Moving your goods and services across the Canada-United States border: compliance, efficiency, and challenges.

• Author: Alzetta-Reali, Silvana

Session Chair-Silvana Alzetta-Reali

Canadian Speaker-Cyndee Todgham Cherniak

United States Speaker-Susan Kohn Ross

INTRODUCTION

MS. ALZETTA-REALI: This session is about compliance, efficiency, and challenges in regard to moving goods and services across the border. Obviously the events of September 11 have shifted the paradigm through which we view security. (1) As we have heard, resources have been focused on security-based initiatives in which trade liberalization and facilitation are secondary goals. (2) And many of the specific features north and south of the border have the potential to indeed impede trade. (3)

This session's speakers will discuss a portion of the security-based initiatives from both the U.S. and Canadian perspective, they will discuss some challenges and hopefully provoke quite a bit of thought. Susan Kohn Ross (4) has been with Mitchell, Silberberg & Knupp (5) as international trade counsel since the beginning of this year. She has practiced in the area of customs, international trade, transportation, and import and export law for more than 20 years. She is currently a member of two subcommittees formed by Homeland Security's Departmental Advisory Committee on Commercial Operations, (6) one in which she deals with 10+27 and advances in trade data elements, the other involving expansion of C-TPAT (8) and CSI. (9) She is also a co-founder with Cyndee Todgham Cherniak (10) of the Trade Lawyers Blog. (11) Cyndee has been with Lang Michener (12) since October 2007 practicing international trade, business law, and tax law. She has reviewed over a hundred regional trade agreements as a consultant to the Asian Development Bank (13) and written an extensive report on these. There is a great deal written about Cyndee, as well as Susan, in the biographies in your program. Cyndee is very proud of the Trade Lawyers Blog, so I also urge you to visit it at www.tradelawyersblog.com. It is chock full of interesting information and items. So I will now without further delay begin our session and pass it over to Cyndee.

CANADIAN SPEAKER

Cyndee Todgham Cherniak *

MS. CHERNIAK: We are going to go back and forth between various topics from a Canadian perspective and a U.S. perspective, but before we do this, I would like to kind of set the stage for everyone. Customs trade, export controls, import controls, practitioners--though that is lawyers, accountants, consultants, et cetera--Canada and the United States generally accept that the safety and welfare of the citizens of North America is an important goal. (14) That is a given. We also recognize there is a thickening of the border that is occurring. (15) As practitioners, we have a role to play sometimes in promoting and speaking in support of the security initiatives and communicating and educating about why they are taking place. However, we have another more unpopular role to a certain extent, especially in the eyes of the Canada Border Services Agency (16) and the Department of Homeland Security. (17) Sometimes we must speak out against the new laws and regulations, policies, procedures, practices because that either affects a particular client or it affects the collective. We have a wonderful opportunity to speak out on behalf of particular individuals, but also to point out where a particular law has not been thought through thoroughly, or if there is a business perspective that someone within government has not taken into consideration. So there is a great opportunity. So at times we are advocating on behalf of a client, and at times we are sounding a warning bell. And so we are kind of transitioning from some of the discussion from yesterday into the positive initiatives that are taking place. And hopefully we will have more of a positive discussion on where changes can be made to improve security even more within the framework of economics.

* Cyndee Todgham Cherniak joined the International Trade Law Group, the Business Law Group and Tax Group as counsel in Lang Michener's Toronto office in October 2007. She is known for her expertise in the area of free trade agreements, regional trade agreements and preferential trading arrangements (collectively, PTAs). She appears before regulatory bodies and tribunals such as the Canadian International Trade Tribunal, and makes representations to the Canada Revenue Agency, the Canada Border Services Agency, the Export and Import Controls Bureau, the Department of Foreign Affairs and International Trade, the Canadian Food Inspection Agency the Department of Finance and the Ontario Ministry of Revenue.

UNITED STATES SPEAKER

Susan Kohn Ross ([dagger])

MS. ROSS: That having been said--I am usually the first one to tweak Customs when I think they have--shall we say politely--misbehaved. But I think we need collectively to do a better job of saying that it is perhaps more palatable. When we say "yes but," that does not mean we are being unpatriotic. It does not mean we are questioning the need for the security measures. But we do need to be willing to stand up and say this is a good idea, or this is not a good idea, and here is why. We are going to move a little bit later on to 10+2. And as Cyndee and Silvy said, we are going to take a series of issues and we are going to sort of bounce back and forth between the U.S. view and the Canadian view. And the first one we picked sort of tags nicely off of the WHTI--Deemed Export Rule. (18) Now, for those of you who are not familiar with it, basically the U.S. has a rule where if you have goods that are subject to an export license, then the technological documents that have to do with it-whether it is blueprints or anything else-are themselves then subject to a license. (19) Now that in and of itself may not be as controversial as some of the other things that have happened. And to tie back to the immigration issue, our Commerce Department controls those things which are not military and therefore controlled by the Department of State. (20)

The Department of State's view is that they want to know the country of your citizenship. (21) But I have a greater concern because this is military in nature, or potentially military in nature. So I also want to know where you have lived, and I certainly want to know your country of birth. (22) And as with any large organization, there is a real problem within the agency when these decisions are made distinguishing between somebody who was born in Libya 45 years ago and left 43 years ago versus somebody who was born in Cuba within the last 20 years. Now, we can leave to one side how they got out of Cuba, and pick any other country that is considered high-risk as far as the U.S. is concerned. But that is the view of the State Department, rightly or wrongly. (23) I prefer to think about our Commerce Department as being somewhat more enlightened. Their view is if you have managed to become a U.S. citizen, you are a U.S. citizen. Now that having been said, because it is often times military goods and because the Department of State takes the view that it cannot only control the goods as I said but also the technical information, I am going to pitch it to Cyndee, and she is going to talk a little bit about the implications of the ITAR, which is the International Traffic and Arms Regulations. (24) In terms of that, the Department of State,-not only seeks to regulate the license of goods, but also what Canadian companies can do in terms of the staffing that they need to make the goods for the U.S. military. (25) MS. CHERNIAK: And I do have one of the Lang Michener (26) articles on the table on this particular subject. So you know, please feel free to pick it up. But we have a couple situations in Canada where as a result of our human rights legislation; we have got cases going to provincial Ontario human rights commissions. Complaints are being brought by employees and potential employees on the basis that they are being discriminated against on the basis of nationality. (27) You can have a dual citizen in Canada who is of Haitian descent or Canadian descent. My uncle actually was born in Cuba. My grandparents just happened to have been living there at the time he arrived, and, you know, Cuban-Canadian citizens would not be looked at under the ITARs, and the problem that is faced by Canadian companies is the extraterritorial reach of the U.S. law. (28) And we have got a catch-22 situation that is evolving in Canada with no real solution at the current time. Because you have got the ITAR under U.S. law, where you are not allowed to have the dual citizenship with 25 countries working on particular projects. (29) Under Canadian law, our human rights commissions have come out quite strongly saying we think that this is discrimination on the basis of nationality, and we will not accept this. (30) And as a result, existing employees at Canadian companies run into difficulties that they are being shifted into other parts of the corporation or organization or there is the potential that they would lose their jobs because the Canadian company wants to continue to sell to the U.S. government or to a subsidiary of a U.S. company. (31) And as a result if they lose their jobs, then there is employment rights that kick into play. (32) And if they have been shifted, it can be considered to be constructive dismissal. (33) But we also had cases at the human rights commissions where a corporation acts inappropriately as against a particular individual. And while there has not been a case that has come out saying here's what we think per se, there have been settlements and some comments have been made about the settlements by the commissions. And so the Quebec Human Rights Commission (34) in the recent Bell Helicopter case (35) came out and said we believe this is discriminatory. (36) They were actually suggesting that other people come forward. And the interesting thing in the Bell Helicopter case was that the individual at issue was not an...