16 WTO Members Establish Multi-Party Interim Appeal Arbitration Arrangement (MPIA) – Standing Pool of 10 Appeal Arbitrators to be Established by June 28th

On 27 March 2020, the following sixteen WTO Members issued a joint statement declaring the creation of a Multi-Party Interim Appeal Arbitration Arrangement (MPIA) for allowing appeals of panel reports in trade disputes:

1. Australia
2. Brazil
3. Canada
4. China
5. Chile
6. Colombia
7. Costa Rica
8. European Union
9. Guatemala
10. Hong Kong
11. Mexico
12. New Zealand
13. Norway
14. Singapore
15. Switzerland
16. Uruguay

The MPIA addresses the current suspension of the WTO Appellate Body due to the blockage of new members from being appointed (see “And then there was One… the Appellate Body Situation”). Other WTO Members can join the MPIA by notification to the Dispute Settlement Body (DSB). The MPIA is intended to remain in effect only until the Appellate Body is again fully functional.

Like the EU-Canada and EU- Norway agreements (see “Norway joins Canada and the European Union in Establishing an Interim WTO Appeal Arbitration System”), the MPIA establishes an appeal arbitration procedure under Article 25 of the WTO Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU). In disputes between the participating WTO Members, it replaces the original appeal procedures under Articles 16.4 and 17 of the DSU. It applies to any future dispute between any two or more participating Members, including the compliance stage of such disputes, as well as to any such dispute pending on 27 March 2020 (except if the interim panel report, in the relevant stage of that dispute, has already been issued on that date).

The principal differences between the two previous agreements and the MPIA are as follows:

Creation of a standing pool of appeal arbitrators: Instead of being heard by “three former members of the Appellate Body, serving as arbitrators”, appeals will be heard by three appeal arbitrators selected from a pool of 10 standing appeal arbitrators composed by the participating Members. The pool of arbitrators will comprise persons of recognized authority, with demonstrated expertise in law, international trade and the subject matter of the covered agreements generally. They will be unaffiliated with any government. The composition of the pool of arbitrators will ensure an appropriate overall balance. There is a formal procedure for the nomination of candidates by the participating WTO Members by 29 April 2020 and a pre-selection process for those candidates which is to be completed by 29 May 2020. The pool of arbitrators will be composed by consensus of the participating Members by 28 June 2020.

Separate support structure from WTO Secretariat: The appeal arbitrators will be provided with “appropriate administrative and legal support, which will offer the necessary guarantees of quality and independence, given the nature of the responsibilities involved”. The support structure will be entirely separate from the WTO Secretariat staff and its divisions supporting the panels. Thus, it will be answerable, regarding the substance of its work, only to the appeal arbitrators.

Ability to streamline appeal procedures: The original 90-day period for appeals is affirmed and arbitrators are empowered to take appropriate organizational measures to streamline the proceedings such as page limits, time limits, deadlines and decisions limiting the length and number of hearings required — provided there is no prejudice to the procedural rights and obligations of the parties and due process. If necessary, arbitrators may make non-binding proposals to exclude claims based on the alleged lack of an objective assessment of the facts pursuant to Article 11 of the DSU. That said, if all else fails, the parties may agree to extend the 90-day time period upon a proposal from the arbitrators.

Tereposky & DeRose LLP regularly provides advice and acts as counsel in international trade disputes, including WTO dispute settlement proceedings. If you have any questions about the foregoing subject, please do not hesitate to contact us.

Daniel Hohnstein
613.237.9005
dhohnstein@tradeisds.com

Greg Tereposky
613.237.1210
gtereposky@tradeisds.com

16 WTO Members Establish Multi-Party Interim Appeal Arbitration Arrangement (MPIA) – Standing Pool of 10 Appeal Arbitrators By June 28th (30 March 2020)

COVID-19 UPDATE: Mandatory Closure of All Non-Essential Workplaces in Certain Provinces

Yesterday afternoon, in an effort to further contain the spread of COVID-19, the Ontario and Quebec governments have ordered the mandatory closure of all no-essential workplaces effective as of tonight, March 24, at 11:59 p.m. In Ontario, this closure will be in effect for 14 days, with a possible extension as the situation evolves. In Quebec, the closure will be in effect until April 13.

Both provinces have confirmed that businesses that can continue operations with employees working remotely or through other contingency measures should do so.

Ontario

The Government of Ontario released it list of essential workplaces that will be allowed to stay open last night. The list includes 19 categories, which are all further defined on the Government of Ontario’s website:

1. Supply chains, i.e. businesses that supply other essential businesses or essential services with the support, supplies, systems or services necessary to operate;
2. Retail and wholesaling;
3. Food service and accommodation;
4. Institutional, residential, commercial and industrial maintenance;
5. Telecommunications and IT infrastructure/service providers;
6. Transportation;
7. Manufacturing and production;
8. Agriculture and food production;
9. Construction;
10. Financial activities;
11. Resources;
12. Environmental services;
13. Utilities and community services;
14. Communications industries;
15. Research;
16. Health care and seniors care and social services;
17. Justice sector;
18. Other businesses, including rental and leasing services, businesses providing mailing, shipping, courier and delivery services, and child care services for essential workers, and home child care services of less than six children; and
19. Business regulators and inspectors.

Ontario does not currently have a process to request an “essential workplace” designation, contrary to Quebec. Businesses should self-assess whether they call within any of the categories above. A 1-800 number and a dedicated website will be made available tomorrow, March 25, for any inquiries.

Quebec

[last updated at 10:40 a.m. on 24 March 2020]

The Government of Quebec published its list of essential services and activities yesterday. The list was updated this morning.

Businesses which fall under any of the 11 categories provided are considered “essential” and are allowed to remain open:

1. Priority health care services;
2. Public security services;
3. Priority government services;
4. Maintenance and operation of strategic infrastructure;
5. Priority manufacturing activities;
6. Priority stores;
7. Media and telecommunications;
8. Banking and financial services;
9. Construction sector;
10. Building maintenance services; and
11. Priority transportation and logistics services.

If a business’ activity is not listed but the business believes that it is essential or that it is an entity that provides essential functions or services, any entity can request to be designated as essential by filling out this form. This request process appears to be only for entities that do not clearly fall within the categories above.

British Columbia

[last updated on 28 March 2020]

On March 26, the Government of British Columbia issued its list of what the province considers to be “essential services”. Essential services in British Columbia “should and are encouraged to remain open” but must follow the orders and guidance provided by the Provincial Health Officer (PHO) to ensure safe operations and reduce the risk of transmission.

The list of essential services is composed of the following:

  • Health and Health Services
  • Law Enforcement, Public Safety, First Responders & Emergency Response Personnel
  • Vulnerable Population Service Providers
  • Critical Infrastructure Service Providers
  • Food and Agriculture Service Providers
  • Retail
  • Transportation, Infrastructure & Manufacturing
  • Sanitation
  • Communication, Information Sharing and Information Technology (IT)
  • Non-Health Essential Service Providers

The detailed list is available online.

Contrary to Quebec and Ontario, non-essential services in British Columbia are permitted to remain open if they can adapt their services and workplace to the orders and recommendations of the PHO. That being said, some types of businesses such as bars have been ordered to close.

Over the past few weeks, our team at Tereposky & DeRose has expeditiously advised businesses on regulatory compliance in the current COVID-19 environment. Should you have any questions regarding this matter, we are at your disposal. Given the urgency of some measures for Canadian businesses, we will respond immediately to all queries regarding COVID-19 related concerns.

***This bulletin will be updated as new information becomes available***

Vince DeRose
613.237.8862
vderose@tradeisds.com

Jennifer Radford
613.237.9777
jradford@tradeisds.com

Stephanie Desjardins
613.237.8680
sdesjardins@tradeisds.com

Covid-19 Update Mandatory Closure of All Non-Essential Workplaces in Certain Provinces (24 March 2020)

Combatting COVID-19 through Expedited Supply Contracts with Canada  

The Canadian Government has issued a public call to all suppliers who can provide emergency goods or services needed to respond to COVID-19. A dedicated web page can be reviewed here: https://buyandsell.gc.ca/calling-all-suppliers-help-canada-combat-covid-19 (Notice: This URL address is intermittently yielding an error message).

Given the importance of responding quickly to COVID-19, the Government’s central purchaser, Public Services and Procurement Canada (“PSPC”), is issuing non-competitive contracts for a wide range of emergency goods and services.

The PSPC contracting process, even when undertaken on an urgent basis, is very complex. It is important for potential suppliers to fully understand their rights and obligations.

Suppliers contracting with PSPC should expect that those contracts include reference to the Standard Acquisition Clauses and Conditions (“SACC”) Manual. The SACC Manual is a catalogue of terms and conditions that are regularly included in contracts by reference. It is highly recommended that suppliers review all SACC clauses referenced in the contract before contract execution.

It is expected that the Canadian Government will exercise a high degree of contracting flexibility to obtain emergency services and goods in a timely manner. That said, suppliers should be prepared to address a number of common terms and conditions, including but not limited to:

  • Warranty provisions that may be longer than what is normally offered in the private marketplace;
  • A requirement that all written material be provided in both English and French;
  • A requirement that the bidder obtain industrial security clearance or controlled goods registration (particularly for contracts with the Department of National Defence);
  • Unlimited liability owed by the supplier to the government of Canada;
  • Third-party indemnity owed by the supplier to the government of Canada;
  • Assignment of intellectual property rights to the government, or the granting of a perpetual license;
  • Termination for convenience, at any time, by the Government of Canada;
  • An obligation on the supplier to maintain records for six years after final payment under the contract, and to provide access for the government to conduct an audit and inspection; and
  • Inclusion of a “most favoured nation” clause where the supplier guarantees the government the pricing offered to the supplier’s best client for similar quantity and quality of goods/services. This will normally be linked to audit rights.

Moreover, if the contract is subject to the Defence Production Act, then the government retains the ability to conduct cost audits and to determine, after the fact, whether the supplier received payment in excess of a “fair and reasonable profit”. Because what is “fair and reasonable” is not defined in the Act, it is highly discretionary. This applies to all forms of contracts, including fixed price contracts.

Depending upon the nature of the goods or services being provided, suppliers may also consider requesting that Canada agree to indemnify the supplier against third-party claims. As well, if the supplier is a manufacturer that has the ability to reconfigure operations and manufacture medical supplies, there may also be a need to obtain a waiver of the application of legislative requirements, including the need to obtain various permits or regulatory approvals.

Over the past few weeks, our team at Tereposky & DeRose has expeditiously advised government suppliers on the administration of government contracts in the COVID-19 environment. Given the urgency of Canada obtaining urgently needed goods and supplies, making sure that contracts are put in place as quickly as possible while protecting suppliers is a top priority.

Should you have any questions regarding these matters or any other government contracting issues, we are at your disposal. Although our procurement team is working remotely, we will respond immediately to all queries regarding COVID-19 related contracts.

Vince DeRose
613.237.8862
vderose@tradeisds.com

Jennifer Radford
613.237.9777
jradford@tradeisds.com

Stephanie Desjardins
613.237.8680
sdesjardins@tradeisds.com

 

Combatting COVID-19 through Expedited Supply Contracts with Canada (23 March 2020)

COVID-19 and Supply Chain Disruption

While the full extent to which COVID-19 will affect global supply chains on which Canadian industries rely remains unknown, material disruptions are inevitable.

In the near term, it is expected that the cost of supplies from outside Canada will increase. Limited transportation capacity, expedited freight costs, payment premiums to “buy up” the supply chain and the implementation of alternative sourcing strategies will all impact the cost of goods in Canada. In the worst-case scenario, Canadian companies may no longer be able to meet contractual obligations on time.

On March 18, 2020, Prime Minister Justin Trudeau announced that the Canada – United States border would be temporarily closed to non-essential traffic. The closure is expected to take effect Friday night.

Both Canada and the United States reinforced the fact that “key supplies” will still flow between the two countries. Over the next few days, Canada is expected to provide further guidance on how the border restriction will operate. It is anticipated that guidance will also be provided on the definition of “key supplies” as well as direction on how the Canada Border Services Agency (“CBSA”) will manage the border restrictions while facilitating the continuation of cross-border trade.

Over the past few weeks, our team at Tereposky & DeRose has assisted a wide range of companies on the legal consequences of failing to meet contractual obligations due to global supply chain disruptions caused by COVID-19. This includes advice on excusable delay and force majeure provisions. Tereposky & DeRose also regularly assists clients dealing with the CBSA.

Should you have any questions regarding these matters or any other cross-border issues, we are at your disposal.

Jennifer Radford
613.237.9777
jradford@tradeisds.com

Vince DeRose
613.237.8862
vderose@tradeisds.com

COVID-19 and Supply Chain Disruption (19 March 2020)

 

Canadian Parliament Passes Legislation to Implement the CUSMA

On Friday 13th March 2020, the Canadian Parliament passed Bill C-100, granting royal assent to “An Act to implement the Agreement between Canada, the United States of America and the United Mexican States” (the “CUSMA Implementation Act”). The legislative process was completed on a highly expedited basis, much earlier than expected, before Canada’s Parliament adjourned itself for a five-week period (until 20th April) in response to the COVID-19 coronavirus pandemic.

With the passage of the CUSMA Implementation Act into law, Canada has paved the way for the new North American free trade agreement to enter into force.

Under paragraph 2 of the Protocol replacing the NAFTA with the CUSMA, Canada, (i) Mexico, and the United States must notify each other, in writing, when they have completed their internal implementation procedures, and (ii) the new agreement shall enter into force (and the NAFTA shall be terminated) on the first day of the third month following the last written notification. Assuming that Canada tenders its notification by the end of March, the CUSMA could enter into force as early as 1st June 2020.

Tereposky & DeRose regularly provides advice on the interpretation, application, and implementation of international agreements. Should you have any questions regarding this matter, we are at your disposal.

Daniel Hohnstein
613.237.9005
dhohnstein@tradeisds.com

Greg Tereposky
613.237.1210
gtereposky@tradeisds.com

Canadian Parliament Passes Legislation to Implement the CUSMA (13 March 2020)

European Union Set to Ban the Use of Aloe Extracts in Food Products and Herbal Supplements

On 4 March 2020, the European Commission published a draft regulation prohibiting certain substances obtained from aloe plants from being used as ingredients in food products and supplements. Specifically, the draft regulation proposes that hydroxyanthracene derivatives including aloe-emodin and emodin, a structurally-related substance called danthron, and aloe extracts that contain these substances should be added to the list of prohibited substances and ingredients set out in Annex III, Part A of Regulation (EC) No 1925/2006, which governs the addition of vitamins and minerals and certain other substances to foods.

This prohibition could affect aloe growers, producers of materials derived from aloe, and businesses that use these materials as ingredients in food products and herbal medicinal supplements that are exported to the EU market.

The European Commission is currently accepting public feedback on the draft regulation. Stakeholders have until 1st April 2020 to provide their comments through the EC website.

The aloe extracts subject to the prohibition contain hydroxyanthracene derivatives, which are botanical substances commonly used in food and herbal medicinal supplements for their laxative effect. On 22nd November 2019, the European Food Safety Authority (EFSA) adopted a scientific opinion concerning the safety of hydroxyanthracene derivatives for use in food. The opinion concluded that hydroxyanthracene derivatives in aloe extracts are genotoxic (i.e., they damage DNA) and that whole-leaf aloe extracts are carcinogenic (i.e., they were shown to cause cancer of the intestine in animal trials). The EFSA was unable to determine a safe daily intake amount that would not give rise to health concerns. The proposed prohibition is based on these findings.

The wording of the draft regulation prohibits aloe extracts in which hydroxyanthracene derivatives, including aloe-emodin and emodin, and the structurally-related danthron are present. Presumably, the prohibition would not cover aloe extracts that have been processed to remove these substances, although there is not yet any guidance available on this point.

The draft regulation has come to the attention of the U.S. Department of Agriculture (USDA) Foreign Agriculture Services, which published a GAIN Report on 17 March 2020 to inform U.S. stakeholders in the aloe industry. Aloe is a commercially important agricultural product in the United States, Mexico, Australia, China, and other countries, where its extracts are used in the production of food, herbal medicinal supplements, and cosmetic products.

Tereposky & DeRose regularly provides advice on international trade barriers and trade-restrictive measures. Should you have any questions regarding this matter, we are at your disposal.

Daniel Hohnstein
613.237.9005
dhohnstein@tradeisds.com

Greg Tereposky
613.237.1210
gtereposky@tradeisds.com

European Union Set to Ban the Use of Aloe Extracts in Food Products and Herbal Supplements (4 March 2020)