International Trade And Public Policy: A Blend Of Practices That Spells Success

Editor: Would each of you gentlemen tell our readers something about your background and professional experience?

Campbell: I received a graduate degree in trade and competition law from the University of Toronto, and I also have an MBA from New York University in economics and public policy. These provided the platform from which I have developed a legal practice that has specialized in economic regulatory issues.

McMillan Binch Mendelsohn is a leading full-service business law firm with offices in Toronto and Montral. As one of the top 20 law firms in Canada, we have developed a client base that includes a significant number of multinational companies, most particularly from the U.S. and Japan. The firm is particularly known for its expertise in financial services and insolvency/restructuring, private M&A work, competition law and public policy matters.

My practice in the competition/antitrust field includes merger clearances, the foreign investment reviews required under the Investment Canada Act for foreign corporations, cartel defense work, and the full spectrum of issues that arise in the pricing, distribution and marketing areas. With respect to trade law, my focus has been on economic and policy matters. This includes antidumping and countervailing duty cases, WTO and NAFTA matters, and the investment protection area, namely NAFTA Chapter 11 investment treaty cases.

Hearn: I came to law from an international relations background. I studied international relations, together with economics and politics, at the University of Toronto, Trinity College. Thereafter I received a law degree from the University of Toronto and then did a masters in law at Cambridge - Fitzwilliam College - with a particular focus on trade law and the laws of armed conflict. My thesis dealt with the laws regulating nuclear deterrence and warfare and was published in the British Year Book of International Law.

I should point out that McMillan Binch Mendelsohn is a member of the State Capital Law Firm Group, an association of more than a hundred firms from around the world. This provides us with a cost-effective platform when we need assistance in other jurisdictions.

My own practice has been in the international trade and public policy areas for the better part of 15 years. I have represented Canadian and foreign producers and service providers (as well as governments and their agencies) across a wide range of industry sectors. Much of my work concerns advising on the rights and obligations of these clients under NAFTA, the WTO and other trade agreements. I have also been involved in antidumping and countervailing duty proceedings before the Canadian International Trade Tribunal.

Editor: You are both engaged in the firm's International Business & Trade Law Practice Group. For starters, would you give us an overview of the group and its practice?

Campbell: The International Business & Trade Law Practice Group is something we put together in a formal sense a few years ago, very shortly after the arrival of Bill and another colleague. Its distinguishing feature is the integration of international business law with international trade work. We did this because we believe that many of the issues that emerge in the context of trade matters constitute business problems, and that these problems invite analysis and resolution across a whole range of legal disciplines and practice areas. The point of this grouping is to provide clients with a service offering that involves administrative, business law, regulatory and a host of other areas of expertise and which is delivered in a coordinated dispute resolution way. In addition, the lawyers in this group benefit from a very wide diversity of interaction that enhances their professional development, and that , we believe, adds value to the service provided our clients.

Editor: Is there a permanent cadre, or do you draw upon different practice groups across the firm as needed?

Hearn: There is an established core group, but it is part of a larger network of international business lawyers within the firm. The group acts as a focal point for assembling the expertise relevant to a particular matter. Some of that expertise may be subject-matter expertise, and some of it may derive from years of experience in a particular industry sector, or under a particular regulatory regime or in connection with a particular culture or legal system. The purpose of the core group is to promote thinking about the development of our business in this area on an ongoing basis while, at the same time, maintaining these informal linkages around the firm which permit us to marshal some pretty impressive resources on quick notice.

Editor: Speaking of industry sectors, who are the clients?

Campbell: Recently we have been active on a high profile trade case in the agricultural sector but the firm is a broad-based business law enterprise, so our clients are drawn from just about any sector you can imagine. We have particular strengths in financial services and in the automotive, pharmaceutical and healthcare sectors. We are also very active in the communications, entertainment and media industries.

Hearn: Let me add transportation, both air and marine, to that list.

Editor: Mr. Hearn, you have acted for the Canadian Corn Producers in their recent attempts to resist the impact of U.S. corn subsidies. What is the background of this dispute?

Hearn: It derives from an income crisis affecting Canadian corn producers. We represented a coalition of provincial corn growers' associations representing some 21,000 farmers in Ontario, Qubec and Manitoba. Over the past two years we have helped this group develop and implement a multi-pronged strategy to deal with U.S. corn subsidies, which the producers claim is the main cause of the income crisis.

The first prong of the strategy is to seek a made-in-Canada, WTO-compliant, fully-funded - both federal and provincial - income support program to offset the injury that the Canadian corn producers contend is caused by U.S. farm subsidies.

The second prong is to request the Canadian government to begin WTO consultations with the U.S. over the trade-distorting impact of the U.S. subsidies. These consultations would be in tandem with Canada's negotiating strategy at the WTO. With the collapse of the Doha Round of trade talks, we believe Canada has an opportunity to lead other major corn producing states - such as Brazil and Argentina - to discipline, via the application of existing WTO rules, trade-distorting U.S. corn subsidies.

Third, we continue to pursue a domestic trade remedy case under Canada's Special Import Measures Act to re-impose high anti-dumping and countervailing duties to offset what the producers allege is the injurious impact of significantly dumped and subsidized U.S. corn imports.

Finally, we seek to have the Canadian government use U.S. grain corn as part of Canada's WTO-authorized retaliation against the U.S. for its refusal to repeal retroactively the Byrd Amendment after it was declared illegal by the WTO.

Editor: Where does the dispute stand now?

Hearn: Our domestic trade remedies case has resulted in several proceedings. The American side, in addition, has started consultations at the WTO with respect to the case. There are various NAFTA panel and judicial reviews as well, but all but one of these have been stayed to enable the parties to focus on the critical elements of the case.

Editor: Agricultural subsidies constitute one of the crucial issues in world trade at present. Where does Canada stand in the international arena on subsidies - as opposed to this bilateral discussion with the U.S?

Hearn: While the U.S. and some of Canada's other trading partners have complained about "supply management" in our dairy sector and the "single desk" selling practices of our Wheat Board, on the whole, Canada has a good record with respect to WTO-compliant subsidies. The Canadian government recognizes that it cannot compete with either the EU or the U.S. Treasury in this regard, and, accordingly, most of our subsidies are well below WTO-permitted limits.

Editor: Mr. Campbell, the connection between public policy and the rules that govern international trade are at the center of your practice. On the basis of that background, would you tell us about the softwood lumber dispute?

Campbell: This is a decades-long dispute between Canada and the U.S. concerning the ways in which timberlands are managed and priced. The dispute evidences the importance of rules - particularly for a small country - in a trade relationship, and in this case Canada has relied heavily on the dispute resolution mechanisms available to it through NAFTA and the WTO. The variety of decisions that the dispute has generated were the building blocks that Canada has used to negotiate a new softwood lumber trade agreement with the U.S. Predictably, neither side is entirely satisfied, which is probably indicative that a decent resolution has been reached.

Editor: Would you share with us your thoughts about the importance of the rule of law in the international trade arena? Why is it so important for the rules to be followed in this setting?

Campbell: The rules are vitally important for everyone. The emergence of the WTO and the success of its dispute resolution process in recent years represent a major step forward. This is nothing less than the imposition of the rule of law on a trading system that, in the past, relied upon diplomacy and on agreements that often lacked implementation force. I hasten to add, this transformation is far from complete. It remains the case that major international players do not always act to implement a decision of a WTO review panel. The U.S. is still being pursued by Brazil on the implementation of the WTO's decision on cotton subsidies, for example. Nevertheless, we have seen remarkable progress that has brought considerable predictability into the international trade regime. Confidence in the rules is important for both the countries which are parties to trade agreements and to the businesses in their jurisdictions which trade based on such regime.

Editor: Please tell us about the resources that McMillan Binch Mendelsohn brings to the table - for both governmental entities and private parties - in the public policy aspect of the international trade discussion.

Campbell: The firm is over a century old, and many of our lawyers have been in and out of public life throughout their careers. We have acted as advisers to both governments and private parties on public policy issues throughout our history.

In addition to the International Business and Trade practice group, we have a Public Policy Group that specializes in working with governments. Recent arrivals to our ranks are Tim Murphy and Senator Hugh Segal, both of whom have served as chiefs of staff for previous Canadian Prime Ministers. They bring an exceptional understanding of how government works in Canada, and they have substantial experience on both domestic and international issues.

Editor: Is there anything you would like to add?

Hearn: One of McMillan Binch Mendelsohn's advertising slogans is that we are "America's Canadian Law Firm." I trust that your readers, or at least a good many of them, will applaud the good work we are doing for the American taxpayers in attacking the U.S. corn subsidies. If we are successful, U.S. taxpayers may see more of their hard-earned money staying in their pockets!

Published October 1, 2006.