Page 22 - CCCA Magazine Fall 2018

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Then in-house counsel must analyze and assess the impact Another thing in-house counsel are keeping an eye on deals
the trade fux will have on their companies. Cherniak says in- with rules of origin. The Canadian countermeasures are applied
house counsel need to come up with answers to a series of ques- to goods that “originate” in the U.S. as defned by the Deter-
tions: Will the company be subject to duties? Will duties affect mination of Country of Origin for the Purposes of Marking
supply and demand of supplies in the marketplace? Will the Goods (NAFTA Countries) Regulations, or what is referred to
company be able to procure goods at the price that was agreed as marking regulations. Rules of origin for marking purposes
to or will it be subject to a price increase? are usually broader than the rules that determine the origin of
In-house counsel will also have to determine whether the goods for preferential tariff purposes, says Pearson.
company can take advantage of short-term legal measures. A In-house counsel, in conjunction with customs experts, need
growing number of Canadian and non-resident importers hit to fgure out whether the goods the company is importing from
hard by the retaliatory tariffs Canada levied against American the U.S. actually have U.S. origins, advises Boscariol. “Some-
products on July 1 are looking to limit the impact of surtaxes by times they may fnd, and we have had a few instances of this,
assessing things they never really bothered with before, begin- that even though you are importing that good from the U.S.
ning with tariff classifcation. and even though its tariff classifcation is on the retaliation list,
In the past, many companies were not particularly con- it isn’t of U.S. origin according to the rules, and if that’s the case
cerned about applying the correct tariff classifcation—it made it is not subject to tax.”
no difference because the goods were duty free, says Boscariol. Seeking relief is yet another option that in-house counsel may
That is no longer the case. With refunds a possibility, many Ca- look into, say international trade lawyers. The Canada Border Ser-
“
nadian companies are undertaking the often complex exercise vices Agency has two programs: Duty Relief and Duty Drawback.
that requires legal analysis informed by the General Rules for In essence, these programs offer relieve or refund duties and sur-
the Interpretation of the Harmonized System, Canadian rules taxes on imported goods so long as the imported goods, or goods
and jurisprudence. manufactured using the imported goods, are later exported from
Canada within four years. The drawback to these programs is that
they can prove to be administratively burdensome.
The other alternative is to seek the granting of a remission
order from the federal government, which would provide the
discretionary remission of import duties, including surtaxes.
“ In-house counsel deal erations, says Pearson.
But there is a hiccup here too—it has political and legal consid-

with risk on a daily basis.
But this is a different  new Challenges
Now that trade skirmishes are a reality, in-house counsel have to
level of risk than what be wary of price gouging, warns Elliot Burger, Senior Counsel of
is normal. It is unpredictable risk. Legal Services at Linamar Corporation, a publicly traded Cana-
dian manufacturing company. With the imposition of steel and
You really don’t know where the aluminum tariffs in the U.S. and Canada’s retaliatory measures,
risks are going to come from so it’s there are some suppliers who view this as a golden opportunity
to increase their prices even though they are not using American,
really hard to prepare and manage Canadian or Chinese (also the subject of tariffs) steel.
those risks. ” “It has been our experience that there are certainly some of

Cyndee Todgham Cherniak, founder of our suppliers who are absolutely under pressure from this and
through no fault of their own are experiencing price increases,”
LexSage Professional Corp. explains Burger. “But there are also suppliers who saw this as a
hawkish opportunity to get another 5 to 10% margin because it
seems that everybody else in the supply chain is doing it.”

22 CCCA MAgAzIne | FAll 2018 AuTOMne