Trade Compliance

GHY discusses changes to international trade regulations and explores cutting-edge compliance strategies.

Trade Agreements, Compliance Among Top Legal Risks for Businesses in 2016

Posted January 25, 2016

Regulatory compliance and trade agreements such as the controversial Trans-Pacific Partnership (TPP) and the Comprehensive Economic and Trade Agreement (CETA) with Europe are among the top 10 legal risks facing businesses in 2016, according to a thought leadership paper released earlier this month by the law firm Borden Ladner Gervais LLP.

Canada is entering into a new era of unprecedented free trade, the report says, and while it acknowledges that the dates on which the TPP and CETA will ultimately come into force aren’t yet known, progress on the ratification processes concerning both agreements can be expected to be made in the year ahead.

Once these trade deals are eventually ratified and implemented into Canadian law, they will affect the competitive landscape for agricultural, manufacturing and service industries throughout Canada, the report states.

“Now is the time when all stakeholders should be carefully investigating the potential risks and opportunities created by the TPP and the CETA with respect to specific goods and services, not only in the Canadian market but also in the relevant export markets.”

Regarding compliance issues, the report warns that companies of every description should be increasingly concerned, “since they affect not just the bottom line, but also one’s reputation, credibility and livelihood,” adding that the election of a new federal government with a mandate for change could potentially translate into more intense levels of scrutiny.

The rules are becoming more and more granular, while still remaining principles-based. It is not enough to focus on the “bare bones” requirements, so executive focus (and board oversight) must be not just on daily operations and strategic initiatives but also on anticipating, planning for and responding to the objectives and policy directions of regulators, which may change depending on leadership.

In light of the possible consequences and costs of regulatory investigations, significant costs are being incurred by organizations to comply with the evolving regulatory environment, its additional constraints and imposed rules. Organizations proactively establish systems to avoid complaints and scrutiny in the first instance and to respond effectively to reviews or investigations when they occur.

Market participants will be acutely aware that robust compliance systems are critical to establishing “due diligence” or “reasonable investigation” defences, as well as to being able to demonstrate adherence to the “public interest”, and the participants will govern themselves accordingly when carrying on business.

Other key trends the firm believes will have legal implications for Canadian businesses in the coming year include: climate change; tax authorities leveraging non-privileged information; rising number of privacy class actions; workplace cyber-sex and IT security; combating fraud in e-payment systems; “honest performance” provisions of contractual obligations; and the regulatory enforcement of Canada's new anti-spam law. 

Click here to download the paper.