Managing the Economic Meltdown

(Christopher Guly — The Lawyers Weekly)

Canadian lawyers face new challenges

The “perfect storm” created by the current economic downturn could generate considerable legal action in several practice areas, such as international trade and investment as well as litigation resulting from a potential escalation of cross-border trade disputes, according to McCarthy Tétrault’s John Boscariol, who heads the firm’s international trade and investment law group and is a partner in the litigation group in Toronto.

“When there are slowdowns, particularly in the context of a crisis, governments tend to erect trade barriers in an effort to protect employees and manufacturing in their country — measures that could violate obligations under trade agreements,” said Boscariol, who chairs the Ontario Bar Association’s international law section and serves as co-chair of the Canada committee for the American Bar Association (ABA)’s international law section.

Already, there are concerns that incoming U.S. President Barack Obama and his Democrat colleagues in Congress could spark one of the largest protectionist initiatives in recent memory. That in turn could lead to other actions on this side of the border.

“When markets slow down, companies bring forward more trade remedy cases, more countervail cases and more anti-dumping cases,” said Boscariol. “When companies start to suffer, they tend to blame imports.”

He adds that with massive government subsidization underway in the U.S., there could be legal challenges in Canada over whether such subsidies run afoul of U.S. trade obligations. So far, the European Union “has fired a warning shot over the bow,” indicating that it would be prepared to take the U.S. to the World Trade Organization if the U.S. government proceeds with a financial bailout of its auto industry and it’s found to have violated international trade law. Read more here.