Written By Darrel Pearson, Jonathan Fried, Jessica Horwitz and Valerie Hughes
Canadian exporters in various sectors sometimes face barriers created by foreign laws, regulations or their interpretation. The vast majority of impediments take the form of product regulatory requirements such as product labelling or technical specifications, and for agricultural products such as meats and grains, food safety rules. These barriers may be contrary to the importing country’s obligations under international trade agreements, particularly where they vary from internationally- accepted standards. However, litigating locally may be costly, and state-to-state dispute settlement must be launched by the government, is time consuming, and may not lead to a binding result.
However, there are also more practical avenues available for businesses to resolve these problems.
Canada has entered into several international trade agreements that, in addition to eliminating or reducing tariffs on Canadian goods exported abroad, impose rules prohibiting the use of non-tariff barriers (NTBs) that discriminate against imports. These agreements, including the World Trade Organization (WTO) Agreement itself, set out several processes and procedures that can be pursued before, or perhaps instead of, resorting to international dispute settlement.
The Government of Canada, and other state parties, may raise specific issues, brought to its attention by exporters or exporter associations, at international meetings of committees and working groups established under these agreements. These meetings offer opportunities to obtain more detailed information about how proposed or existing regulations work and to discuss potential adjustments that could address exporters’ concerns while maintaining non-protectionist measures intended to achieve legitimate purposes for which they were adopted. The meetings may also serve as useful avenues for obtaining information that could inform preparation for a potential trade dispute if it is not possible to resolve the matter through bilateral discussions.
It is in Canada's interest to ensure its international agreements are implemented fairly so that Canadian exporters can fully leverage and benefit from their intended economic growth opportunities. However, Canadian government officials will raise specific trade concerns at international meetings only if private sector interests persuade them of the value of doing so. To successfully persuade the government to intervene in a specific case, exporters (or exporter associations) must advance their case by providing the government carefully prepared briefs that thoroughly describe the issues, document the specify market access concerns in detail, and set out the relevant legal considerations. Bennett Jones experts are well placed to assist in making these submissions.
Trade Agreements Establish Sector-Specific Committees Where Trade Concerns May be Addressed
Trade agreements establish various committees and working groups covering a range of subject areas that serve as for a for treaty party representatives to discuss the operation of the particular agreement. An important part of committee work addresses trade concerns identified by private sector traders who have first-hand experience operating (or struggling to operate) under the trade agreement rules.
There are 24 committees, sub-committees and working groups under the Canada-United States-Mexico Agreement (CUSMA) that meet regularly to discuss a variety of matters including trade problems encountered by private sector interests. Examples include:
- the Committee on Agriculture, “a forum to exchange information on trade related to agricultural goods … and endeavour to address issues or trade barriers, and improve access to their respective markets”;
- the Committee on Sanitary and Phytosanitary Measures (SPS Committee), which is to “identify and discuss measures that may have a significant effect on trade in North America, including for the purposes of facilitating greater alignment of sanitary or phytosanitary measures”; and
- the Committee on Technical Barriers to Trade (TBT Committee), which is to “undertake initiatives to support greater regulatory alignment in the region, including through developing common standards or conformity assessment procedures, in sectors of mutual interest.”
Analogous committees that address exporter market access issues were established under other trade agreements including the Canada-European Union Comprehensive Economic and Trade (CETA), and the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP). At the most recent meeting of the CETA SPS Joint Management Committee held in October 2022, for example, Canada raised several concerns about E.U. measures including rules on maximum levels of hydrocyanic acid (HCN) in flaxseed.1 Canada pointed out that Canadian growers were finding the new E.U. legal requirements very difficult to meet as HCN occurs naturally in linseed, making mitigation extremely problematic. The E.U. agreed to discuss the results of a study on the subject being undertaken by Canada.
World Trade Organization Committees
The WTO committees on Technical Barriers to Trade (TBT Committee) and Sanitary and Phytosanitary Measures (SPS Committee) were established to provide WTO members an opportunity to consult on matters relating to the operation of the TBT and SPS agreements. The Technical Barriers to Trade Agreement sets rules for the imposition of product standards such as packaging and labelling requirements as well as product conformity assessment systems, while the Sanitary and Phytosanitary Measures Agreement covers food safety regulations and measures to protect against the spread of diseases carried by plants or animals.
A significant portion of SPS and TBT Committee meetings is dedicated to raising and discussing specific trade concerns (STCs). During committee meetings, the WTO member raising the STC explains its concerns with the measure in question; other members may express similar or additional concerns. The member that implemented or intends to implement the measure (responding member) may clarify certain aspects of the measure and often indicates that the concerns will be or are being reviewed. Continued bilateral discussions are often proposed. It is also possible that the responding member does not offer a satisfactory response, in which case the STC may be raised at a subsequent meeting.
The STC tool helps to ease regulatory bottlenecks and can also lead to amendment or withdrawal of measures affecting market access. The tool does not necessarily solve every case, but it is being used increasingly by WTO members to address a wide variety of concerns. Billions of dollars in exports have been facilitated through successful interventions by WTO members in WTO committee meetings.
Since 1995, when the WTO was established, Canada has raised 140 STCs before the TBT Committee and 33 before the SPS Committee covering a wide variety of measures and products, from BSE measures related to beef (a Korean measure), to automobile safety requirements (a Chinese measure), labelling of organic products (an E.U. measure), quality control orders for chemical and petrochemical substances (an Indian measure), and Halal food requirements (an Egyptian measure). A recent example of a specific trade concern raised for the first time by Canada in March 2023 is in respect of China's import restrictions on heat-treated pet food containing poultry ingredients due to avian flu concerns, which Canada claims are discriminatory and inconsistent with international standards. Additional information about STCs raised by Canada as well as all 164 WTO members is available on the WTO Trade Concerns Database.
How Can Exporters Obtain Help from the Government When Facing Hurdles in Foreign Markets?
Exporters (or associations representing exporters) who have experienced market access difficulties in foreign markets should raise their concerns with the federal government. Depending on the export product, representations could be made to Global Affairs Canada, Agriculture and Agri-Food Canada, Health Canada, or other federal departments (or to provincial equivalents as an initial step to taking up the matter with the federal government).
To successfully persuade the government to intervene in a specific case, it will be necessary to demonstrate that the exporter/exporter association has studied the situation thoroughly and has documented the specific market access concerns in detail. Exporters/exporter associations should prepare a written submission for the government that:
- identifies the product in question;
- sets out the trade value and volume involved;
- explains the market access difficulties; and
- describes the operation of the foreign law or regulation of concern.
It is very helpful when submissions are accompanied by a legal assessment of the inconsistency of the law or regulation in question with the trade agreement provision(s) and an indication as to whether the issue has been considered previously, either in dispute settlement proceedings or in committee meetings. Exporters should be thoroughly prepared to make the case to the government of the urgency and value of raising their market access impediment, and should facilitate the government's task of taking the matter forward to the relevant committee.
Bennett Jones experts in International Trade and Investment Law have a long and proven track record of expertise in international trade law, including providing advice on the consistency of laws, regulations and practices with trade agreement obligations, and assisting clients experiencing difficulties in accessing foreign markets for their products. In addition, our Government Affairs and Public Policy group members have exceptional knowledge of Canadian government practices and procedures having served in the government, including at Canada's mission to the WTO, and are well positioned to provide strategic advice on seeking the government's agreement to raise trade concerns at international meetings.
Connect with us to discuss how we can assist you in exploring whether the methods described above may be helpful in addressing your market access hurdles and if so, to help you prepare a submission that will succeed in persuading the government to pursue the matter at the relevant international forum.
1 Canada exported over CAD $84 million of flaxseed to the European Union in 2021 and is the European Unions’s third largest supplier of flaxseed after Russia and Kazakhstan.
2 For example, some €83 billion worth of E.U. exports were facilitated by successful interventions by the European Union in the WTO TBT Committee during the period 2009-2020: L. Cernat and D. Boucher: Multilateral Cooperation Behind the Trade War Headlines – How Much Trade is Freed Up?, CEPS Policy Insights, No PI2021-03/ February 2021, p. 4.
3 STCs are also discussed at meetings of the Committee on Market Access and the Committee on Import Licensing but to a much lesser degree than at the TBT and SPS committee meetings.