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Possible Commonwealth trade agreement explained

Thursday, February 18, 2021 @ 10:59 AM | By Sebastian Ferguson

Sebastian Ferguson %>
Sebastian Ferguson
Following on from part one of the CANZUK series which outlined the likely structure through which the agreement will operate, part two will continue to look at the regulatory impacts resulting from the principle of mutual recognition. Then, through comparing CANZUK to broadly similar trade agreements such as NAFTA, it is also possible to formulate some predictions as to what the prescribed dispute mechanism could look like.

Regulatory impacts

Whilst Brent Cameron, author of The Case for Commonwealth Free Trade, suggests that no country would forfeit its right to set its own national standards, the principle of mutual recognition will impact regulations across all four states. These include:

  • Education and employment: All four countries would agree to recognize the qualifications and experience of citizens from CANZUK counterparts. For professionals like lawyers, this would likely mean the simplification of the cross-qualification process. Regarding education, we could see an Eurasmus-style arrangement which would facilitate cross-pollination of higher education institutes. Educational collaborations like that of Oxford University’s with AstraZeneca would bolster future research for vaccines and cures to other diseases. Furthermore, Cameron notes that employment and labour standards are at an equally high standard footing across the four nations and the Trans-Tasman Travel Arrangement (TTTA) have not encountered any problems concerning a race to the bottom. Therefore, employment regulations are unlikely to encounter drastic changes beyond mutual recognition.

  • Health care and pharmaceuticals: The U.K.’s medical regulator (MHRA) has already started collaborating with Canada and the U.S. on international projects like “Orbit” and “Access” which are focused on approving innovative treatments for diseases such as cancer. Through Cassis de Dijon-esque mutual recognition, these medicines would become recognized and readily available across CANZUK. This would almost certainly be the case for COVID-19 vaccines. Canada could also introduce reciprocal health-care agreements to allow its citizens to access health care across all CANZUK countries.

  • Data privacy: This is likely to be the greatest stumbling block in getting the treaties ratified by the U.K. in particular. Data privacy was one of the main concerns in the Brexit negotiations as the U.K. risked being demoted to third-country status. To circumvent this, the U.K. has agreed, under s. 10 (a) Trade and Cooperation Agreement, to not authorize data transfers through adequacy agreements with other countries without the EU’s authorization. This is because the EU doesn’t want data leaving Europe without suitable protections in place. As such, there is a lot of work to be done to reassure the EU that data privacy regulations will be consistent.

  • Trade, competition and antitrust: Similar to employment and labour standards, competition and antitrust standards are robust across all countries. Accordingly, James Marshall, partner at Covington & Burling, points out that British competition watchdogs, the CMA, have recently pledged to become pioneers of consumer protectionism and environmental safety. However, it seems likely that CANZUK will seek to include countervailing duties and antidumping provisions within the ANZCERTA trade agreement in order to address the issues previously faced by NAFTA. Additionally, there may potentially be a provision which reinforces the principle of mutual recognition. This area will likely be governed by a court or tribunal.

Chapter 19 NAFTA dispute mechanism?

Finally, one of the most relevant legal aspects of a CANZUK agreement will be the dispute mechanism that is agreed to resolve the aforementioned free trade issues. In the case of NAFTA, Chapter 19 panels were legally anomalous in international dispute settlement as they did not apply international law, but instead required a panel composed of individuals (multilateral) from many countries to re-examine the application of one country’s domestic law.

If such tribunals were implemented, their decisions could still be challenged before a CANZUK Extraordinary Challenge Committee as permitted by Chapter 19 NAFTA.

However, Extraordinary Challenge Committees have not historically functioned as an ordinary appeal. Under NAFTA, it only vacated or remanded a decision if it involved a “significant and material error that threatened the integrity of the NAFTA dispute settlement system.”

Whilst antidumping and countervailing duties are likely to be addressed directly via an amendment to the TTTA, there will of course be other points of contention. This being said, it’s worth pointing out that all four countries operate under a common law jurisdiction. Therefore, given the language and cultural assimilation of the Anglosphere, it is likely that provisions will be similarly interpreted by any panel or tribunal.

In terms of the politics, negotiators will have to decide whether multilateral panels are an appropriate dispute mechanism for reviewing the domestic law of one of the signatories. These dispute settlement bodies are binding and there will undoubtedly be additional arguments over which type of mechanism to use. Whilst this leads into a topic within itself, given CANZUK’s similarities with NAFTA, it is possible that agreements will be upheld and enforced through a similar, Chapter 19 vein.  

This is the second half of a two-part series. Part one: CANZUK: A new Commonwealth agreement?

Sebastian Ferguson is a law postgraduate currently working as a paralegal in the U.K. with a keen interest in commercial law, banking and finance. Contact him via LinkedIn.

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