The African continent has taken a major step towards advancing the free exchange of goods and services under rules that facilitate interaction between the parties. This should foster prosperity and development directly for the parties involved, and even for third parties indirectly, as all this is the result of the profits generated by these transactions.

May 30, 2019 was the launch of the major agreement of Africa Continental Free Trade Area (AFCTA). 52 countries signed the agreement, and are currently ratifying their adherence to it. This means that the weaker economies of the continent can do more business with their African neighbours, and increasingly compete with countries that are already major players in the global economy.

Africa has a very great potential for the production of goods, especially perishable goods and diverse manufactures, because they have an impressive diversity of natural resources; the continent’s other great resource is its people.

The potential to generate significant economic activity

According to the last article published by the World Economic Forum, this agreement will allow the area to generate about $4 trillion USD for investments and commercial transactions of goods and services. This already makes this market more appetizing, for large, medium, small and micro entrepreneurs. The latter are those that can benefit the most, by the removal of the tariff and non-tariff barriers to intra-regional trade, which would now be better called intra-continental. The harmonization of tariff rates is important, since a Free Trade Agreement between two or three countries is not the same as one with 52, and each with different visions and interests.

This is where the political will must assert itself and leave behind the particular interests of rulers who dictatorially determined the commercial, financial and social policy of their respective countries. Their actions unleashed many socio-political problems that always maintained an image of instability and high risk regarding doing business in Africa.

Times have changed in Africa

Now times have changed. There are more democratic governments, and there is more investment and development. True, that has not always been exponential, but has been well directed and has stimulated emerging economies with good attractions such as South Africa (host of a World Cup of Soccer, and being the first African country to participate). Kenya follows, impelling the formalization of its micro and small entrepreneurs, You can also include Equatorial Guinea in the scenario, the hidden oil reserve of Spain and perhaps a good part of Europe.

All this indicates that the horizon looks very promising. There will be growth platforms for the local businessmen of each of the signatory countries, and with that, real wealth increasing through the free exchange of goods and services and investments. However, there are also great challenges to make order and harmony prevail.

Challenges remain

Among these challenges are establishing the minimum and necessary legal frameworks so that resolutions of conflicts and disputes can be carried out efficiently.

Another significant challenge for all governments will be to modernize and improve the road infrastructure of all the countries involved. When talking about road infrastructure, I refer to all forms of transport that are part of the channels of supply chains used in commerce. The network of roads and highways are best to start with, as this should dramatically reduce the transit times of heavy transport and people throughout the treaty regions.

It will be important to accentuate the efficiency of infrastructure and customs personnel within borders, so that there is free transit of merchandise according to the bases of the treaty, combined with the internal laws of the country where it is only transited or is the end point of destination of the goods or people. More investment should also be made in the rail network, as well as in ports and airports.

These last three types of road infrastructures are critical for commercial development, since supply chains that have efficient multi-modal forms bring reduced costs, increasing the competitiveness of all the countries involved in this agreement.

E-commerce is also an important part of the future of this vision, which will be supported by clear rules, together with a modern regulatory framework. It could create the conditions to generate the sale of millions of products, following the major global trends of retail and business to business (B2B).

Another critical and major challenge is financial control, due to the high flow of transactions that will result from the opening of investment markets and the exchange of goods and services, as well as the mobility of people.

This control should be aimed at monitoring monetary flows and their origins. The scourge of money laundering is a global problem, and is also an issue within Africa. It may not be easy to apply more efficient controls and policies adapted to the reality of the way in which criminal structures operate. However, the support of countries with more development in establishing and enforcing financial controls could help Africa, supporting economic growth through trade and investment, and bringing development and prosperity for its inhabitants.

Beyond just sending humanitarian aid (which has been vital in most cases), it is extremely important to support the African continent so that they can make full use of their potential and thereby also enter more markets globally. Being more efficient as a block will also bring improvements at the individual level of each country, since together they can improve their negotiations with other large economies, which otherwise would be impossible.

This treaty is the best example of what looks to be a trend in world trade: an economy of blocks. I firmly believe that Africa is reinventing itself.  We can already see a new Africa, open and determined to compete strongly in the global conglomerate.

The post Can Africa reinvent itself through the Africa Continental Free Trade Area (AFCTA)? appeared first on Trade Ready.

Canada’s trade volumes will increase with Chile through the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

CPTPP creates trade opportunities for Canada

The benefits of the CPTPP have been overshadowed as of late amidst the USMCA negotiations. The agreement was signed on March 8th, 2018 and is expected to be ratified in the near future. The U.S. is not currently a part of CPTPP, which will create some major trade opportunities for Canada as we compete in similar export markets (EDC, 2018).

Although there has been a lot of attention on Canada and its trade growth potential with Japan, Chile is an important emerging economy which should not be overlooked. Chile ranks number one in South America with an estimated GDP per capita of $24,500, according to the CIA World Factbook. The CPTPP provides a unique investment opportunity for Canadian exporters and entrepreneurs looking to expand in the South American market.

Trade between Canada and Chile

Trade between Canada and Chile is already significant and has steadily increased since 1997, when the Canada-Chile FTA was enacted. According to the Government of Canada, bilateral trade between the two nations in 2017 equated to $2.9 billion. Chile is Canada’s third-largest trading partner in South and Central America. As trade volumes and relationships are already strong with Canada and Chile, the CPTPP will set the stage for future growth.

A desirable prospect of the CPTPP for Canada and Chile is that either country can select a trade agreement of their choice, whichever has more favourable provisions. The CPTPP will also promote better labour and environmental standards, as well as increased labour mobility for higher-skilled professions.

In terms of foreign direct investment (FDI), the CPTPP will allow Canadian and Chilean companies to invest with greater confidence. According to the Government of Canada, the CPTPP will provide protection from unfair and discriminatory treatment, allowing greater predictability and transparency.

When we consider the factors of endowment, Canada has a comparative advantage with arable land. As a result, our main exports to Chile has been agricultural; fats, oils, and wheat which we can export at a low opportunity cost. Due to the reverse weather seasons (northern vs. southern hemisphere), Canada imports a large number of fruits from Chile, a total of $605 million in 2017 (Government of Canada, 2018).

The Conference Board of Canada suggests that financial, computer and managerial services are three of Canada’s top five growing exports in general. Canada has been a large exporter of commercial services to Chile with a total of $161 million in 2017 (Government of Canada, 2018).

Canada’s top import from Chile are metals and minerals for a total of $922 million (Government of Canada, 2018). Mining is one of the backbones of Chile’s economy, a similar trait to Canada. Stronger trade relations pose an opportunity for Canadian mining companies, such as Toronto-based Barrick Gold, to expand their operations in Chile and the surrounding areas. Canadian mining companies could focus on joint ventures with Chilean companies, reducing costs and increasing project scalability.

Economic trade growth could also lead to increased tourism between Canada and Chile. Air Canada already offers daily direct flights from Toronto to Santiago. Both nations offer many sights for outdoor, wine and ski enthusiasts. The reverse weather seasons and stronger trade relations could help foster increased tourism between the two nations.

CPTPP to foster trade growth with Chile

Canada must acknowledge that the CPTPP will also come with increased competition among the eleven countries that form the multilateral agreement. With increased trade, economies of scale can be established. Comparative advantages would help countries export goods and services which come at a low opportunity cost, ultimately driving down the cost and putting additional pressure on domestic producers.

All indications suggest that the CPTPP will facilitate further trade growth between Canada and Chile. This agreement will allow Canada to better leverage an already strong trading relationship with Chile, an important emerging economy.

The CPTPP will also provide more favourable trading conditions in terms of FDI, labour mobility and protection from unfair and discriminatory treatment. There are unique opportunities for both countries in terms of increased tourism, joint-ventures for mining operations and to establish economies of scale through comparative advantage.

The post How the CPTPP will facilitate further trade growth between Canada and Chile appeared first on Trade Ready.

Since the Brexit movement succeeded in the UK, there have been rumblings that the UK could find a new trading niche with NAFTA. That long-shot idea seems more of a possibility as the UK struggles to strike a post-Brexit trade deal with the European Union.

Amid concerns that Britain, the world’s fifth largest economy, could be left without a trade bloc when it’s released from the EU in March 2019, the UK’s administration is reportedly taking a serious look at the ramifications of joining NAFTA.

The UK’s Telegraph reported in mid-October that a UK-NAFTA deal could be in the works. Since then, the idea of a trans-Atlantic trade partnership between the UK and North America has earned both praise and criticism. On one hand, a partnership with NAFTA could ease Britain’s transition away from the EU. On the other hand;

A partnership with NAFTA — its own fate uncertain under the Trump administration — could prove a difficult transition for British companies looking to export to Canada, the United States and Mexico.

The UK and NAFTA: An easy transition?

If there’s one great advantage to the UK finding a post-Brexit home with NAFTA, it would be that the UK would be moving from one large trading bloc to another. While NAFTA reigns as the world’s largest trading bloc, in terms of GDP, the EU isn’t far behind.

The combined GDP of NAFTA member countries are more than $22 trillion, while the combined GDP of the EU member countries is just under $21 trillion. That means the UK, which currently sends half of its imports to EU member countries, could find valuable new trading partners on the other side of the Atlantic.

With NAFTA, British officials also could find trade partners who are eager to form ties with the post-Brexit UK.

While British officials have struggled to advance a new trade deal with the EU — some officials say there’s only a 50% chance a deal will be struck with the EU — politicians in North America have expressed a willingness to accept Britain into the fold.

In the United States, President Donald Trump has long said he would be first to strike a trade deal with the UK after the passing of Brexit. Canadian Prime Minister Justin Trudeau has also expressed his desire to form a free trade deal between Canada and the independent UK.

The difficulties with a UK-NAFTA partnership

Signing Britain on to NAFTA might not prove the quick solution to post-Brexit trade for the UK, however. First and foremost, the future of NAFTA itself is largely uncertain.

Trump campaigned on dissolving the 25-year-old trading bloc as part of his “America First” policies. While he seems to have softened his language on NAFTA — expressing a willingness to rework the deal with Canada and Mexico rather than outright canceling the deal — it remains to be seen what the future will bring for the trade deal. That makes relying on NAFTA as the cornerstone of trading future for the UK could prove perilous.

Joining NAFTA also would bring about serious change for UK-based exporters. While the EU had its own set of strict guidelines, companies would have to adapt to NAFTA standards. That would mean using more products and supplies from NAFTA trading partners and knowing how to fight off potential disputes under NAFTA’s governing policies. It remains to be seen how many UK companies would be willing to adapt and how many would relocate to continue to operate under EU rules.

The future of Britain and NAFTA

The rumors about Britain’s potential joining with NAFTA underscore the uncertainty surrounding trade deals in a post-Brexit world.

With a trade deal between the EU and the UK on the ropes, British officials have declined to comment on a potential joining of NAFTA, other than to say they are exploring all possibilities for free-trade deals.

Meanwhile, those with a stake in international trade are still waiting to see how NAFTA could morph under the Trump administration.

The post Could the UK really join NAFTA? appeared first on Trade Ready.

When it comes to free trade in North America and Asia, the two continents appear to be heading in opposite directions. The U.S. has withdrawn from the TPP, while the implementation of the ASEAN Economic Community (AEC) has accelerated intraregional FDI to record levels.

Canadian businesses should be participating in the ASEAN region’s robust economic growth curve despite the absence of a Canada-ASEAN FTA. I believe the Canadian government is attempting to pivot and reach out to the Asia-Pacific region through the likes of the APEC Business Advisory Council (ABAC) and Canadian International Innovation Program (CIIP).

Canadian companies are also already perceived to be innovative, collaborative and trustworthy in the ten countries comprising ASEAN.

What seems to be missing, however, is a comprehensive plan to achieve an effective market penetration across the diverse, hugely fragmented, yet inter-related ASEAN countries.

On the fast track towards economic interdependence

With a regional GDP of USD $2.5 trillion, ASEAN is the fastest growing region on the planet. After a 4.6% expansion in 2016, GDP forecasts predict 4.9% growth for both 2017 and 2018. Myanmar is expected to be the fastest growing economy in the region, with a prediction for 7.4% growth, followed by the Philippines at 6.6% and Vietnam at 6.2%. Also expected to grow at a moderately quick pace is Indonesia (5.2%), Malaysia (4.9%), Thailand (3.2%) and Singapore (2.4%).

The region is seeing unprecedented construction activity, presenting an excellent growth opportunity for companies selling construction-related products and services. Earlier this year, Marriott announced plans to open 80 new hotels in the APAC region by the end of 2017, bringing 19,000 new rooms to the region. In addition, an astonishing 437 hotels are being built across the ASEAN region, focused mainly in tourist destinations to meet growing demand. Thailand, Malaysia and Indonesia plan to open 81, 79 and 113 properties respectively in each country in the coming years.

New rail lines will make ASEAN travel easier than ever

In addition to commercial construction projects, Private Public Partnership (PPP) mega-infrastructure projects building new rail lines, airports and seaports are on the rise across the region. A new rail project connecting Bangkok with Southern China with an estimated value of USD $5.2 billion has been approved by the Thai government. Its most interesting characteristic is that China will do the design for the project, and Thailand the construction.

Chinese end-to-end control over mega-infrastructure projects is becoming a contentious issue, and serves as a vivid example of China’s One Belt One Road theory becoming a reality at a rapid pace. ASEAN countries are beginning to negotiate that China-financed infrastructure projects contain local engineering, construction and supplier content.

The Singapore to Kuala Lumpur Malaysia multi-billion-dollar high speed rail (HSR) project has been approved and the EPC (engineering, procurement and construction) contracts awarded. The most notable aspect of this project is the high probability of coinciding commercial and residential construction projects emerging in close proximity to the stations. If you provide people with efficient transportation into the cities, new outlying communities will emerge. The areas near the stations will become urbanized, creating additional commercial and residential construction projects.

Other notable mega rail projects in the region include the Hanoi Vietnam metro project valued at USD $15 billion, and Malaysia’s 600 km East Coast Rail Line (ECRL), connecting the capital city of Kuala Lumpur with Malaysia’s east coast states through 23 stations, valued at USD $12 billion.

Major plans for port expansions and FDI projects provide new opportunities

Singapore continues to invest in major infrastructure projects as well. They have just completed T4 – a new passenger terminal building at Changi Airport, and work on the new Tuas mega-container-port has begun.

The multi-billion dollar mega-port investment project includes plans to move and consolidate all port activity to South Tuas by 2027, opening progressively from 2021 until full completion by 2040.

Construction is well underway, with reclamation ongoing for two out of four phases of the development and more than three kilometres of caissons installed. Singapore is also thinking long term, building for an eventual capacity of 65 million TEU’s (standard-sized 20-foot containers) annually, anticipating significant interregional and intraregional trade expansion.

Commercial construction and infrastructure is one growth story, and foreign direct investment (FDI) is another. FDI is entering the region at record levels as interregional and intraregional manufacturing multinationals move from labor intensive and higher cost locations in Asia to ASEAN countries.

Vietnam in particular is reforming and becoming more accessible to foreign investment. Recent years have evidenced steady and increasing FDI there. In 2016, FDI in Vietnam totaled USD $24.4 billion, with 63.7% (USD $15.5 billion) invested in manufacturing and processing capabilities. South Korea is Vietnam’s largest investor and Samsung has three projects currently under construction valued at USD $5.5 billion. The South Korean electronics giant is constructing a new plant in Northern Vietnam that will employ 30,000 workers, and a research and development center in Ho Chi Minh City.

An effective and coherent strategy, not an FTA, is your key to ASEAN market entry

ASEAN is now the fifth largest automotive market, offering new growth opportunities to companies supplying both OEM (original equipment manufacturer) and aftermarket products and services. The ASEAN region produces 4 million cars and trucks each year and sells 10 million motorcycles annually. China progressed from bicycles to motorcycles to cars over a period of 20 years, and ASEAN will similarly advance from motorcycles to cars rapidly over the next decade – especially in the Philippines, Indonesia and Vietnam, in line with economic development and rising incomes.

ASEAN has arrived as the global growth engine of the next decade and beyond.

The absence of a Canada – ASEAN free trade agreement should not prevent SMEs from capitalizing on ASEAN growth opportunities. Furthermore, an FTA is not the silver bullet to establishing and growing your ASEAN business. An effective and coherent commercial strategy is.

Achieving more effective market coverage and penetration across ASEAN’s diverse, hugely fragmented, yet inter-related market is highly challenging and complex for any company. Basic templates or theoretical “cookie-cutter” market-entry formulae often falls short of delivering desired results.

What companies need is a distinctive market-entry and channel design process that caters for key variables which encompass the necessary agility to synchronize individually tailored business, multi-partner, multi-level network strategies with relevant opportunities, regional cultures and competitive scenarios – eliminating the wasted costs of trial-and-error market entry efforts.

Considering the absence of a Canada-ASEAN FTA, the federal and provincial governments might consider a funding strategy to assist Canadian companies with the expense of retaining outsourced specialty ASEAN marketing services. Procuring regional knowledge, experience, and expertise will make a major difference and help companies grow.

The post ASEAN has arrived as the global growth engine of the next decade. Are you participating? appeared first on Trade Ready.

Japan was the major market in the negotiations with which Canada did not already have a trade agreement—and thus was the real prize for Canadian businesses and workers. However, American withdrawal from the TPP has left the issue of Canada-Japan trade lingering.

Despite the apparent demise of the TPP, the Japanese market (the world’s third-largest) is too rich an opportunity to let pass by. Canadian leaders should make a trade deal with Japan a priority.

The Canadian and Japanese markets are complementary in many ways—for example, Canadians buy Japanese consumer electronics, and Japan needs our natural resources and food products. This complementary nature can be conducive to win-win trade negotiations with significant long-term benefits.

TPP laid the groundwork for the future

Despite long and difficult negotiations, the TPP trade deal fell through at the last minute, with U.S. President Donald Trump scrapping the deal before it was ratified. Though there has been movement to keep the TPP without the U.S., the outcome of these talks is far from certain.

With the TPP process having just wrapped up, there is a prime window of opportunity for Canada to negotiate a bilateral free trade deal with Japan. Due to the detailed negotiations it took to finish the trade pact, Canadian officials will have the market knowledge and connections needed to begin bilateral talks soon.

Canadian officials are already up-to-date on the latest market information related to Japan’s exports and trade agenda. Furthermore, trade officials in Canada have connections with the Japanese bureaucracy from the TPP negotiations. This knowledge, and the connections between our two bureaucracies, provide an opening to restart bilateral talks as soon as possible.

Natural resource-based industries would benefit most from a Canada-Japan FTA

Numerous Canadian industries and their workers will benefit from a Canada-Japan FTA. In 2016, Canada sold $10,575,158,000 worth of merchandise exports to Japan. The top three categories were oil seeds and miscellaneous fruits/grains (14.81% of exports); ores, slag and ash (14.56%); and meat/edible meat offal (11.40%). Together, these three, along with other natural resource and food exports, would benefit hugely from a free trade deal.

Is Canada in position to meet Japan’s energy needs?

In 2011, following the crisis at the Fukushima Daiichi nuclear power plant, Japan shut down and reviewed its nuclear energy system. Prior to the disaster, which is still affecting communities in Japan today, nuclear plants provided about 30% of Japan’s energy mix. While some reactors have come online since that review, most remain offline. As a result, Japan has faced, and will continue to face, a critical need for energy from abroad.

That includes liquefied natural gas (LNG) and oil, both of which Canada has the potential to export in large amounts. Canada’s oil industry is well-established, though there are questions from environmentalists, Indigenous peoples and local communities to be answered regarding pipelines. British Columbia has enormous potential for LNG exports to Japan, though the recent change in government at the provincial level makes the future of this industry unclear. With these domestic political uncertainties, the energy industry’s potential benefit from a Canada-Japan FTA is less clear.

Seafood will be another big winner

The Japanese diet is dominated by seafood, as one might expect from an island nation. Japan’s love for seafood has led to incredible export success for several provinces already.

For example, Newfoundland and Labrador’s herring roe is very popular in Japan. In 2016, the province sold $44 million worth to Japanese buyers. British Columbia has likewise seen seafood export success, selling millions of dollars’ worth of sea urchins to the country. An FTA would only expand these opportunities, while also reducing costs for those already engaged in this avenue of trade.

The future is bright

The future of Canada-Japan trade is bright. The two countries have shared values—democracy, the rule of law, free markets—and have complementary economies. Many Canadian industries and their workers stand to benefit from a free trade agreement with Japan. With the TPP pact likely over, Canada can seize the moment and hastily restart bilateral trade talks with the world’s third-largest economy.

The post Why Canada needs to seize the moment and start negotiating a free trade agreement with Japan appeared first on Trade Ready.

In January, I wrote an article for FITT arguing the government needed to show China it was serious about pursuing a bilateral free trade agreement (FTA), if that indeed was what they wanted to do.

In his most recent cabinet shuffle, Canadian Prime Minister Justin Trudeau appointed a sitting minister, John McCallum, as the ambassador to China. Appointing an ambassador straight from cabinet sent a clear message to Beijing that Trudeau was eager to explore an FTA. McCallum knows the prime minister well, having sat with him in caucus and cabinet for nearly a decade. The ambassador can be a direct line of communication between Beijing and the Prime Minister’s Office. During negotiations, the Chinese will know that McCallum has the ear of his country’s leadership.

However, as much as it will be a Canadian sales pitch in Beijing, any trade deal will require a sales pitch here at home as well. The Trudeau government will need to convince Canadians that a trade agreement is good for the Canadian economy, businesses, and workers.

Public support will be crucial for a trade deal of this magnitude—it will be a deal with the world’s third-largest economy, and it may transform entire industries.

The Asia Pacific Foundation of Canada, a Vancouver-based think-tank, released a 2017 National Opinion Poll (NOP) on Canadians’ feelings toward China, especially on trade. The numbers revealed support for a trade agreement, but they also revealed some concerns the government will need to address if such an agreement is to receive public approval.

Majority support for a trade agreement

The NOP revealed that a majority of Canadians (55%) support an FTA with China, while 36% do not, and 9% are unsure. During trade negotiations, the 36% opposed will need to have their concerns addressed. Similarly, the 9% who are unsure if they support or oppose it will need to be convinced of its merits.

The recent trend is towards support for an FTA. The NOP noted that support, currently 55%, was only 46% in 2016 and 36% back in 2014. In three short years, support has gone from just over one-third of Canadians to a majority. Support is growing, but there are public concerns  the government will need to address.

Support comes with concerns for the government

While 55% of Canadians may support an FTA with China, the NOP revealed a more nuanced situation. Prime Minister Trudeau will need to communicate the deal to Canadians in a manner that keeps the concerns below in mind.

An FTA is not a top priority for Canadians

While a majority of Canadians support an FTA with China, it is not their priority for Canada-China bilateral relations. According to the NOP, only 13% saw an FTA as their priority. The plurality (27%) cited environmental cooperation and 15% identified democratic reforms in China.

These numbers indicate Canadians are multifaceted in their approach to China—they may reveal an uneasiness about trade relations with the world’s third-largest economy. This means that any trade talks are likely to involve, in the domestic political sphere, discussions surrounding democracy and the environment.

If the Trudeau government hopes to sell a trade deal with China to the Canadian people, it will need to be prepared to answers questions on these issues.

Concerns over trade with China

The NOP further showed Canadians are concerned about the impacts of an FTA with China. While a majority believe it will be good for Canadian businesses (76%), a smaller majority (64%) is also concerned about the economic and political influence China may have on Canada, should our economies become so closely intertwined.

The 64% number is perhaps as important as the 55% support rate for an FTA. Should the trade deal go through, it may produce a public reaction similar to the one that occurred when Chinese company CNOOC invested in Canada’s oil sands. If the Trudeau government wants to pursue an FTA with China, they may face a lot of concerns that the Harper government faced during the CNOOC affair.

Other concerns that Canadians have include the impact of China’s volatility on the Canadian economy if there is an FTA (71%); cheap Chinese goods entering the Canadian market (56%); and that China will benefit more than Canada in any agreement (51%).

Work still to be done to get public on board with Canada-China FTA

The NOP reveals that, while a majority of Canadians support an FTA with China, that support is incredibly nuanced. There are a lot of concerns, from cheap goods flooding our markets to unequal benefits. Support for an FTA is not unconditional, and it is only the bilateral priority of 13% of the public.

Unless many of the concerns raised by the NOP are addressed, the government may find a public reaction similar to the one that faced the Harper government during the CNOOC situation.

While public support is growing, it is not absolute. There is a lot of work to be done to convince the public an FTA with China is good for Canada.

The post The people have spoken: public opinion on free trade with China appeared first on Trade Ready.

CETA, or the Comprehensive Economic and Trade Agreement, is a free trade deal between Canada and the European Union. Negotiations began in 2009 and were concluded in August 2014.

The agreement has come back into headline news since the World Economic Forum in Davos in January, and the release of major updates to the agreement’s controversial ISDS section in February, 2016.

The deal is now in the ratification process and must be approved by the Council of the European Union and the European Parliament before going into effect. There is some debate over whether each of the EU’s 28 member states must also approve CETA to enact the agreement.

If the agreement comes into effect, as early as 2016, it will eliminate 98% of the tariffs between the EU and Canada.

1. CETA is a “Gold Standard Deal”

The Canadian government is touting CETA as a top-notch agreement that will have profound positive effects on the Canadian economy and trade industry, calling it the country’s biggest trade initiative to date.

Prime Minister Justin Trudeau reiterated this sentiment to the CBC during his appearance at the World Economic Forum in Davos, Switzerland on January 22, 2016.

This is an important opportunity both for Canada and Europe and I’m looking forward to getting it signed.

Canadian Minister of International Trade Chrystia Freeland also recently promoted the agreement, stating “This is really a gold-plated trade deal,” and adding that CETA’s ratification will give Canada access to a market of 500 million people.

Virtually eliminating trade barriers between Canada and the EU will make Canadian products and services more competitive in the remunerative EU market, benefitting the nation’s businesses and their workers.

A joint study conducted by Canada and the EU prior to launching negotiations found that CETA could boost bilateral trade by 20% and increase Canada’s GDP by $12 billion per year.

2. Copyright provisions match Canadian laws

Copyright extension and ISP liability are controversial issues in Canada, and there has been extensive criticism of the way that other agreements, most notably the TPP, have established stricter standards than established Canadian law.

Though there were concerns both in the EU and Canada that CETA would also enact stricter policies, including criminal liability measures similar to the much protested ACTA agreement, the negotiations ultimately yielded provisions that more closely match Canada’s existing laws and the WIPO treaties.

In the end, CETA is reflective of Canadian standards in the protection of technology, rights management information, and internet service providers

3. ISDS modified to reflect governments’ right to regulate

Like most modern international trade agreements, CETA includes provisions for Investor State Dispute Settlement (ISDS).

These are also often controversial sections as they allow corporations to sue states, with no reciprocity on the part of the states.

The CETA text states,

Section 4 of the agreement (pages 158 – 161) provides Investment Protection to foreign investors, and guarantees a ‘fair and equitable treatment and full protection and security.’

Under CETA’s ISDS, foreign corporations have the right to sue nation states if they have suffered financial losses due to a violation of the Non Discriminatory Treatment provision, or a violation of guaranteed investment protection.

On February 29, 2016, Cecilia Malmstrom, European Commissioner for Trade, and Chrystia Freeland released a joint statement announcing that an agreement was reached to replace the “ad hoc” arbitral tribunals outlined in CETA, with a permanent tribunal whose members will be appointed in advance and will bound by strict ethics regulations.

Stronger language was added to emphasize governments’ right to regulate. An appeals system will also be put into place to ensure the proper rules of law were followed in the case of awards.

4. CETA is a big deal for agriculture

The EU is the world’s biggest importer of agricultural products, importing around $114 billion of agri-food products in 2014.

With the enactment of CETA, approximately 94% of EU agricultural tariffs will be eliminated for Canadian exporters, giving them an advantage over competitors in countries that do not have a free trade agreement with the EU. After seven years, the rate of duty-free agricultural imports will rise to 95%. Canadian agricultural exports will have preferential access to the EU market..

This will undoubtedly increase trade in agricultural items, creating new Canadian jobs and higher wages for producers, exporters, and companies in the industry.

For example, EU tariffs will be eliminated on:

• Wheat
• Fresh, frozen and processed fruits and vegetables
• Canola oil
• Oats, barley and rye
• Maple syrup
• Processed pulses
• Beef, pork and bison

5. The deal is a boon for investors

The agreement will be good news for those interested in FDI,as it will make it easier for Canadians to invest in the EU and vice-versa.

The agreement will open the gates to EU government procurement projects for Canadian suppliers, which, at $3.3 trillion annually, is the largest procurement market in the world.

This market presents unprecedented opportunities for Canadian exporters in products and services.

Increased investment creates jobs, supports innovation in technology development, and gives Canada a vital part in global value chains.

CETA is expected to complete the ratification process and become enacted by 2017.

Will you be taking advantage of new export opportunities made available when CETA is enacted? Do you think the FTA is a “gold standard” deal for Canada?

The post 5 things you need to know about CETA appeared first on Trade Ready.

Some policies included in the TPP have critics and proponents more divided than others.

In getting to the bottom of the issues that matter, we bring you the main arguments for and against one of the most controversial provisions in the agreement – the Investor State Dispute Settlement and Investment Chapter.

ISDS: Peaceful conflict resolution mechanism or threat to domestic policy?

According to the Office of the United States Trade Representative (USTR), the ISDS included in the TPP aims to provide an “impartial, law-based approach to resolve conflicts.”

The USTR points out that there are ISDS policies in more than 3,000 trade agreements currently in existence.

“Because of the safeguards in U.S. agreements and because of the high standards of our legal system, foreign investors rarely pursue arbitration against the United States and have never been successful when they have done so…We believe that providing a neutral international forum to resolve investment disputes under international law mitigates conflicts and protects our citizens,” The USTR website claims.

Further, the USTR states that the ISDS in the TPP agreement will ensure freedom from discrimination for Americans doing business abroad, protection against property theft by foreign governments, protection against denial of justice for investors, and the right to transfer capital freely.

However, these protections for investors may come at a steep price for domestic policy, including environmental, health, and financial policies, and cost at least some of the nations involved in the TPP a lot of money in dispute settlement payouts.

An article released in The Globe and Mail shortly after the TPP text was published summed up the concerns:

“Negotiating partners assured the stakeholders that the TPP’s investment chapter would respond to the legitimate concerns about expansive investor protections and ISDS. The actual text, however, when made public, showed the opposite: a further evisceration of the role of domestic policy, institutions, and constituents.”

“In their current form, the TPP’s substantive investment protections and ISDS pose significant potential costs to the domestic legal frameworks of the US and the other TPP parties without providing corresponding benefits.”

1. TPP’s ISDS chapter allows foreign investors to sue governments over policies that harm their interests – thereby perpetuating a private justice system that overrides democracy

In support of ISDS: Proponents of the ISDS emphasize that the TPP text improves upon the language in previous agreements, such as NAFTA, making sure that nations will still maintain the ability to make policy decisions based on what’s best for the citizens, rather than foreign investors.

The USTR states that “New TPP language underscores that countries retain the right to regulate in the public interest, including on health, safety, the financial sector, and the environment.”

The Canadian government has issued the following statement:

“International arbitration does not restrict any level of government from legitimately regulating in the public interest. This includes regulations with respect to health, social, environmental and national security issues. Disputes are a normal part of every trade relationship. However, they represent a very small portion of the billions of dollars in investments that Canada attracts and the billions of dollars that Canadian companies invest abroad.”

Global Affairs Canada (GAC) also states that the TPP:

Provides access to an independent international investor-state dispute settlement (ISDS) mechanism that is prompt, fair and transparent, and subject to appropriate safeguards.

Opposed to ISDS: According to a report by the Columbia Institute on Sustainable Investment (a joint venture between Columbia University’s law school and environmental institute):

“Unfortunately, while the TPP might ‘underscore’ that countries retain the right to regulate in the public interest, the agreement does not actually protect that right. In article 9.15, the TPP states, ‘Nothing in [the Investment Chapter] shall be construed to prevent a Party from adopting, maintaining, or enforcing any measure otherwise consistent with this Chapter that it considers appropriate to ensure that investment activity in its territory is undertaken in a manner sensitive to environmental, health or other regulatory objectives.’”

2. All disputes should be solved in domestic courts

In support of ISDS: The USTR argues that the domestic courts are far more costly to U.S. government.

“Though the U.S. government regularly loses cases in domestic court, we have never once lost an ISDS case and, in a number of instances, panels have awarded the United States attorneys’ fees after the United States successfully defended frivolous or otherwise non-meritorious claims.  The U.S. federal government defends challenges to U.S. state or local government measures in ISDS disputes.”

Opposed to ISDS: Lise Johnson and Lisa Sachs, coauthors of the Columbia Institute of Sustainable Investment report, stated in a their article in The Globe and Mail:

“A forthcoming analysis shows that less than 20 per cent of the 34 claims filed against Canada under NAFTA would have any case for damages in domestic courts, and only half of those would have had an arguable case for the equivalent damages.”

3. ISDS clauses cost governments millions from settlement payoffs

In support of ISDS: USTR: “The United States has never lost an ISDS case. We have had only 13 cases brought to conclusion against us, and the United States has prevailed in every case. And in part because we have continued to raise standards through each agreement, in recent years we have seen a drop in ISDS claims, despite increased levels of cross-border investment.

More than half of the companies that initiate ISDS cases are small- and medium-sized businesses or individual investors, so the millions of American workers they employ stand to potentially benefit from strong ISDS protections.

Global Affairs Canada: “Investment is a key driving force for economic growth and competitiveness in Canada. It plays a crucial role in spurring innovation and linking Canada to global value chains. Canada has a clear interest in ensuring the stability, transparency, predictability, non-discrimination and protection of Canadian individuals and companies that invest abroad.”

Opposed to ISDS: While ISDS chapters in other trade agreements haven’t brought many dispute claims against the U.S., the same cannot be said of Canada.

“The dozens of times that Canada has already been sued, largely under the North American free-trade agreement, show that private arbitrators have been very willing to second-guess Canadian policy-makers and administrative enforcement, extracting damage awards. While Canadian governments have insisted that the tribunals have gotten it wrong on many issues, they have had little recourse,” Johnson and Sachs explain.

According to the Canadian Council on Policy Alternatives, Canada is the most sued government in the industrialized world. In an article for the Public Policy and Governance Review, Jordann Thirgood states:

“Since 2005, over 70 per cent of NAFTA claims have been made against our government. We have paid out $172 million in damages, with 35 outstanding cases that could add up to another $6 billion.

4. Disputes are often frivolous

In support of ISDS: The USTR states that fears over unfounded, frivolous disputes will be brought to governments’ doorsteps any time corporations feel a decision has been made against their interests are unfounded under the TPP’s provisions.

“The Mechanism for expedited review and dismissal of frivolous claims and claims outside the tribunal’s jurisdiction: This mechanism enables respondent countries, on an extremely expedited basis, to move to dismiss (1) frivolous or otherwise unmeritorious claims (akin to provisions under the Federal Rules of Civil Procedure) and (2) claims the tribunal is not empowered to resolve.”

Opposed to ISDS: Jake Schmidt, director of the Natural Resources Defense Council’s international program says:

There are other legal risks that TPP raises, regardless of its improvements over NAFTA. Because TPP is a more widespread deal, it gives more companies more grounds to sue if a participating government interferes with their projects.

“Even if the United States ends up winning under those circumstances, it still provides another avenue for companies to pursue if they don’t get what they want. Even if you made ISDS perfect, you’re doubling the number of companies that have the potential to bring lawsuits,” Schmidt was quoted in an article on morningconsult.com.

5. Disputes through ISDS brought against developing countries can be devastating to their government coffers, and often target environmental, health care and safety policies

In support of ISDS: According to the Canadian Government, The ISDS “Preserves the full rights of governments to legislate and regulate in the public interest, including for public health and environmental reasons.”

Opposed to ISDS: Rachel Wellhausen, author of Recent Trends in Investor-State Dispute Settlement argues:

The possibility of being sued by a major corporation through ISDS might create a chilling effect, especially among poor countries already at a disadvantage when it comes to cutting back pollution. Governments might think twice about updating regulations in order to avoid getting sued.

In support of ISDS: However, last word on this issue goes to Ezra Klein from his article on Vox.com:

“This is a key point, and it’s worth stopping on for a moment: ISDS agreements are there because developing countries, in many cases, want ISDS systems. They may have corrupt court systems or unpredictable local governments, and that makes it hard for them to attract the foreign investment necessary to level up their economy.”

Do you think ISDS provisions are beneficial to the countries who sign on to them through trade deals? Does the incentive to invest outweigh the risk of being sued?

The post FACE OFF: Two sides of the TPP – Investor State Dispute Settlement (ISDS) appeared first on Trade Ready.

The Trans-Pacific Partnership was finalized in October, and has since been a topic of intense debate.

However, due to the size of the final document and its many specifics concerning tariff liberalization, customs, trade facilitation, competition, and other critical topics, it’s understandably taking time for all of the new stipulations to be digested by the larger public.

As environmental groups and analysts make headway with reading through and analyzing the agreement, some groups have come out resolutely against the agreement, arguing that tying these economies together more tightly will make it harder to pass more stringent environmental regulations in the future.

Environmental regulations don’t go far enough

One U.S. law professor pointed out that this is the first multilateral treaty in recent years which required the adoption of only one multilateral environmental agreement, the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES).

Previous trade treaties required constituent parties to abide by seven of these types of agreements.

Moreover, environmental groups point out that according to the terms of the trade agreement, a state will not be in violation of these regulations if it fails to comply with the stipulations set out in the agreement.

Violating an environmental aspect of the TPP requires proof that the measures taken by the country in question not only go against the environmental rules, but also affect trade and investment with other signatory states.

Complete silence on climate change

Environmentalists are also upset by the treaty’s lack of regulations on Japan’s whaling trade or Singapore’s trade in shark fins, and are particularly concerned that the trade agreement fails to mention climate change or global warming at all.

“Beyond making no effort to combat climate disruption, the TPP would actually fuel the climate crisis,” the Sierra Club said in its report, “A Dirty Deal,” released earlier in December.

If approved, the pact would increase greenhouse gas emissions and undermine efforts to transition to clean energy.

The organization also maintains that the deal would open up avenues for oil and gas firms to overturn energy policies in trade dispute tribunals, and increase greenhouse gas emissions by spurring companies to move their manufacturing hubs to less environmentally friendly economies.

Overfishing provisions the one bright spot

It’s not all doom and gloom for the environment, however, with specific regulations attached to try to stem overfishing.

The environmental chapter includes provisions that prohibit signatory nations from providing subsidies to fishing practices which promote or support overfishing of marine species deemed to be in danger by national governments, regional fishery management organizations, or scientific evidence.

Moreover, TPP participant nations are now prohibited from extending existing subsidies that would endanger low stocks of endangered fish.

Countries are also required to notify trade partners of fishing subsidies which are part of their policies, as well as additional information about the state of the fish population.

The measure is significant, as participants in the TPP trade agreement – which encompasses 12 nations, or an estimated 40% of the world’s economy – account for eight of the top 20 global fishing nations.

Mixed opinions sparking conversations about next steps

Though the Sierra Club is decidedly disappointed in the agreement, the World Wildlife Fund is encouraged.

“No major trade agreement before this one has gone so far to address growing pressures on natural resources like overexploited fish, wildlife, and forests,” WWF-US President and CEO Carter Roberts said in October, shortly after the talks were completed.

With the right implementation and compliance procedures, the conservation commitments in this trade agreement could be game-changers.

Roberts added that each nation will have to individually undertake the appropriate policies to comply with the regulations.

While some environmental groups claim the TPP agreement will make it harder to implement new, more ambitious environmental regulations, one lawyer pointed out that the agreement is an important step to ensure that countries which fail to comply with existing environmental regulations will catch up to their peers.

Furthermore, making it harder for participant nations to introduce new economic policies is not as dangerous as some environmental groups make it seem.

Governments have used environmental policies to limit foreign competition, which has led to protectionist policies, resulting in domestic industries continuing to violate existing environmental protocols.

Do you think the TPP agreement goes far enough to address environmental issues?

The post Environmental groups are unhappy about TPP’s failure to address climate change appeared first on Trade Ready.

Abid Samdani, CITP|FIBP, is a Trade Commissioner Assistant with DFATD in Karachi, Pakistan.

With a passion for international trade and over ten years of practical experience, he is setting himself apart as an elite member of the global trade community.

From a free trade agreement to a presidential visit

Abid began his international trade career in February 2005, when he became a Commercial Assistant at the Consulate General of Sri Lanka in Karachi.

The opportunities in joining the international trade field are huge. It offers the chance to be a constant learner, to work in a challenging environment, travel and to make a real impact on the company or organization for which we work.

One of his initial assignments was to supplement the Sri Lankan Mission’s operation to provide relief to areas in Sri Lanka hit by the tsunami in December 2004.

His core responsibilities included promoting awareness among the Pakistani business community about the free trade agreement signed between Sri Lanka and Pakistan, a task which had a major influence on the rest of his career.

“Just after joining the Sri Lanka Consulate in February, the Pakistan – Sri Lanka FTA came into force from June 2005. I was made responsible at the office for studying and communicating its basics to local businessmen. Later, I got myself so involved in the subject that it made me adopt international trade as a career.”

He was an important member of the team which organized and recruited 27 companies from Sri Lanka for the “My Karachi Exhibition 2007,” which resulted in several memorandums of understanding (MoUs) and contracts being signed between various participating businesses.

Abid also operated the Sri Lankan visa section of the consulate for a couple of weeks, under supervision, when one of the visa officers was absent, and assisted with protocol and administration when then-Sri Lankan President Mahinda Rajapaksa visited Karachi in 2006.

“Providing ‘in-market’ support to visiting trade missions and delegates had been an integral part of my portfolio; varying from event planning/management to handling high level protocol services.  This multi-tasking has really helped me later in my career to professionally handle multiple tasks within time constraints.”

Scaling new international heights with DFATD

After over three years at the Consulate, Abid decided to join DFATD and begin his current position as a Trade Commissioner Assistant at the High Commission of Canada in Karachi.

“Working for DFATD as a Trade Commissioner Assistant was my dream, to work for one of the largest OECD economies, and with a highly globalized North American economy. It has given my career a new height of success and international exposure.”

“At the Karachi post, we deliver client-focused services to Canadian business that includes market intelligence, match making for business partners, promotion of B2B networks between Canadian clients and local contacts, and more.”

Two of Abid’s main areas of focus have been forestry and education, and he has worked to see impressive results in both areas.

One of my proudest accomplishments was assisting with the business ventures, events and marketing of Canadian forestry products to achieve an increase of approximately 20% of Canadian lumber to Pakistan.

These forestry products are then primarily used in construction and allied industries, like cabinets, floors, door framing and furniture.

In the realm of education, Abid has been working on a program called “Imagine” to create awareness for Canadian post-secondary institutions as desirable international study destinations for students, parents and consultants in Pakistan.

The program includes school presentations, participation in local education events, newspaper editorials, connecting with local education groups, and general advertising.

As a result, there has been a steady increase in the number of Pakistani students applying to, and enrolling at, Canadian universities and colleges.

Abid hopes that “the quality of a Canadian education will provide them with the tools they need to develop their full potential. The program is therefore intended to be a springboard that will help them fulfill their dreams and ambitions.”

He also has a diploma in computer science, and was able to help the entire Trade Commissioner Service by suggesting improvements to their new corporate CRM tool.

An unending thirst for knowledge

In 2010, two years after starting with DFATD, Abid began working on his Post-Graduate Diploma in Economics and Finance (PGDEF) from the University of Karachi. However, one educational program wasn’t enough for him.

“I took the FITT courses as a challenge as I was also completing my PGDEF from the University at the same time.”

Online FITT courses allowed me to study at my own pace and at my given time, and it allowed me to login from anywhere to study – which eventually resulted in completion of both study programs in the same duration.

On top of his other education, Abid is certain that studying international trade, specifically through FITT courses, has been a great asset to his career, and will continue to be going forward.

“The FITT courses gave me in-depth and current knowledge of international trade. It expanded my horizon to a new level, empowering me to research and think analytically before going ahead in international trade work, or any other field of life.”

Joining the international trade elite

Once Abid finished the courses, he was excited to apply for and receive the elite CITP®|FIBP® designation.

“I am honored to be affiliated with the most prestigious professional CITP|FIBP designation by FITT, the only credential of its kind that is industry proof of the highest level of cross-functional international trade expertise.”

Though he has only had his designation for a few months, Abid says he is already seeing benefits to his career, and is excited to see the directions it can take him in the future.

“The CITP designation will advance my career and build professional credibility in the field of global business. It will set me apart in the competitive international business industry because it’s proof that I possess the competencies global business experts have identified as being essential for a successful career in international trade.”

The post Abid Samdani, CITP|FIBP – Trade Commissioner Assistant appeared first on Trade Ready.