Keystone: Why the White House Delayed the Pipeline Project and Its Impact on the Canadian-U.S. Relationship

Just three days after the White House announced the delay of the Keystone pipeline, a $13 billion dollar cross-border project that would have transported crude oil from Alberta’s oil sands all the way to Houston, Texas, President Barrack Obama and Prime Minister Steven Harper sat down in Hawaii to show bi-lateral relations remain strong.

As reported by CBC, Prime Minister Harper has attributed the Keystone delay, and other recent White House decisions, to America’s upcoming presidential election:

"This is simply the political season in the United States and decisions are being made for domestic political reasons that often have little or nothing to do with what other countries may think."

Obama's administration recently revived its "Buy American" provisions, potentially costing Canadian businesses billions of dollars in U.S. sales, and in the budget proposal he tabled last week the president proposed a $5.50 "passenger inspection fee" for Canadian air travellers.

On Thursday, the State Department ordered TransCanada to reroute its proposed pipeline and subject it to further environmental assessment.

The 2,700-kilometre pipeline would bring crude from the new oilsands expansions in northern Alberta to be turned into gasoline and other fuels in Texas, the hub of the American refining industry.

Canada has lobbied hard for an expanded pipeline to be built, saying it would provide jobs and economic benefit to both countries.
…
"We have already indicated of course that we are disappointed," Harper said. "Nonetheless, I remain optimistic that the project will eventually go ahead because it makes eminent sense.

"I would also point out — I think it's important to note — that there has been extremely negative reaction to this decision in the United States because this pipeline and this project is obviously what's in the best interests of not just of the Canadian economy but also the American economy."

Nevertheless, he said the decisions also underscore the need for Canada to secure access to Asian markets for its energy products. 

"That will be an important priority of this government going forward," he said, noting he raised the issue with Chinese President Hu Jintao on Saturday.

Yet, Christopher Sands—a Canada-U.S. relations expert—takes a harsher line against the Keystone delay:

Christopher Sands, a specialist in Canada-U.S. relations at the Hudson Institute, a think-tank in Washington D.C., argues the White House simply "messed up" and is now in a serious jam over an issue that threatens to derail Obama's re-election hopes. 

Environmentalists were looking for an issue to grasp, he said, and the pipeline seems to offer something for several green groups because there are concerns about land, air, water and climate change. 

"It's just a sign of how badly the president is concerned about his reelection hopes, that he can't afford to upset his constituency," Sands said. 

"The delay we're now stuck with is because the president mishandled the file."

But, whether or not the White House made the right call on Keystone, the political reasons for the delay are significant:

But the delay, which will very likely place a final Keystone decision well after the presidential election a year from now, was the culmination of a remarkable few weeks that saw the president take an increasingly personal interest in the issue. That interest, many observers believe, makes it clear this was a political decision, made by a White House eager to hold on to a base of young environmental-minded voters who were instrumental in handing Barack Obama the presidency.

“I am sure the Obama campaign did not like the idea of their campaign offices being occupied by a bunch of people who were against the pipeline,” said Jane Kleeb, the Nebraska campaigner who was instrumental in stirring up that state’s opposition. “And I’m sure they were tired of the high-level donors saying, ‘No we’re not going to donate until you do something on this pipeline.’”

Mr. Obama’s growing interest was evident over the past few weeks. There was the Oct. 26 event in Denver where, in response to a heckler, Mr. Obama stopped mid-speech and responded: “I know your deep concern about [Keystone],” he said. “We will address it.”

Finally, and surprisingly absent from the Canadian news sources, is the fact that the environmental concerns regarding Keystone are not limited to the White House or State Department. As reported by Reuters:

The State Department's environmental assessments of the Keystone are also being challenged by another lawmaker, whose committee has oversight of such reviews. Barbara Boxer, the chairman of the Senate Environment Committee, asked Secretary of State Hillary Clinton on Friday to answer a series of questions about the environmental assessment by November 14, probing whether the firm had a conflict of interest.

Boxer asked whether the Keystone decision will be delayed until the State Department knows the results of an independent engineering evaluation of spill detection measures and valves.

And this is not to mention the laundry list of complaints from the Natural Resources Defense Council, Sierra Club, National Wildlife Federation, and Friends on the Earth, that were lobbing legal challenges to what they considered a rushed State Department review . Among the groups’ complaints are (1) their contention that additional pipeline infrastructure is not necessary, (2) inadequate safety analysis, (3) an incomplete study of the green house gas and other air pollutant effects of the project, and—finally—(4) insufficient public review of the project.

Tim Hortons in Hot Water: How a Pending Class Action Lawsuit Illustrates the Difference of Canada’s Good Faith and Fair Dealing Doctrine

By Justin McNeil
Senior Editor

Tim Hortons dominates the Canadian fast food industry to the tune of $2.536 billion (CDN) in revenue last year alone. Its blend of coffee, fresh doughnuts, and connection to that most Canadian of sports has helped cement its own reputation as quintessentially Canadian. An organizational strategy embraced by other fast food chains, but not the other North American coffee giant, is Hortons’ reliance on franchising. The role this corporate structure has played in the success of the company seems somewhat evident, and now a class action lawsuit that is currently before the Ontario Superior Court of Justice may demonstrate the degree of importance franchises have played in Hortons’ rise. Inherent in this contractual relationship, are notions of good faith in negotiations between franchisor and franchisee. The legal concept of good faith and fair dealing, and how it is both defined and applied by the court may make the difference in whether the suit is ultimately successful or not.

The debate centers on this relationship and alleged misrepresentations over the costs of a new freezing process for doughnuts that are no longer baked in store. A recent article in Macleans takes a look at the dispute and lays out the contested information that has Hortons franchisees bringing suit. While the factual background is immense, the legal challenge which entails multiple causes of action may hinge on a claim that senior management breached the duty of good faith and fair dealing when they introduced the new flash freeze doughnut process. Franchisees say that management misrepresented how much the new technique would end up costing per doughnut. With costs now higher and margins lower than were expected, the franchisee plaintiffs feel the agreement they made was not presented to them with the requisite good faith that is inherently implied in contract negotiations. Now, they seek damages totaling $1.95 billion (CDN).

In most of Canada, good faith and fair dealing exists through the same common law recognition that is found in the U.S., as it is not afforded the strength of legislation (although the U.S. Uniform Commercial Code does codify the duty of good faith for the enforcement of commercial contracts). Only Quebec, in the civil tradition and inspired by French provisions with the same aim, has codified good faith in multiple articles of the Civil Code of Quebec. See Article 6; Article 7 (speaking to abuse of right); Article 1375. Instead, the common law provinces largely rely on the application of other doctrines to invoke breach of good faith and fair dealing, including unconscionability and fiduciary duties. Despite these differences between jurisdictions and legal systems, the concept is often applied in a very similar manner, yielding somewhat corresponding results. Even in Canadian common law though, courts have chosen to invoke the duty of good faith for a myriad of different reasons. Additionally, the duty has been employed differently depending on whether the issue involves contract negotiation, contractual performance, or contract enforcement. In response to this disparity, the increasing prevalence of the doctrine being asserted in legal claims, and its lack of a precise definition, there have been calls for a clear, bright-line rule in Canadian law that can be applied uniformly and provide for more predictability in the bargaining process.

Others have come to different conclusions regarding the relative benefits of applying good faith and fair dealing. In another common law country, it has been argued that the doctrine is neither required nor necessary for the proper operation of New Zealand contract law. The difficulty in arriving at a common definition for the doctrine, its differing application in distinct areas of the law, and justifications of its theoretical underpinnings that vary country by country are all arguments put forward to demonstrate the impracticality of relying on it. Reasons for why the doctrine is unnecessary in New Zealand include inter alia that adequate remedies are already in place—statutory, common law, and equitable—to protect contracting parties, the duty would reduce parties’ freedom to contract, the creation of a good faith duty is left to the legislature, the problems created by extending a general duty throughout diverse areas of contract and societal groups who may not need the protection, and a fear of the flood of litigants that will overwhelm the courts arguing a breach of good faith. Though these are all valid concerns, Canadian courts may continue to be more influenced by the similar codified rights of Quebec, and the traditional recognition the duty enjoys in American common law when grappling with the exact definition and authority to be extended to good faith in the future.

Legal claims aside, the class action suit is further complicated by allegations of impropriety on both sides in another Macleans article that more comprehensively addresses the turbulent recent history of the company and the motivations that animate the lawsuit. The lead plaintiff, Archibald Jollymore, is a store owner, former executive vice-president, and cousin of the former owner and co-founder of Tim Hortons, Ron Joyce. The current owners maintain that Joyce is both funding the plaintiffs’ fees in bringing this action and coloring the character of their claims, continuing a power struggle that began soon after Joyce sold the company to U.S.-based Wendy’s in 1995. With other family relationships involved, as well as different contingents of franchisees loyal to either the current or previous owners, the exact determination of what “good faith and fair dealing” means in this context will likely prove pivotal in the disposition of the case. Such an evaluation may have implications beyond this decision, due to the high level of publicity it already enjoys and the possibility of massive damages.

While the outcome of this case may not drastically alter the contract law of Canada, it may well serve as an impetus in further delineating the boundaries of its good faith and fair dealing doctrine. A reliance on the doctrine may move this area of Canadian common law closer to the law of the U.S., in that the duty is broadly recognized but largely uncodified. Whatever the result, effects will certainly be felt among franchisees of Tim Hortons, and possibly those of other Canadian chains. Any impact on the application of good faith and fair dealing in the U.S., or other common law jurisdictions, will be much more difficult to gauge. In a future post, I hope to follow up with new developments in the class action suit, as well as more fully explore distinctions in the doctrine’s application between Canadian and American law.

Accessing the Impact of Jack Layton’s Death on the Newly Empowered NDP and What Does Having this Party as Official Opposition Mean to Canada-US Relations?

By Erwin Braich
Staff Writer

Before becoming Prime Minister, in a speech to the conservative American think-tank Council of National Policy, Stephen Harper described Canada’s New Democratic Party (NDP), in the following way, “basically a party of liberal Democrats, but it's actually worse than that, I have to say. And forgive me jesting again, but the NDP is kind of proof that the Devil lives and interferes in the affairs of men.”[1] Since its founding in the early 1970s, this unapologetic left-leaning party Harper seems to scorn, has been an integral part of the Canadian political order. In fact, it was the NDP’s first leader Tommy Douglas who introduced universal healthcare, something that today you cannot leave out in the very first sentences describing Canada. More recently, the party was led from 2003 until this past summer by Jack Layton. Throughout his tenure, Layton passionately promoted his party’s principles while at the same time attracting more voters.[2] His savvy leadership translated to huge political gain for the NDP. In the federal election this past spring they surprised everyone. Layton was able to secure 103 seats for his party, and even oversaw a massive victory in Quebec, a place that the NDP had never even attempted to contend in.[3] Ultimately, Layton’s party leadership led to the utter collapse of one party (Bloc Quebecois) and the taking of the throne for Canada’s center-left spotlight, from the other (Liberals). But tragically, as the nation’s political scene was being reshaped by the emergence of the NDP as the Official Opposition, Layton succumbed to cancer in August. Which leads to the question: who will get behind the wheel of this reinvigorated political party? And in what direction will they steer Canada’s New Democrats?

There is no doubt Layton will be missed. Across Canada, only one-in-five think the NDP will be able to find a new leader as strong as Layton, while two thirds (66%) of Canadians disagree.[4] As of now, long-time NDP strategist Brian Topp is the sole registered leadership candidate, which will be formally decided at the party’s convention in 2012.[5] He has a stance on every Canadian hot-button issue such as advocating Canada must formally recognize Palestinian statehood, to being vehemently opposed to the Keystone XL oil pipeline project linking Alberta to the Gulf Coast.[6] Other potential candidates exist, among them Quebec MP, Thomas Muclair who gains popularity day by day. According to a poll released last week 28 percent of Canadians would vote NDP if Muclair is chosen to be the party’s leader, while 25 percent who would vote NDP if Topp is chosen.[7]

There is an important side note for any American observing the NDP leadership race. Canada has extremely tight campaign finance laws. Under the new rules, the maximum contribution an individual supporting one of these candidates can contribute is $1,200, but the NDP has instituted an internal policy that reduces this to a mere $1,000.[8] Also under Canadian law, corporations and other businesses are completely prohibited from contributing altogether. Needless to say, this is a vastly different campaign finance regulatory structure than seen in the United States.

So how will this impact the party’s effectiveness as Official Opposition? For one, it is the first time in history the NDP has held this position. So, if you combine this with the fact that they entered this Parliamentary session without real leadership, at first glance things can look somewhat unpredictable for the party. However, the NDP is now the sole voice coming from the political left in Ottawa. Given the huge blow dealt to the more centrist Liberals, (the Official Opposition for the previous five years) we can be sure that Harper’s Conservative government is going to be contested with more passion than ever before. Yet one thing to keep in mind is that any effectiveness is going to be tempered, because at the end of the day, the Conservatives have a majority government. In Canada it is only in extreme cases that an MP votes against his party. That said, any Opposition party’s role in a majority government will be more-so to stimulate public debate while waiting for the next election rather than directly affecting policy outcomes.  

            What could the NDP being the Official Opposition mean for US-Canada relations? Let’s be honest, the party has never been particularly friendly with the US. Expect Parliamentary debate to be reflective of this. The NDP have historically been known as the “anti-American” party extremely skeptical of American power. At one point they even called for Canada to pull out of NATO, because of their suspicion of American intentions.[9] And just this week NDP Immigration Critic (the formal Opposition “shadow” position to the Immigration Minister) MP Don Davies, called for Canada to ban former Vice President Dick Cheney from entering Canada for a scheduled speaking engagement, because of his role in the Bush administration.[10] While the Opposition’s current Foreign Affairs Critic, NDP MP Paul Dewar (another possible leadership candidate) has made clear that his party will closely examine any perimeter security cooperation between Canada and the US. [11] Alexander Moens, writing in the Fraser Institute’s most recent report on Canada-US relations, blames Canadian nationalist sentiment and specifically the NDP for creating what he terms the “political albatross” preventing progress on the Prosperity and Security agreement.[12] During Layton’s campaigning in 2011 he reiterated the NDP stance on Canada’s involvement in Afghanistan. He spoke on numerous occasions about how the party has been strongly in favor of bringing Canadian troops home since 2006 and immediately ending the military mission altogether.[13] The Conservatives on the other hand, are more in line with Obama’s plans of scaled down perseverance in Afghanistan. On every occasion the NDP has almost automatically opposed Canadian cooperation with the United States. We can anticipate that the NDP will be quick to challenge the Prime Minister on everything he decides to do regarding relations with the US. This is not only because it is the role of any Opposition to be the proverbial thorn in the governing party’s side, but also because there could not be more diametrically opposite sets of beliefs regarding Canada-US relations in Parliament.

Yet there is hope that things could gradually warm up between the Opposition Party and their stance towards the Americans. With the NDP’s new foothold in Quebec, they will now have to appeal to that province’s voters, who have historically been somewhat more supportive of Canada-US cooperation. Actually, amongst English-speaking Canadians, it is a well-known joke that when in Quebec, you will be treated more warmly if you tell them you are American rather than from another province. And from a policy standpoint they have always been Canada’s exception. One pertinent example is with regard to trade. In 1993, the NDP (and frankly most Canadians) had been staunchly against Canada’s commitment to NAFTA, but the opposition to the free-trade agreement was remarkable lower in Quebec where almost half of the population actually supported it.[14] This illustration is particularly germane to today, because the NDP under Layton’s leadership had advocated completely renegotiating the trade agreement. So might there be a chance the newly the acquired Quebecers lessen the party’s disdain towards the free trade pact? It is on key Canada-US issues like these, in which the new leader will have to balance traditional party positions with the interest of maintaining support in their newly conquered province.

Ultimately, Jack Layton’s legacy will be reflected by the strong position in which he left his party. As Official Opposition the NDP are going to be effective as determined critics of any move Harper’s Conservatives make, and at least for the meantime this critical voice should be at its loudest when it comes to Canada-US relations.

---

[1] Text of Stephen Harper's speech to the Council for National Policy, June 1997 http://www.cbc.ca/canadavotes2006/leadersparties/harper_speech.html

[2] Ian Austen, New York Times http://www.nytimes.com/2011/08/23/world/americas/23canada.html

[3] 2011 Federal Election Results http://www.sfu.ca/~aheard/elections/results.html

[4] Angus-Reid Poll http://www.angus-reid.com/polls/43998/canadians-remember-layton-fondly-support-state-funeral-to-honour-him/

[5] NDP Party Website http://www.ndp.ca/leadership-2012

[6] Brian Topp, Globe and Mail http://www.theglobeandmail.com/news/politics/second-reading/brian-topp/

[7] Joanna Smith, Toronto Star http://www.thestar.com/news/canada/politics/article/1058971--ndp-would-do-best-under-mulcair-poll-finds?bn=1

[8] Elections Canada http://www.elections.ca/content.aspx?section=pol&document=index&dir=lim&lang=e

[9] John Ibittson, Globe and Mail http://m.theglobeandmail.com/news/politics/ndp-foreign-defence-policy-differs-from-tories-in-style-more-than-substance/article2036769/?service=mobile

[10] Canadian Press Release, http://www.huffingtonpost.ca/2011/09/26/dick-cheney-canada-visit-ndp-ban-bar-don-davies_n_980609.html

[11] John Ibittson, http://m.theglobeandmail.com/news/politics/ndp-foreign-defence-policy-differs-from-tories-in-style-more-than-substance/article2036769/?service=mobile

[12] Alexander Moans, “Skating on Thin Ice: Canadian-American Relations in 2010 and 2011” p. 26 [Google Books] http://books.google.com/books?hl=en&lr=&id=mBLlGi0kAakC

[13] NDP Party Website http://www.ndp.ca/press/canadian-leadership-in-afghanistan

[14]Guy Lapachelle, “Quebec under free trade: making public policy in North America” p. 255 [Google Books]

http://books.google.com/books?id=E40tHMkPlUkC

Selecting The Supremes: What America Can Learn from Canada’s Approach to Appointing Justices to the Canadian Supreme Court

By Keith Edmund White

Last week highlighted the dramatically different approaches Canada and the United States use to appoint members to their highest courts. For only the second time, Canada witnessed the use of a formal Advisory Committee to question the Prime Minister’s Supreme Court appointments. The term ‘advisory’ in the committee’s title exposes an interesting feature of Canada’s constitutional process: “The MPs have no power to confirm or deny the prime minister’s appointments.”

In short, and this may be shocking to American readers, nominees to the Canadian Supreme Court have only one practical hurdle to clear: getting the Prime Minister’s approval. Canada doesn’t have the pleasure of watching four-day long interrogations of Supreme Court nominees by the U.S. Senate (in fact, the Advisory Committee was limited to three hours of questioning). Nor does Canada subject their Prime Minister to the dubious distinction of being ‘Borked’.

And this difference isn’t just a fun institutional ‘quirk’ to use as fodder for small-talk. The issue of how judges are appointed to the highest courts of Canada and America presents an intriguing, if not troubling, question: how should democratic nations select their top judges, keeping in mind that the judiciary (1) can yield immense political power, but (2) often derives its credibility from being considered above politics (or, stated less positively, being an inherently undemocratic institution)?

But, before reviewing what happened at last Wednesday’s committee hearing or comparing Canada and America’s appointment processes, providing an overview of Canada’s approach to Supreme Court appointment may prove useful to American readers.

Technically, the Governor General of Canada—not the Prime Minister—is vested with the power to appoint members of the Supreme Court, after consultation with the Queen’s Privy Council for Canada (the non-partisan bureaucratic support staff for Canada’s federal cabinet and the prime minister). But, in practice, this means that the Prime Minister’s cabinet—which, in essence, means the Prime Minister’s support—selects and appoints justices to the Canadian Supreme Court.

Also, there are two rules of appointment to the Canadian Supreme Court concerning geographic representation, one formal and one informal, which may surprise American readers. First, reflecting Quebec unique constitutional status, the Supreme Court Act—the 1875 parliamentary act that created and now governs the Canadian Supreme Court—mandates that the Canadian Supreme Court have at least three justices from Quebec. Second, there remains a convention that, out of the remaining six justices, three justices be appointed from Ontario, two justices from Western Canada, and one justice from the Atlantic provinces. (While the two new justices will return the Court to this ‘conventional’ ratio, the Court currently made up of four judges from Quebec, two from Ontario, two from Canada’s Western provinces—Manitoba and British Columbia, and one from Nova Scotia).

But, this background aside, what transpired at last Wednesday’s Advisory Committee hearing? Well, the Globe and Mail predicted that the two appointees—Mr. Justice Michael Moldaver and Madam Justice Judge Andromache Karakatsanis (both currently serving on Ontario’s Court of Appeal)—would face “a battery of questions”:

Supreme Court of Canada nominees Mr. Justice Michael Moldaver and Madam Justice Judge Andromache Karakatsanis have just one day left to prep for a nerve-wracking parliamentary hearing where they will field a battery of questions from MPs. 

However, the chances are slim that the hearing will develop into a free-wheeling session in which the personal lives and views of the nominees are flushed into the open. Instead, it promises to be a tightly scripted affair where MPs largely avoid touching on hot-button social, legal or political issues. 

“I think there will be fair questioning, but I don’t think it will be adversarial questioning,” said Liberal MP Irwin Cotler, a member of the Supreme Court search committee that prepared a list of six finalists for Prime Minister Stephen Harper to select from.

Yet, Emmett Macfarlane, writing for Macleans, was unimpressed with the committee’s “vacuous” questioning:

For advocates of greater transparency and democratic accountability in the Supreme Court appointments process, Wednesday afternoon’s ad hoc committee hearing—which gave members of Parliament an opportunity to interview the prime minister’s two nominees—was rather difficult to watch. 

The questions ranged from vacuous puffery, such as asking Justices Andromache Karakatsanis and Michael Moldaver to name their personal heroes, to glib and disrespectful challenges to Moldaver regarding his inability to speak French. The broader question of whether Supreme Court justices ought to have proficiency in both of Canada’s official languages is most definitely a legitimate one. And it was certainly not out of bounds for members to ask Justice Moldaver about the importance of language capacity and his intentions to learn French. (I’ll set aside for now the debate about whether we should make bilingualism a prerequisite for appointment to the Court). 

But by the time NDP MP Joe Comartin was using his second round of questions to ask Moldaver for the fifth or sixth time about the language issue, it had become painfully obvious that the hearing had nothing to do with learning about the judges or the role of the Court and everything to do with the MPs playing politics. Comartin had already asked a question in French to test Moldaver in a manner that could only have been meant to embarrass him. Not only was it rude, it was also pointless; Moldaver had already expressed regret and pledged to do his best to learn French as quickly as possible. It was as if Comartin hoped that his endless pestering would force Moldaver to quit, which is bizarre enough considering Comartin was on the committee that unanimously approved the short-list from which Stephen Harper named the two judges. 

That sideshow notwithstanding, the hearing offered little of substance from which to learn anything relevant about the judges’ views on their role as justices or the role of the Supreme Court. It was a stark contrast from the first time a Supreme Court nominee was publicly interviewed in Parliament. The 2006 hearing where Justice Marshall Rothstein answered an array of questions on his views about the Court and its function had its share of fluff, but was truly edifying by comparison.

Yet, this criticism isn’t unique to the Canadian process. This was the Washington Time’s take on Justice Elena Kagan’s (then) upcoming confirmation hearings:

The most important question members of the Senate Judiciary Committee should ask Supreme Court nominee Elena Kagan is, “Who do you think you are kidding?” 

The hearings process for high court nominees has become ritualized to the point that it is almost useless. Nominees are extensively coached to avoid voicing a real opinion. There is no intellectual give and take. Spontaneity is largely absent. Anyone who can reasonably keep his cool and regurgitate platitudes for a few hours can enjoy a lifetime appointment to the most important judicial body in the land.

But two important features in Canada’s selection process should be pointed out: (1) the five-person search committee did not only question the Prime Minister’s two Supreme Court choices, but also cut the Prime Minster’s list of 12 semi-finalists to 6 finalists, and (2) the committee included two members from Canada’s opposition parties.

As reported by the Globe and Mail, “[h]aving Liberal and NDP members on the search committee gave them a say in the process as well as a vested interest in the result, [Liberal committee member] Mr. Cotler acknowledged. ‘At the end of the day, the two people were also recommended by us.’”

These differences reflect a boarder, constitutional divergence between America and Canada’s Supreme Court appointment processes. As a result of its unique constitutional history, appointments to the Canadian Supreme Court, in essence, overtly political: the Prime Minister can install anyone to the Canadian Supreme Court who is constitutionally eligible. But this high level of discretion has pressured Canadian Prime Ministers to craft practices that afford their Supreme Court picks greater political legitimacy, and the freedom to experiment with different approaches to gain such legitimacy.

The United States, by contrast, embodies a rigid process of ensuring Supreme Court nominees earn political legitimacy: U.S. Senate confirmation. But this institutional mechanism has seemingly led the United States in a hyper-politicized process that has little hope of changing. (But does, at least to some, still offers a ‘teachable moment’ to American citizens).

Admittedly, both processes are only as good as the political actors make them. And, while Canada’s constitution gives the Prime Minister the power to look for innovative solutions to the Canadian Supreme Court’s democratic deficient, the Prime Minister’s ultimate control over the process could make Canada “look more like a dictatorship.” For example, in 2008 Prime Minister Harper, then with only a minority government, bypassed Parliament completely when appointing Justice Thomas Albert Cromwell to the Canadian Supreme Court. But, it should be noted that Prime Minister Harper (1) chose a justice with board support, (2) was able to quickly fill an important vacancy, and (3) consulted with then Liberal-opposition leader Michael Ignatieff.

And, at the end of the day, it seems Canada and America’s very different approaches to selecting Supreme Court justices bring the same result: hearings that offer little substance, and results dictated by the Prime Minister or President’s political capital.

Perhaps Canada’s current approach to appointing Supreme Court justices needs improvement. Yet, when the next vacancy on the U.S. Supreme Court occurs, American politicians, policymakers, and voters should look to Canada’s recent experiences with judicial appointment. Not only will they perhaps discover new ways to improve the America’s appointment process, they may also come to appreciate the benefits of Canada’s constitutional flexibility.

CONDITIONAL RESIDENCY: THE U.S. HAS IT, NOW POSSIBLY CANANDA?

By Racheal Clarke
Staff Writer

As neighbors, Canada’s immigration law is a vital part of understanding the bilateral relationship between the two countries. With proposals to relax security at the U.S.-Canadian border and instead adopt a continental security approach, understanding the differences of how individuals can get into the United States and Canada is a critical topic in Canada-United States relations. This post explores the emotional political debate over whether Canada should adopt a U.S.-styled conditional residency requirement on immigrants who enter Canada by virtue of marrying a Canadian citizen.

The United States imposes a two year conditional residency requirement on individual immigrants who are beneficiaries of an immigrant petition filed by their U.S. citizen spouse. If the couple is married for less than three years, the immigrant spouse receives a conditional resident card when their application for permanent resident status is approved. Ninety days before the second anniversary of the marriage, the couple must file Form I-751 Removal of Conditions. In order to remove the conditions, the couple must submit documentation proving the bona fide nature of the relationship and must show proof of marital union. This is normally done by sending in pictures of the couple together with friends and family, joint accounts, affidavits from the couple, friends and family, etc. However, there are times that the marriage ends before the two year requirement. This makes it difficult for the immigrant spouse to adjust their status. Knowing that they would immediately be placed in removal proceedings, many immigrant spouses stay in a broken marriage. In worst case scenarios, these immigrants put up with physical and emotional abuse in order to receive their permanent resident status.

Canada’s Minister of Citizenship and Immigration has proposed a policy to create a two year “conditional residency” similar to the U.S.[1] The proposal would amend the Immigration and Refugee Protection Regulations to include a specified period of conditional permanent residence for spouses and partners sponsored by Canadian citizens/permanent residents. Unlike the U.S., this policy would only apply to spouses and partners who have been married to their sponsor for two years or less at the time of the sponsorship application.[2] The sponsored spouse or partner would be required to remain in a bona fide relationship with their sponsor for a period of two years after receiving Canadian permanent residence status or risk losing their status.

This proposal has created serious concerns about the vulnerability of spouses and partners in abusive relationships. Canada’s Immigration Legal Committee (ILC) is opposed to the proposed changes. Among other objections, the ILC believes that the new policy would place the immigrant spouse, who usually are women, in increasingly vulnerable situations such as abusive relationships. They also believe that there are enough measures in place to prevent and identify marriage fraud.

A report done by Status of Women Canada shows that this is a legitimate concern. The report entitled, “Sponsorship…For Better or For Worse,”[3] states that “although not all sponsored women are negatively affected by the legal relationship, […] often sponsorship seems to be a source of conflict, tension, blackmail and at times abuse.”[4] The proposed changes may very well force women sponsored by Canadian spouses to remain in an abusive relationship for fear of losing her permanent resident status. However, the Minister has stated that “a process for allowing bona fide spouses and partners in such situations to come forward without facing enforcement action would be developed if a conditional permanent residence period were introduced.”[5] It will be interesting to see if this policy works for Canada as well as it works (or doesn’t work) for the U.S.



[1] The proposals were published in the Canada Gazette. See Canada Gazette, Government Notices (2011), available at http://www.gazette.gc.ca/rp-pr/p1/2011/2011-03-26/html/notice-avis-eng.html#d114 (last visited Sept. 24, 2011).
[2] This is one year less than is required in the United States.
[3] ANDREE COTE, et al., SPONSORSHIP. . . FOR BETTER OR FOR WORSE (2001), http://dsp-psd.tpsgc.gc.ca/Collection/SW21-54-2000E.pdf.
[4] Id.
[5] Jim Bronskill, Feds Propose New Rules For Sponsored Spouses, March 28, 2011,  http://news.ca.msn.com/canada/cp-article.aspx?cp-documentid=28166829.

The WTO at a Crossroad? FTAs and the Future of International Trade.

By Steven Paille

Staff Writer

Introduction

With the US Congress finally ready to vote on three bilateral trade deals, it seems a good time to look at the Canada-United States trade relationship and its impact on the WTO.  In particular, should proponents of liberalized trade welcome or read the ongoing negotiations between Canada and the EU for a Comprehensive Economic and Trade Agreement (CETA)—and, perhaps, its push for America to conclude its own free trade agreement (FTA) with the EU?  

Answer:  It is possible that nations pursuing ‘free-er’ trade could actually end the era of free trade as we know it—and gut the WTO.

The United States (US), Canada, and the European Union (EU) are all members of the World Trade Organization (WTO).  Since the US and the EU make up approximately half of the world’s GDP, their inclusion in the WTO is vital to the continuance of international trade norms, dedicated to non-discrimination, transparency, and low trade barriers.  However, the current economic downturn could signal a change in international trade norms and individual countries’ trade policies.  The blogosphere has already questioned whether the world is “moving back towards the protectionist system of the 1930s.”  In contemplating whether the US and EU will ever enter into a Free Trade Agreement (FTA) or whether the EU and Canada will successfully conclude the Comprehensive Economic and Trade Agreement (CETA), one must ask whether the world will return to the “spaghetti ball of bilateral trade agreements” dueling with one another, and whether the WTO can endure such a change in international trade norms.

Most-Favored-Nation and GATT Article XXIV

One of the fundamental trading principles of the WTO is “Most-favored-nation” (MFN), or non-discrimination.  In fact, this principle is the first article of the General Agreement on Tariffs and Trade (GATT), the second article of the General Agreement on Trade in Services, and the fourth article of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).  The MFN principle articulates that an individual country should keep trade barriers low, transparent, and equal for all WTO trading partners.  Further, an individual country should not discriminate between local products/services and foreign products/services.  Moreover, the WTO provides for an international trade arena, whereby bilateral agreements are not needed.  In fact, the WTO states, “[Regional Trade Agreements] (RTAs) can complement the multilateral trading system, help to build and strengthen it. But by their very nature RTAs are discriminatory: they are a departure from the MFN principle, a cornerstone of the multilateral trading system.” 

Like most agreements, there are always exceptions.  Here, a big one is that countries can still discriminate against one another by liberalizing their trade restrictions more with other countries through regional trade agreements of RTAs. (Other exceptions include more favorable trade policies for developing countries and restrictions to trade from countries that are “trad[ing] unfairly.”)

The Concern of RTAs

RTAs, while seemingly an excellent inducement for all countries to lower trade barriers, could obliterate MFN—and with it the WTO itself— if it is used by Canada and the United States to obtain preferential trade deals with the EU.

The WTO reports a “surge in RTAs [that] has continued unabated since the early 1990s.  As of 15 May 2011, some 489 RTAs, counting goods and services notifications separately, have been notified to the GATT/WTO.  Of these, 358 RTAs were notified under Article XXIV…”  As a result, while the exception for RTAs may have been needed to attain the support 153 WTO member states, the increase in RTAs and an eventual EU-US FTA and Canada-EU FTA may make MFN the exception, rather than the rule.  Clyde Prestowitz, President of the Economic Strategy Institute, explains that a “US-EU free trade agreement…would probably destroy the WTO because the US and the EU together represent somewhere between two-thirds to half of the world economy.  If half of the global economy entered into an FTA and excluded the other half – where would that leave the WTO?”  Mr. Prestowitz calls FTAs “preferential trade agreements,” which, according to the MFN doctrine, are disfavored by the WTO.

And a FTA between the EU and the US may solidify an international trade regime defined by competing blocs of FTAs.  If approximately half of the world’s economy had a preferential trade agreement, the other half of the world’s economy, spread across a number of countries, may lose out.  Although current tariffs between the EU and the US are low, “economic gains are higher when you do trade deals between bigger economies.”  Therefore, the aggregate effects of an EU-US FTA could be quite large.  This could result in disincentives for the EU and the US to engage in trade with outside countries.

As a result, an EU-US FTA could start an interesting cycle across the world.  If outside countries are left out because of an EU-US relationship, each outside country would be incentivized to quickly develop their own FTAs with the EU and the US.  This could create another “spaghetti bowl” effect. 

On the other hand, the dramatic increase in FTAs could create a reinforcing web of county-to-country trade deals that, in time, would allow the WTO to set even more liberal trade rules. The result could then be that the international trade norm of low trade barriers is strengthened.  In fact, as Fredrik Erixon, director of the European Centre for International Political Economy, points out, the EU and the US “will inspire others to follow their lead.”

Conclusion:  Will the WTO Step In?

The impact of FTAs on the WTO will depend on these agreements specifics.  Hence, the critical question becomes if the WTO will step in either to block these agreements (unlikely) or influence their terms (more likely). 

The FTA-exception, drafted into the WTO’s governing documents with critical qualifiers, could permit the WTO’s judicial arm to step in and ensure FTAs will not harm—but only reinforce—a global norm for liberalized trade among all countries.  I’ll be exploring this topic in my next post. 

North American Security Perimeter News Round-Up

Buzz is building about Canada and the United States government’s announcing a security perimeter agreement. Three Canadian articles aid in understanding what the deal hopes to accomplish, the steps needed to complete the deal, and—most importantly—the tensions any agreement would have to resolve between the two nations.

SC Magazine makes clear that the soon-to-be announced security perimeter deal is really a package of “around three dozen separate border unification measures” that have already been concluded.

What’s the impetus behind these deals? Well, as CBC reports, the positive trade impact trade of a security perimeter agreement is not lost on Obama administration members like U.S. Ambassador to Canada David Jacobson:

"This is a big deal," Jacobson said as he addressed a manufacturing summit in Montreal. "Particularly in my country people understand that if we're going to move the needle on exports and on trade, and on jobs that are dependent on export and trade, we're going to have a lot more bang for our buck by focusing on Canada."

But, in some ways, the main impact of these agreements may be to return U.S.-Canada to its pre-9-11 trade relationship. From the Vancouver Sun:

He [Ambassador Jacobson] said that in the years following those attacks, the U.S. moved quickly to implement security measures at the border, which caused traffic tieups and "emotional" consternation in Canada. 

"Clearly, as you ramp up security and just slow things down and make it less efficient and make it more onerous, it doesn't look as welcoming. I understand that and all Americans understand that. And that's something that we have worked on with Canadians."

But of course there are those who worry about the implicated of a security perimeter deal. This February 4, 2011 CBC article summarizes the Canadian partisan dynamics surrounding the deal:

The issue has been a hot political topic since a U.S. government watchdog called Canada-U.S. border security "unacceptably ineffective" in a report released on Tuesday. Later that day, PMO spokesman Dimitri Soudas announced that Harper would be travelling to the U.S. to meet with Obama.

Liberal Leader Michael Ignatieff then accused Harper of "talking with President Obama about things he's not prepared to talk to Canadians about."
Robertson told The Canadian Press the government should be keeping other parliamentarians and politicians in the loop. 

"Concerns over privacy, standards and sovereignty need to be assuaged and the case made for how the initiative serves the national interest," he wrote in a forthcoming report for the Canadian Defence and Foreign Affairs Institute and the Canadian International Council. "Mr. Harper needs to confide in Mr. Ignatieff and the premiers." 

Since the release of the U.S. government watchdog's report, opposition MPs have accused the government of not doing enough to stand up to the U.S. 

"Every deal this prime minister has made has led to a thicker border, not a thinner one," NDP MP Brian Masse said. "American politicians continue to slag Canadians as terrorists and they go uncontested every single day."

But with Harper now enjoying a parliamentary majority, it seems any roadblocks on the measures would have to originate in the States—not Canada.

Yet, legal eyes will be watching what legal agreements the nations do--or do not--come to on certain areas. As noted by the articles above, there is concern in Canada that more invasive American border security measures will diminish Canadian privacy expectations. But there will also be issues related to America' and Canada's different immigration policies.

As Reuel S. Amdur points out in The Canadian Charger:

The idea of harmonizing immigration and refugee policy is disturbing. Ours is, in spite of Harper, still a more open policy on refugees, and we are actively promoting selective immigration, with many people coming from countries that are on Washington’s radar.

 As far as security is concerned, we are already involved in NORAD and are paying around 10% of its operational costs. As with the $16 billion or so for fighter jets, against whom are we defending ourselves and our American betters? And should we be wary of American agents operating in Canada? A number have arrests warrants out for them on a kidnapping charge in Italy.

Pendulum Swing: Why Canada’s Cross-Border Jurisdictional Liberalization Matters for U.S. Transnational Lawyers

By Keith Edmund White

Note:  The following is a summary of Mr. Giacomelli’s Sept. 8 presentation to the Cleveland Metropolitan Bar Association’s International Law Section.  I would be remiss if I did not thank Jon P. Yormick, Section Chair, for organizing the event and his insightful comments, not to mention the Section’s  other officers, Mark J. Sundahl and Kristopher O. Justice.  Finally, many thanks to Mr. Giacomelli for his presentation; naturally, this article is my work product and does not intend to speak for Mr. Giacomelli or the Cleveland Metro Bar Association.

                Thursday afternoon I attended a presentation by Jon-David Giacomelli on U..S.-Canadian commercial disputes sponsored by the Cleveland Metropolitan Bar Association’s International Law Section.  Giacomelli focused on the Canadian judicial system’s “revolutionary” change towards enforcing U.S. court decisions within Canada.  He did so by discussing three topics:  (1) the dramatic liberalization of Canadian jurisdictional barriers to enforcing U.S. orders in Canada since 1990, (2) the value of American clients knowing what novel Canadian legal actions they can now use in Canadian litigation, and (3) the pros and cons of litigating commercial disputes in both nations.

                While technical, these subjects are critical to any attorney representing a U.S. client considering an action against a Canadian individual, affiliate, or separate Canadian organization.  And, for those interested or engaged in international commercial law in the United States, this situation will happen:  the Canadian-U.S. trading relationship constitutes the world’s largest trading relationship.  While some may imagine Canadian international commercial lawyers phoning New Delhi or Moscow, it’s important to remember—as Giacomelli noted—that Canada derives more trade dollars from Kentucky “than [with] most of the BRIC countries.”  And, on the American side, 2010 saw over twice as many U.S. export-dollars flowing into Canada than China.  And, remember, today there are more Californians than Canadians.

                Naturally, any barrier to trade costs money—and legal barriers, while admittedly abstract, are no different.   Before 1990, American plaintiffs with U.S. judgments who sought enforcement in Canada were forced to initiate a new Canadian judicial proceeding.    Whether from litigation delay or simply incentivizing legally problematic cross-border behavior, Canada’s jurisdictional nationalism dampened cross-border trade.

But, according to Giacomelli, the last twenty years have pushed Canada’s “jurisdictional pendulum” firmly towards jurisdictional liberalization.  Morguard v. De Savoye, while dealing with interprovincial jurisdictional issues, showed the Canadian Supreme Court’s embrace of the “real and substantial connection” test in determining how Canadian courts decide to enforce other jurisdiction’s legal judgments.  And Giacommelli made clear this term of arc has been interpreted liberally:  “the hurdle…is extremely low” and “courts bending [are] bending over backwards” to enforce U.S. judgments. 

                Of course, this radical change has not come without its critics—but Giacomelli does not place himself or the Canadian Supreme Court within this group of liberalization naysayers.  As he pointed out, in Beals v. Saldanha (2001) the Canadian Supreme Court enforced a U.S. court order where the defendant showed “newly discovered proof of fraud which was not before the U.S. court.”  The Canadian Supreme Court’s response:  since the fraud could have been reasonably discovered at the American proceeding the judgment is enforceable in Canada. 

While Giacomelli acknowledges the dangers of such “liberalization gone awry,” he does not see the Canadian legal system—in regard to American legal judgments—changing its tune anytime soon.  “[T]hose who thought the newly constituted Supreme Court would pull back were solely disappointed,” Giacomelli concluded.  And, in Pro Swing Inc. v. Elta Golf Inc. (2006), the Canadian Supreme Court went even further by making clear American injunctive orders could also be enforced in Canada.  

In sum, the liberal swing of Canada’s jurisdictional pendulum isn’t changing anytime soon.

            And how does this liberalization burst impact U.S. practitioners? American lawyers, when enforcing U.S. judgments in Canada, can now avail themselves of novel Canadian legal claims.   But, Giacomelli noted that many American lawyers are still playing catch-up when it comes to executing these tools properly, at their client’s possible detriment.  Standing out in Canada’s commonwealth tool box are (1) Mareva injunctions that freeze a defendant’s assests at the onset of a case and (2) Anton Piller orders that permit civil search warrants to be executed by the plaintiff.  Both require U.S. attorneys to not only spell-check their bill, but become acquainted with these legal tools’ procedural and substantive aspects.

              But, even clearing those hurdles does little if the U.S. legal practitioner cannot appreciate the differences between Canadian and American-style litigation.  Giacomelli uses 400 factors when advising clients, but—thankfully—boiled these down to a handful of core American and Canadian litigation benefits.  America (1) offers more avenues for accruing damages and (2) greater discovery access.  On the other hand, Canada offers (1) less expensive litigation, (2) legal costs to the winner, and (3) the natural advantages of both counsels settling the matter in the same jurisdiction. 

               An American international commercial must know these three topics—Canada’s liberalizing jurisdictional barriers, novel legal tools, and overall litigation benefits—before advising a U.S. client on what forum-shopping.  And, perhaps even more important, it allows the prepared international commercial lawyer to take advantage of their adversary’s (possible) lazy lawyering.

                In short, understanding Canada’s jurisdictional liberalization not only makes for good parlor-room conversation, it’s need-to-know information for international commercial lawyers who suspect they may run into world’s greatest trading relationship.