Dear International Trade and Investment Committee Members,
Here are the international trade and investment articles and publications of interest for the week of March 24 to March 30. This week’s edition has been curated by Alexandra Logvin. Alexandra is an associate at Fasken Martineau in Ottawa.
Top News: Ukraine-Russia
- The Russian government has banned entry to 13 Canadian senior civil servants and politicians in retaliation for punitive actions that Ottawa levied on Moscow elite over the annexation of Crimea and the destabilization of Ukraine.
- The United States and its closest allies on Monday cast Russia out of the Group of 8 industrialized democracies, their most exclusive club, to punish President Vladimir V. Putin for his lightning annexation of Crimea, while threatening tougher sanctions if he escalates aggression against Ukraine. President Obama and the leaders of Canada, Japan and Europe’s four strongest economies gathered for the first time since the Ukraine crisis erupted last month, using a closed two-hour meeting on the sidelines of a summit meeting about nuclear security to project a united front against Moscow.
- An International Monetary Fund (IMF) mission worked in Kyiv during March 4-25, to assess the current economic situation and discuss the authorities’ economic reform program that could be supported by the IMF. At the conclusion of the visit, Nikolay Gueorguiev, Mission Chief for Ukraine, issued the following statement today in Kyiv:
- “The mission has reached a staff-level agreement with the authorities of Ukraine on an economic reform program that can be supported by a two-year Stand-By Arrangement (SBA) with the IMF. The financial support from the broader international community that the program will unlock amounts to US$27 billion over the next two years. Of this, assistance from the IMF will range between US$14-18 billion, with the precise amount to be determined once all bilateral and multilateral support is accounted for.”
- The General Assembly today affirmed its commitment to Ukraine’s sovereignty, political independence, unity and territorial integrity within its internationally recognized borders, underscoring the invalidity of the 16 March referendum held in autonomous Crimea. (GA/11493; 100 Votes in Favour, 11 against, 58 Abstentions for Text on Ukraine).
- The U.S. Bureau of Industry and Security (‘BIS’) suspended the issue of licences for exports to Russia on 1 March. In an announcement on its website, BIS said it has ‘…placed a hold on the issuance of licenses that would authorize the export or re-export of items to Russia. BIS will continue this practice until further notice.’ The decision has been confirmed to apply only to new licence applications and will not affect existing licences issued by BIS.
- At the same time, the Directorate of Defense Trade Controls (‘DDTC’) is reported to have implemented a similar policy for licences and other export authorisations involving export to Russia, although to date this is unconfirmed by DDTC.
- Ukraine and its backers won support from little more than half the members of the United Nations General Assembly to declare invalid Crimea’s referendum to secede, as Russia wielded diplomatic and economic pressure for members to abstain or cast no ballot. The 193-member General Assembly voted 100-11 today to pass a nonbinding resolution describing the Crimean referendum as “having no validity” and calling on all states and agencies to not recognize “any alteration of the status” of Crimea. Fifty-eight members abstained, and 24 were absent.
- General Motors Co. (GM) said it’s expanding the recall of small-car ignition switches by 971,000 vehicles worldwide to cover 2008-2011 vehicles that were built with safe parts but may have received faulty replacements. The recall brings the total to 2.59 million small cars and now includes 2008-2010 Chevrolet Cobalts and Pontiac G5s, Pontiac Solstices, Saturn Ions and Saturn Skys and 2008-2011 Chevrolet HHRs, Jim Cain, a Detroit-based GM spokesman, said today in a telephone interview. The expanded recall comes on top of 1.62 million cars recalled last month for faulty ignition switches linked to the deaths of 12 people.
Other News
- On 26 March 2014, the WTO issued the dispute panel reports in the case “China – Measures Related to the Exportation of Rare Earths, Tungsten, and Molybdenum” (WT/DS431/R, WT/DS432/R and WT/DS433/R). At issue were China's export duties and quotas, minimum export price requirements, export licensing requirements and other administrative restrictions on the export of various forms of raw materials (rare earths, tungsten and molybdenum) used in the production of various kinds of electronic goods. The complainants were the US, the EU and Japan. The panel ruled against China’s restrictions:
- On 27 March 2014, the WTO issued the panel report in the case “United States – Countervailing and Anti-Dumping Measures on Certain Products from China” (WT/DS449/R). The dispute concerned two different US measures complained at by China: (1) Section 1 of US Public Law (PL) 112 99 entitled "An act to apply the countervailing duty provisions of the US Tariff Act of 1930 to nonmarket economy countries, and for other purposes", which was enacted on 13 March 2012; and (2) the United States’ alleged failure to investigate whether so-called "double remedies" arose from 25 parallel countervailing duty (CVD) and anti-dumping proceedings, initiated over the period 2006 2012, involving imports from China as a nonmarket economy country under US law. The panel ruled in favour of the US on issue 1, and against it on issue 2. WTO’s summary of the decision and the full report with addendum can be found here, respectively:
Government Announcements/Press Releases
- Erin O’Toole, Parliamentary Secretary to the Minister of International Trade, today tabled in the House of Commons the Final Agreement Summary of the Canada-Korea Free Trade Agreement, including a technical summary of final negotiated outcomes.
- On the first day it comes into force, the Canada-Korea Free Trade Agreement will provide Canada with preferential new market access to South Korea’s 50 million consumers and annual $1.1 trillion economy. In fact, the agreement is projected to boost Canada’s economy by $1.7 billion and increase Canadian exports to South Korea by 32 percent.
- The Canada-Korea Free Trade Agreement is a landmark economic achievement: it is Canada’s first free trade agreement in Asia, one of the fastest growing and most dynamic regions in the world. South Korea is not only a major economic player and a key market for Canada; it also serves as a gateway for Canadian businesses into the Asia-Pacific region.
- The Honourable Ed Fast, Minister of International Trade, today issued the following statement: “Today, the London Court of International Arbitration has ruled in favour of Canada on a dispute over the termination date of export charges related to a 2011 ruling under the Softwood Lumber Agreement between Canada and the United States. We welcome the ruling, confirming Canada’s understanding of its international obligations. As a result of this ruling, the Government of Canada will cease to collect export charges from Ontario and Quebec softwood lumber exporters that were implemented as a result of a 2011 award. The federal government will also refund charges collected from the Ontario and Quebec industries subsequent to the termination of the award on October 12, 2013.”
Commentary
- Known unknowns are multiplying in a new threat to global economic expansion. While economists Mohamed El-Erian of Allianz SE, Allen Sinai of Decision Economics Inc. and Morgan Stanley’s Joachim Fels see growth speeding up this year, mounting geopolitical strains in Ukraine and elsewhere are prompting them to turn more guarded about the outlook.
- Russian President Vladimir Putin called President Barack Obama today to talk about a U.S. proposal to resolve the conflict over Ukraine and the two leaders dispatched their top diplomats to continue discussions. Obama asked for a written response from the Russian leader to the plan that Secretary of State John Kerry presented to Russian Foreign Minister Sergei Lavrov in the Hague earlier this week, according to a statement from the White House.