Our readers will be aware that the USMCA (CUSMA) is on track for US ratification and – by most accounts – will come into force possibly as early as mid-2020. This is not a lot of time for company executives to prepare. In addition, the three USMCA Partners will soon be meeting to set USMCA implementation rules, or USMCA Uniform Regulations, which must be in place before the USMCA goes into effect.
The developments on the USMCA front come at the same time when the US Administration will be introducing a host of unilateral rule changes regarding foreign investments into the United States. In other words, 2020 is the year when executives will want to:
- Ask the right questions
- Receive the right information and informed strategic advice
Under the NAFTA, Canadian investors were entitled to bring a claim for breach of an investment protection directly against the United States. This was possible under the Investor-State Dispute Settlement (ISDS) provisions of the Investment Chapter.
Clearly, the pending coming into force of the USMCA will bring about major changes for the protection of Canadian investment in the United States. Company executives will want to know:
- With respect to existing investments, what, if any, NAFTA investment protections are retained, at least temporarily, via the USMCA’s “legacy” provisions;
- With respect to new investments, how to manage the complete removal of ISDS from the USMCA.
Outside of the USMCA, the enactment of new laws and regulations by the US Administration that broaden the authority of the US Committee on Foreign Investment in the United States (CFIUS) to screen certain types of inbound Canadian investment may impose significant additional requirements and restrictions.
Companies in Canada will want to know if these laws and regulations apply to their investments and, if so, what procedures must be followed to ensure that their investments are not penalized.