. Contrarily, there's a growing body of public opinion in the US that favours legalization, which make it difficult for the administration to implement a hardline approach. "But the lack of a unified front only aggravates the uncertainty," says Sherman's colleague Jacqueline Richards. But that works to Canada's advantage. "Any increase in uncertainty in an already unclear legislative environment functions as an impediment to cannabis projects in the US," Sherman says. "Unburdened by the U.S.'s significant political and legal uncertainty, Canada has an opportunity to expedite its already rapid industry development to position itself as a global leader in the market for legal cannabis." Somewhat unexpectedly, the proposed legislation contemplates export licences only for medical cannabis and not for recreational cannabis. But that could change as the legalization of recreational marijuana gathers steam in other countries. "Even if it doesn't, there's still significant opportunity in the medical sector," Sherman says. All the more so because of the stringent quality controls that the new legislation imposes. "Everything that's commercially grown will be grown to pharma quality," says Cam Mingay, a partner at Cassels Brock. "We're also going to learn a lot as first movers in this arena."

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