Dawson Strategic's December Briefing: A TPP Holiday Season

For readers interested in the Trans-Pacific Partnership (TPP), do check out Dawson Strategic's December briefing. Whether on the big-picture, or the leading issues within the TPP talks, the briefing's three articles are must-reads.

One particularly interesting section of Dawson Strategic's December article, The TPP: What's In It For Canada?:

Beyond its defensive interests, the TPP is a central component of Canada’s Asian and emerging markets strategy. Much of 2013 will likely be spent reconciling the trade rule-making interests and capacities of advanced industrialized economies with those of emerging economies such as Vietnam and Peru. Advanced economies like the U.S., New Zealand, Australia and Canada will bump up against each other on issues like investor-state dispute settlement and dairy market access, but there will be relatively few fireworks. In areas like intellectual property and labour mobility, the commitments that Canada is making with the EU are likely to go much deeper than anything we can expect from the TPP.

Image of the Day: Canada-U.S. Trade

The Globe and Mail offers some interesting graphs of where Canadian business leaders think their export market heading in the near-future.

Check out all the results and related articles here, but this graph was the most surprising--showing that most  participants believing America's share of Canada's export market will stay the same or even increase:

Let's Get Over "Net Benefit" Test Carping: Or Why Political Law is Still Law...and the World's Still Here

By Keith Edmund White, Editor-in-Chief

More complaining about the dreaded political nature of Canada's revamped "net benefit" test.  Critics seem to be saying, 'If a law's a law, it should always be transparent and consistent--just like jury decisions!'  Keith Edmund White looks at Don Lenihan's criticism of the Harper government new rules of foreign takeovers (i.e. the "net benefit" test), and stands up for the messy, status quo the revamped rules leave in place.  Added bonus:  mention of Conrad Black.

Don Lenihan, Vice President at Ottawa’s Public Policy Forum, hits the Harper government’s new rules on foreign takeovers of strategic Canadian industries (and compliments Conrad Black).
From Lenihan’s iPolitics article:

If we really are at the beginning of a long-term trend that will force the federal government to begin employing controversial (possibly highly controversial) measures to protect Canada’s strategic assets, the goal of the policy should be to ensure that the decisions are transparent, effective and fair.

Unfortunately, on this score the new rules raise more questions than they answer. Do we really want to include all SOEs under one catch-all rule? If an SOE is willing to comply with the same rules as private sector companies, should this make a difference?

If the policy allows “exceptional circumstances” to override the rules, how will these be defined? How will the government deal with future private sector cases that are similar to the Saskatchewan Potash Corp? What other resources or industries could be declared strategic assets?

What options are open to the government to create the kind of “middle ground solution” proposed by Black?

Lenihan echoes the worries of many commentators about Canada’s vague “net benefit” rules.  The tacit underlying assumption of Lenihan’s critique: all legal determinations should be consistent and transparent.  But aren’t foreign takeovers of critical Canadian industries (or of any nation) as political—as say—the political and inconsistent decisions to raise or lower taxes or conclude a foreign investment treaties?  And in the case of foreign takeovers, are any two Canadian industries really the same?

But what will keep Canada from deterring smart foreign investment?  Simple:  If Canada drives away smart investment, it will feel it where it counts--the pocket-book.

Sure, this approach may not have the gossamer shine (and superficiality) of administrative consistency, but there are legal issues that societies do not settle through bright-line rules. And those issues tend to be that way for a reason.

And Lenihan's critique--making a new sub-set of rules for SOEs that comply with private sector practices--shows just how illusory the quest for a Black-ian "net benefit" middle-ground is.  The more Canada tries to make rules for all possible foreign takeover scenarios, the longer the rule becomes, perhaps to the point of incomprehensibility--and the easier it is manipulated.  Just ask anti-Affordable Care advocates how they feel about the ACA being considered a 'tax' and not a 'mandate' by the controlling opinion of the Supreme Court, thereby passing U.S. constitutional muster.  The point:  rules don't always bring clarity, especially when they are voluminous and involve hot-button issues.  

Oh, and wait, we're worried, in the case of Chinese state-owned enterprise CNOOC takeover of Nexen,  of Canada's notoriously illiberal society negatively impacting the struggling, still-malleable but liberal-idolizing economy of China?   

Check out one notable exception to the chorus of "net benefit" naysayers, Jeffrey Simpson's article in last week's The Globe and Mail:

China [owner of Cnooc who put in the bid for Nexen] wants things both ways: that its SOEs can buy elsewhere but others can’t buy in China. That the Harper government has now identified a sector of the Canadian economy essentially off-limits to SOEs can’t logically be objected to by China, which puts big swaths of its economy out of reach of foreign investment or insists that foreign companies can only buy minority interests or participate in joint ventures.

China has been pursuing a policy of locking up natural resources wherever they can be profitably bought, and Canada seemed a likely next target. If China doesn’t like the new Canadian guidelines, there are plenty of other opportunities around the world. If China chooses not to test the guidelines, Alberta’s bitumen oil will still interest other investors.

The challenges of bitumen oil are so many that the new guidelines’ impact is among the least threatening. The changing oil scene in the United States, the difficulty of getting approval for pipelines, the growing emissions of greenhouse gases, the discount price for oil to the U.S. and high production costs are among the industry’s key challenges.

Mr. Harper, whose foreign policy is too often characterized by finger-waving intransigence, struck a reasonable balance in this instance between domestic interests and international concerns.

Is this the best system?  Probably not.

Is it a workable system for a sensitive topic in a democratic society?  Sure seems that way.

In any case, Lenihan should check out the Journal of Parliamentary and Political Law.

Also, to all readers, know that the world (and Canada) will survive the new "net benefit" test; just like the world (and Canada) survived the last one.

Canada, United States and Gun Violence: Global Edmonton Questions If Gun Laws Explain the Difference

Global Edmonton offers an excellent article probing the role gun control laws have on the different levels of gun-related violence in Canada and the United States.  In short, "guns laws are not necessarily the cause," at least according to Ottawa defense attorney Solomon Friedman.

From the article:

Friedman, who has expertise in gun laws, said he “runs a comprehensive criminal defence practice, and I represent people charged in gang shootings, where these individuals never would have qualified for a firearms licence in the first place. Bad people want to do bad things; they find a way to do them.”

According to Statistics Canada, this country had a firearms homicide rate of 0.5 per 100,000 in 2011. The Centers for Disease Control and Prevention say the rate in the U.S. in 2010 – the most recent data available – was 3.6, or more than seven times the most recent rate in Canada. 

Friedman said each U.S. state has varying degrees of gun control but, in general, laws are looser in the U.S. in terms of what kinds of weapons people can have. And while Friedman did not dispute that the U.S. has a bigger problem with gun violence than other western countries, including Canada, he said gun laws are not necessarily the cause.

“We’ve been looking for a long time for a correlation between civilian gun ownership and gun crime . . . and it’s my understanding that the research has not borne out that type of correlation, that the correlation is with socioeconomic factors, with poverty, with mental health.”

UOttawa Law Prof Geist Hits Canadian Government's TPP Secrecy

By Keith Edmund White, Editor-in-Chief

Dr. Michael Geist, a leading voice on copyright and UOttawa professor with a syndicated column on technology law to boot, last Sunday hit the Harper government for its lack of transparency over Canada's participation in the Trans-Pacific Partnership (TPP).

The column's main value added for other similar articles: its focus on the content of Canadian public commentary on the TPP and the TPP split in the Canadian business community. From Geist's column:

In addition to tens of thousands of form letters and emails criticizing the TPP, the government received hundreds of individual handcrafted responses that unanimously criticized the proposed agreement.

A review of more than 400 individual submissions did not identify a single instance of support for the agreement. Rather, these submissions typically expressed concern with the prospect of extending the term of copyright or adopting restrictive digital lock rules.

The documents also revealed that the Canadian business community was split on the agreement, with numerous companies and associations identifying concerns about the potential direction of the TPP.

Leading telecommunications companies, including Bell, Rogers, Shaw and Telus, cautioned against changes to Internet provider liability rules; groups representing the blind warned against new restrictions to accessing digital materials; Oxfam Canada worried about the TPP’s impact on pharmaceutical pricing; and the Canadian Library Association expressed fears about a reversal of recent changes to copyright damages rules.

Main lesson:  trade policy always picks winners and losers--the fight is over who they should be.  

Now there is a fair rejoinder to Geist's thesis:  If trade deal talks are ever fully transparent they'll never be concluded, since free trade pits the generalizable benefits of liberalized trade against the deep and particularized interests of a few key economic actors, and Mancur Olson collective action tragedy always wins.   Now was that last statement wildly shallow and profoundly undemocratic?  Yes.

For the sake of balance, I'll highlight (again) Beyond the Border, 2013: Inching Toward a Deal by Colin Robertson in Wednesday's iPolitics.

BTB: Bilateralist Reports on Progress, and (Relative) Risk to North American Exporters

Luiza Ch. Savage, at her blog Bilateralist and at Mclean's D.C. correspondent, shared an excellent BTB update chart prepared by Birgit Matthiesen that details and has and has not been accomplished by the governments of Canada and the United States.

You can find Matthiesen's 2-page side-by-side comparison here, and Savage's Maclean's article here.

Savage, not getting buried in details, succinctly gets to the 'impact' of differing rates of success on BTB's various objectives:

This is complicated stuff and no one expects overnight changes. But timing matters, too. For example, the governments reported progress on a pilot projects for harmonizing cargo screening for North-America-bound cargo at the ports of Prince Rupert and Montreal. There is a risk that quick progress on such“perimeter” elements coupled with slow progress on expediting the land border between Canada and the U.S. could inadvertently disadvantage North American manufacturers relative to exporters from, say, Asia or Europe.

Says Birgit Matthiesen, the Washington representative for the Canadian Manufacturers and Exporters:

“With the increased competition from third countries in the last few years, and what is anticipated from the TPP and Canada-EU trade agreement, manufacturers in Canada and the U.S., and their business partners, are going to be looking for real relief from transactional costs and compliance burdens at the land border. If not, the North American supply chain could be at a competitive disadvantage.”

BTB RCC Wrap Up, Next Week, and Shameless Self-Promotion

By Keith Edmund White, Editor-in-Chief

Exciting Posts Next Week & Shameless Self-Promotion 

Readers, please forgive the delay in postings.  We have a slate of blog postings and expert Q&As in the hopper for next week.

In the meantime, CUSLINexus will engage in some self-promotion.  Check out Keith Edmund White's recent postings for Beyond the Border Observer blog:

Week in Review:  BTB and the Regulatory Cooperation Council,
BTB Delivers:  Pilot Program Offers Faster Border Commutes for Trusted Traders

BTB and RCC Progress Reports

And, keeping up with the BTB & RCC theme, readers should know that the first annual progress reports were released on these bi-national joint initiatives to enhance border security and cross-border trade. 

The BTB progress report can be found here, and the RCC progress report can be found here.

And read Keith's post on these reports at Woodrow Wilson Center's Beyond the Border Observer blog.

More BTB & RCC Resources

For more information on the status of these two important bi-national efforts, check out the following sites:

Canada and United States report progress on perimeter security and economic competitiveness, Prime Minister of Canada, 12/14/12
White House Releases Report on Beyond the Border and Regulatory Cooperation Council with Canada, The White House, 12/14/12
Beyond the Border, 2013:  Inching Toward a Deal, iPolitics, Colin Robertson, 12/12/2012
Beyond public view:  Harper's Beyond the Border initiative a year later, rabble.ca, Stuart Trew, 12/13/2012
Beyond the Border website
Regulatory Cooperation Council website