Page 23 - CCCA Magazine Fall 2018

{ fEAturE }

Under these circumstances, in-house counsel certainly have
a role to play, he adds. They can begin by asking suppliers to
justify those cost increases by providing evidence that their
costs did indeed surge. They should also study the contract they “ If you are going to
negotiated with their suppliers to determine whether suppliers [customize contracts],
have a legal leg to stand on.
Hand in hand with this effort, in-house counsel should the ability to get that
consider drafting contract language that protects against accepted by the other
price increases or withdrawals from trade agreements. Again, side has everything to do
easier said than done. Force majeure provisions are typical in
almost any contractual relationship between commercial par- with how you spell it out to them….
ties, points out Burger. (Force majeure is a contractual term by [That being said,] I do think that
which one or both of the parties is entitled to cancel the con-
tract or is excused from performance due to a specifc event everybody understands that we are
or events beyond its control). He suggests changing the force living in a trade environment where
majeure language to insulate a company from the potential or there is a lot of fux.
necessity of price increases. at Linamar Corporation”
“I have always taken the position that you cannot fall back on Elliott Burger, Senior Counsel of Legal Services
force majeure,” says Burger. “We have got to write up indepen-
dent provisions that relate to reliance on trade agreements and
create language that goes beyond that.”
In these cases, the size and clout of the company matters as “The challenge for Canada, Canadian companies and Gen-
does the importance of “your supply” to the client, he acknowl- eral Counsel indirectly is to rise to the occasion and diversify
edges. But so does the approach you take. customer bases so that this doesn’t happen again,” says Pearson.
“If you are going to do that, the ability to get that accepted “There are opportunities inasmuch as the U.S. is going to be
by the other side has everything to do with how you spell it out targeted with countermeasures by other countries so we have to
to them,” he explains. “It’s a tough sell, and I have had some open our eyes and see where the opportunities lie.”
success, but I do think that everybody understands that we are “Companies should be looking at doing it now because there
living in a trade environment where there is a lot of fux.” is generally bad news coming out of the U.S. when you talk
about what Trump is doing,” says Boscariol. “But I don’t want to
 new opportunities be naïve about this. You cannot change these things overnight,
As disheartening as the trade situation may be, there are op- especially a sophisticated manufacturing supply chain.”
portunities that Canadian companies can take advantage Then there’s the widely held perception that Canadians are
of, according to international trade law experts. Canada’s conservative by nature, something that holds them back from
overwhelming reliance on the U.S. market is well known. seizing opportunities in new markets, laments Burger. “That
In 2016, Canadian exports to the U.S. stood at $454 billion, means that they are not particularly adventurous with their
or approximately 75% of all outward trade from Canada, a supply chains or export markets.”
fgure that represents about 20% of the Canadian economy, These are heady times for in-house counsel. Already over-
according to Export Development Canada. It may be time to worked, they now face a challenge that “is only going to increase
look elsewhere. in the coming years,” predicts Boscariol. “There’s no easy solu-
In the past four years, Canada signed several trade agree- tion. There’s more than just throwing money and resources at
ments, including one with Israel, the Comprehensive Economic it. You have to plan these things carefully.” ❚
and Trade Agreement (CETA) with the European Union and
its member states, and the newly signed Comprehensive and
Progressive Agreement for Trans-Pacifc Partnership (CPTPP). Luis Millán is a law and business journalist based in Montreal.

CAnADIAn COrPOrATe COunSel ASSOCIATIOn | CCCA-ACCje.Org 23