NAFTA vs CETA: Modernization, Pros and Cons

What is NAFTA? The North American Free Trade Agreement was negotiated between Canada, the US and Mexico. NAFTA came into effect in 1994, and this year marks its 23rd birthday. At its conception, it became one of the world’s largest free trade zones and led the flood of trade agreements that were signed throughout the 90s and early 2000s. The deal required that no country could give preference to domestic or non-member state investors over those from other member states. NAFTA has received a great deal of criticism over the course of its career. It is often seen as a symbol of globalization in North America.

What is CETA? The Comprehensive Economic and Trade Agreement (CETA) is a free-trade agreement between Canada and the European Union. CETA was negotiated between 2009 and 2014 and passed in February of this year. It will see provisional implementation beginning September 21st. Negotiations were largely conducted in secrecy and without public knowledge. Trade unions, civil society organisations and even MPs were excluded. Meanwhile, big business enjoyed significant influence throughout the process. The deal boasts a modernized agenda, and is being held up as the model for a new generation of free trade deals.

By Robin Haverstock

NAFTA Pros

Boosts Trade 

Since it’s impossible to look at it in a vacuum, it’s difficult to say just how much NAFTA has lifted up Canadian GDP. What we can say, however, is that it has spurred foreign direct investment and has supported our import/export economy. Since 1993, U.S. and Mexican investments in Canada have tripled. U.S. investment, which accounts for more than half of Canada’s FDI stock, grew from $70 billion in 1993 to over $368 billion in 2013. As of Canada’s trade liberalization, Canadian exports to the United States grew from $110 billion to $346 billion. Spikes in these trends following the deal’s consummation point to NAFTA’s influence.

Lowered Prices 

By nature, NAFTA reduces the price of goods for consumers. Companies are better able to optimize production of goods so that costs go down, and the removal of tariffs on foreign goods slashes extra dollar value.

Lowered Costs and Gov spending  

NAFTA reduced government spending. That’s because each nation’s government contracts became available to suppliers in all three member states. That increased competition and lowered costs. Government spending could then go elsewhere.

Diplomatic Relations

One argument that’s often cited in favour of free trade in general and NAFTA in particular is that it strengthens the diplomatic ties between countries. In other words, countries that are economically interconnected are less likely, the theory goes, to experience diplomatic or military conflict. Post-NAFTA, it is argued, the heads of state of the U.S., Canada and Mexico meet more frequently and put a higher value on their diplomatic relations.

Supply Chain Integration

NAFTA is a senior citizen of trade deals. It was signed near the beginning of the global movement towards trade liberalization and it was a pioneer of continental free trade agreements. Since it has been around for so long, it’s hard to retrospectively prescribe judgements regarding its effectiveness. NAFTA has become a sort of whipping boy for globalization, and all of its woes. That means that we’re unsure what costs and benefits NAFTA did deliver to North America, and which were just an unavoidable consequence of a developing world.

Many of NAFTA’s benefits, like job creation, GDP growth and diversification, are disputed. One benefit that is generally agreed upon is NAFTA’s profound effect on supply chain integration. Free trade deals are all about taking advantage of diversity, so supply chain integration was perfectly suited to it. NAFTA made it easier to do research and development in one country, manufacture parts elsewhere and assemble in the other country. NAFTA’s advocates usually point to the revitalization of the North American autoparts industry and the aerospace industry. The process of supply chain integration can initially cause company relocation and lost jobs, but ultimately it optimizes production.

NAFTA Cons

Lost Jobs

While it’s difficult to definitively place the net number of jobs created and lost by NAFTA, we can identify sectors and industries that suffered. Since NAFTA optimized supply chains, many manufacturing jobs crossed borders to Mexico. In turn, both the US and Canada saw a rise in post-secondary educated jobs. Still, this cannot erase the damage to families who relied on high-paying manufacturing jobs.

Industry Relocation and Suppressed wages

NAFTA allows easy industry relocation and makes it appealing. When a factory is built across the border, jobs are relocated. While that can hurt nations individually, it’s often still positive in the big picture, by many measures. An unexpected side effect is the suppression of wages. As the job market in these industries becomes scarcer, workers are willing to work for less money, to their detriment. Workers in Mexico did not necessarily get much better conditions, since companies emigrated there in order to exploit the economic climate. Even companies that stayed in Canada were able to suppress wages simply by means of the threat of taking work elsewhere.

Human Rights Violations

This evaluation has put an emphasis on the pros and cons of CETA and NAFTA for Canada. There are some negative aspects to NAFTA, however, which don’t directly impact Canada. While NAFTA has endangered some of Canada’s human rights law by shifting power to corporations, Canada is fortunate enough to be able to weather it. Most violations of human rights tied to NAFTA have taken place in Mexico. When Canadian and American produce overtook Mexican, many Mexican farmers were forced to find alternative work. Some were exploited in substandard conditions as a result.

While this occurred outside of Canadian borders, human rights violations are of significance to us all. Breaches of human rights law are unacceptable, and should be taken as a NAFTA con for Canada. Moreover, we mustn’t neglect the reality that industrialized land development has not always had the consent of the indigenous peoples of Canada. This has indirectly led to more poor living conditions and poverty for those vulnerable populations.

CETA Pros

Boosts Trade

The primary objective of a free trade agreement is to increase trade and boost GDP. Like NAFTA, CETA is expected to do this very effectively. CETA’s provisional implementation will eliminate almost all tariffs between Canada and the EU. Over the next seven years, more tariffs will be transitioned out. The removal of tariffs is expected to boost Canada-EU trade by up to 20%. This translates to an additional $12 billion dollars for Canada’s economy, and $17 billion for the EU’s. The deal will undoubtedly increase GDP and growth on a national scale.

New Markets

Easier access to the EU opens up new markets for Canadian firms. Not only will our business profit from the deal, but world-class Canadian products will have a better chance to compete on a global scale. In theory, this promotes innovation and a ‘natural selection’ of sorts for the best goods.

Reduced dependency

Canada’s renewed trade with Europe should relieve some of our dependency on American goods and markets. Canada will now have better opportunities to discriminate amongst goods and thereby optimize spending. CETA also makes a point of protecting Canada’s interests in the event of a US-EU trade deal. This kind of preemptive power is invaluable to Canada.

Modernization

One of the big selling points of CETA is its attention to modernization. CETA is a big deal for Canada and for Europe. The TPP having fallen through, it will be the most significant trade deal signed in the northern hemisphere for the past decade or more, possibly since NAFTA. As such, CETA has tentatively attempted to tackle previously taboo topics in the name of modernization. It addresses areas that NAFTA hasn’t come close to touching, even after acknowledging the ongoing updates. CETA will deal with more than just imports and exports. It recognizes the fast-paced nature of modern businesses. The deal will place a higher importance on global value supply chains, investment, public procurement, intellectual property provisions and labour mobility. In that sense, CETA operates in a larger context than NAFTA does, and it takes on a fresh perspective.

CETA Cons

Competition 

Competition is a double edged sword. While it should drive Canadian products to excellence and innovation, it will also spell defeat for many smaller firms which are unable to cut it. Canada’s 35 million people will now compete with Europe’s 500 million. If European corporations are allowed to interfere on a sub-national level, their influence could be seen in areas that are currently overseen by Canadian government and investors.

Human Rights 

CETA has promised stringent human rights protections, but it’s hard to say whether it will uphold them. Generally free trade agreements allow multinational companies to more easily relocate, with the end goal of minimizing costs. For one thing, this opens up vulnerable cheaper labour to exploitation. It also leaves previous employees in the dust and without stable income. There’s a fear that CETA could gradually erode workers’ rights and reduce salaries as the labour market gets more competitive. The deal grants more power to investors and multi-nationals who are likely to be primarily profit-seekers.

Environmental Degradation

In the past, international trade deals have led to environmental degradation by both direct and indirect routes. Cooperating with foreign multinationals makes it more difficult to implement strict climate change policy in order to protect the environment, especially when these multinationals wield public procurement power. CETA allows multinationals to challenge or ignore environmental regulations. Once foreign firms are in, taking measures to enforce these rules will be even more controversial. In general, increased international trade also encourages industrialized extraction and production,  and they aren’t likely to be coupled with sustainable methods. These are big contributors to CO2 emissions, deforestation and water pollution.

Threatened Public Services 

There are many concerns about CETA, many of which are shared by free trade agreements worldwide. Like we’ve said, however, CETA is a modern age deal and it encounters new issues as well as new benefits. One of the distinguishing features of CETA is its inclusion of public procurement provisions.

Public procurement refers to the process by which public authorities, such as government departments or local authorities, purchase work, goods or services from companies. (EU Commission)

Once it has come into effect, the deal will allow European companies to bid for public contracts in Canada at all levels of government. We count on the government to provide public services like healthcare, education, utilities and social programs. At CETA’s onset, European firms will be able to purchase clout in these services. This means they’ll no longer be protected in the public interest. Many of them could become privatised, opening them up to greater profiteering and looser regulations. If that happens, multinationals could take control of some municipal services, leading to possible legal disputes between the two. To make matters worse, privatisation is very difficult to undo should issues arise.

For example, take our healthcare system. CETA will expose Canadian medical services to privatisation pressures. European firms will gain greater access to our firms, and this is likely to lead to increased costs for treatments, pharmaceuticals and surgeries. On top of that, according to the rules of NAFTA, we will have to offer the same access to US firms.

Blockchain Marketplace: CryptoKitties

Introduction – CryptoKitties is an Ethereum-based distributed app (DApp) developed by Axiom Zen in Vancouver. It is a blockchain marketplace. The idea is to make technology user-friendly and relate-able. It might have started as a proof-of-concept, but it has potential for a lot more. I like to think of it as an early MMO game – key to understanding trade systems, locally or internationally.

Issuance – Gen0 kitties are non-fungible (ERC 721 tokens) issued by the company every 15 minutes. The price is an average of the last 5 Gen0 kitty sales and reduces over time. The auction lets them get the best price for each kitty. Important note on ERC 721: not all tokens are created equal – this results in rare kitties and adds fun to the economics.

Circulation – Their smart contract confirms a maximum of 45,000 Gen 0 kittens. I’m guessing another 5,000 is for promotional kitties. Each Gen0 kitten is limited by 8 cool-down levels of 2 cats at each level. They can produce a time-permitting cap of ~256 kittens. That’s about 12.8 million “tokens” in early circulation, with < 50,000 new cats introduced per week in the long-term (2% inflation).

Economics – The supply of kitties is limited by breeding activity which creates new kitties but devalues the original, making it an investment decision reflecting the market price. If demand goes up, more kitties will be produced… so, future kitty “coin” releases will fully depend on trustless market (Blockchain Marketplace) forces rather than the company as in the case of ICOs. There is a huge incentive to find rare cats though (ERC 721), skewing price distribution such that the generic kitten is cheaper than the average where one may have expected it to represent the average.

Conclusion – Judging by the last Gen0 kitty sale as of now then, CryptoKitties technically hit an $18 million CAD market cap! I think, with investment in user adoption, additional functionality and customer service, CryptoKitties can go pretty far. It’s a genius implementation of peer-to-peer trustless marketplaces/platforms and a real business right from the genesis block :+1:

– Hudhaifah Zahid

Bottom-Up Bitcoin | A Trip to Scaling Bitcoin 2017 (Part 1)

My fascination with Bitcoin and it’s bottom-up design began after the 2008 financial crisis. I took up economics at school to better understand what happened. We began with microeconomics – incentives, supply and demand, and the beauty of free market and international trade. Then of course things got political because humans are social creatures. When it comes to getting things done as a group and achieving consensus, we always differ – and for the better really.

by Hudhaifah Zahid

There is a top-down and bottom-up approach to most things. Sadly, I found our textbook lacking this discussion in the political philosophy behind economics. I only found it while browsing the web. I read up on the basis of top-down Keynesian and Monetary economic models found in the textbook but was left  unsatisfied. Then I came across the bottom-up approach! It is presented by the Austrian economic model, contributed to extensively by Keynes’ contemporary – Friedrich Hayek.

My main issue with top-down models is that they lack foresight and data at the individual level. There are continuous efforts to improve on this but data gathered is always historical. We can only get a true view of the aggregate whereas the market operates at the individual level. To put it starkly, if policy (hint: quantitative easing) allowed a bank to make $10 million while 1 million people lost a dollar, we would see that as a policy success. Yes, the $10 million gained by the bank will go back into the economy and help everyone but why did people have to lose a dollar in the first place?

A lot really comes back to our ability to reach consensus and implement its results. It is easier to understand and implement policies with aggregate gains than to worry about all the small details. Through human history, perhaps tied to our combativeness, we developed and honed hierarchical models for group decision and actions. This remained the case for the past century, paving the way for Keynesian and Monetary models. This has begun to change thanks to the internet and peer-to-peer communication. It is evidenced by the rise of platforms like Facebook, Uber, AirBnB and GoFetch.ca. They are markets with their own policies that have emerged from the interaction of individuals and personalized data. Take that a step further and you come to Bitcoin and blockchain technologies. No borders, no middlemen, just trade and interaction on your terms and yours only – it’s a Hayekian dream in the making.

Simplicity in a Cacophonous World

In August, I took a twenty hour Greyhound, from Vancouver to Calgary, the a four hour drive from Calgary up to Jasper National Park. A friend of mine had been living in the park for the past four month, part of a mission by BC parks to save an endangered species of tree. He is also a fantastic photographer. responsible for the images shown in this post. For the past two years, I had made it a personal goal of mine to go through the Canadian Rockies at least once a summer; as an avid Tolkien fan and as a longstanding reader of high fantasy, I found that the picturesque landscape and wilderness of the north, touched some part of my soul that I could not feel within Vancouver. Through the course of my three days in Jasper, I was reminded of the value of simplicity, possible through a rural lifestyle, within a world that has developed startling amounts over the last hundred years. The days were spent biking and walking, and climbing, with visits to the local Veterans bar at night. At the top of a back country hike on the top of a mountain valley, I found silence, a silence that was impossible to find within the cities that we humans have built, and on that mountain top I sat, and listened. The simplicity and peace found in natural, non densely populated areas is something that has value, especially within our increasingly globalized world, as something beautiful that is worth cherishing.

by Ray Yiu

Lost in the World

Over the course of my life, Vancouver has changed, from a rural suburb to a city that is ever expanding and growing. The labor office that once stood on a corner in an area that I used to spend afternoons doing nothing has been converted into a series of high rise apartments, this is happening all around the city. Now this is not a bad thing, I am not Lao Tzu, and am not advocating for a return to subsistence farming and the abolishing of the globalized, industrialized world. (At least not yet) But within this, Vancouver has and will continue to transform, from a large town in the midst of the Canadian west coast, to an eventual metropolis, perhaps in the next thirty or so years. Something is lost in this transformation, a simplicity and silence that cannot be captured within a big city. Much is gained in industry and globalization, and multiculturalism is a beautiful thing, especially within large cities, but with it comes stress, anxiety and a feeling of being lost in a world that seems entirely indifferent to ones existence.

A Wilderness Worth Exploring

Canada is a beautiful country, and Vancouver is a beautiful city, for it is situated on the coast, with the mountains and the rain-forest surrounding it. But even on its finest hikes, the noise pollution is evident, the lifestyles do not echo simplicity, despite pushes towards local businesses, food and culture. As a child, I served in the Royal Canadian Air Cadets, and on one excursion into a military base in the wilderness, I remember looking into the night sky, and hearing nothing in return, apart from the occasional gunshot. In Jasper, I encountered the same type of silence, albeit without the gunshots, at the top of a back country hike through several large valleys, ending on the peak of a mountain, overlooking the Rockies and the forest. Nature has sound, but within the sound of nature there is silence. Silence in the chirping of birds and the rustling of leaves, the occasional mountain goat or thrush that wanders by, or the bear or deer that you stray across. Nature is indifferent to humanity, but it is not cold towards it, it simply exists, and you simply exist in the moment while it moves around you. I sat and meditated for a time, and felt an incredible calm settle over me, a calm that I had never experienced with the hustle of the city. Within silence, there is simplicity, within simplicity, there is great calm.

“Take Off Your Hat”

That night, we went drinking at the Royal Canadian Legion, a hats off veterans bar  populated mostly by locals within Jasper. The atmosphere was indicative of Canadian friendliness, everyone seemed to know each other, and the sounds of happy conversation and music floated throughout the establishment as easily as the bartender poured drinks. It was open mic night, at one point, a Latino man stepped on stage and called up a local prairie girl to play the violin, and two old men to play the drums and bass respectively. They began to jam, and by the second song, the assembled bar crowd stood up, moved onto the dance floor, and began to salsa. This scene astounded me, the looseness and friendliness of the people was reflected in their willingness to cut loose and dance; people who lived simple lives and let loose with dance and live music. It was beautiful to watch and to participate in.

“Manifest plainness, Embrace simplicity, Reduce selfishness,
Have few desires.”

At the top of a truly big hill in Jasper, I was able to get a birds eye view of the town of Jasper, amidst the surrounding mountains, forest and lakes. The scene was reminiscent of Middle Earth to me, of what I imagined the town of Bree must look like, tucked within the wilderness that Tolkien wrote so fondly about. Within the Lord of the Rings, the Shire and its surrounding towns are models for the simplistic living that Tolkien saw as endangered by war and industrialization. In Jasper, I see the value behind this type of lifestyle, the appeal of living within nature, in an area where silence is attainable, where friendliness and community are ingrained, and where the expansionist desires of humanity have yet to reach.

The sage Lao Tzu once said, “Nature does not hurry, yet everything is accomplished.” Granted, Lao Tzu wished for a permanent revision to the days before globalization, to a rural setting where small communities remained within themselves, with no desire for expansion. I do not agree with this, there is value in globalization, in multiculturalism and in cities. But there is so much value in simplistic living, in silence and nature, and it is worth preserving and seeing, and being a part of. Environmentalism is essential, we must preserve these areas, for the sake of the planet as well as our own needs and survival, along with for the peace that can only be brought by nature. I strive to find some silence in my day to day life, to spend as much time in the sun and grass as possible, to remember the peace that simplicity can bring in a life that is fraught with anxiety and noise.

SICC Arbitration Case Study and Commentary

Study and Commentary on SICC Case: BCBC Singapore Pte Ltd vs. PT Bayan Resources TBK [2017] SGHC(I) 06.

By:
Dee Dee Peter
Kisantiny Suthagar
Kho Feng Ming
Shelbie Jotem
Priskila Sinem

Issues:

Funding

The funding issues focused on three key issues, namely, whether BR was obliged to:

  • provide funding for the commissioning, operations and maintenance of the Project in accordance with a funding MOU executed in March 2009 (Funding MOU);
  • consent to KSC obtaining an advance from SCB to repay monies lent to it by BCBCS; and
  • contribute 49% of KSC’s care and maintenance costs.

The SICC looked at the terms of the JV Deed and Funding MOU which were expressly governed by Singaporean law.   Under Singaporean law a contextual approach is taken to contractual construction (i.e. ‘the Court ascertains the intention of the parties at the time they entered into a contract based on all “relevant” evidence’).  Extrinsic evidence can be used to interpret a contract if it is ‘relevant, reasonably available to all the contracting parties and relates to a clear or obvious context.’ Subsequent conduct can also be considered as an aid to construing a contract.

In considering the JV Deed, the SICC looked at the natural and ordinary meaning of the funding obligations clauses and held that had the parties intended to give up their ‘significant right’ to withhold consent to calls for funding then they would have articulated this in the Funding MOU.

The SICC commented on what it considered, or more relevantly did not, to form relevant extrinsic evidence under Singaporean law, including evidence of subsequent conduct.  For example, the Court looked at BR seeking clarification of the costs associated with its funding obligations, and did not consider this relevant contextual evidence of BR’s awareness of its legal obligation to contribute to such costs under the Funding MOU.

Ultimately on the question of funding, the SICC determined that BR was under no obligation to provide funding for commissioning costs or care and maintenance costs (even though it was subject to good faith obligations under the JV Deed), nor was it under any obligation to consent to KSC obtaining a further advance to repay debts owed to BCBCS.

Coal Supply

The first coal supply issue was whether BR was under an obligation to supply and / or assist to procure coal to be supplied to KSC under the JV Deed or other agreements or side deeds.  In relation to this issue, KSC had entered into coal supply agreements with entities related to BR.

On this issue, the SICC held that there was insufficient evidence to determine how much coal was required by KSC in the period in question, which was during the commissioning phase.  To that end, it reserved its decision until later when the issue could be further explored.

The second coal supply issues was whether the coal supply agreements (and related side agreements) for the supply of coal between November 2011 and March 2012 were illegal or entered into for an illegal purpose under Indonesian law, and thus unenforceable in Singapore. This was namely because of the transfer pricing and tax implications of the economic model used for pricing the coal.  In 2010 the Indonesian Government introduced new regulations for the mining industry impacting on permits, and more relevantly, on mandated minimum benchmark prices for various types of coal.

The SICC explored the two distinct strands that comprise illegality in Singapore.  First, as a matter of public policy:

” … a Singapore court will not enforce a contract or award for damages for its breach, if its object or purpose would involve doing an act in a foreign and friendly state which would violate the law of that state.”

Second, on an independent conflict of laws basis, the SICC confirmed that a contract would be:

” … invalid in so far as the performance of it is unlawful by the law of the country where the contract is to be performed.”

BR’s argument that the coal supply agreement and associated side letter were illegal was dependent upon them being illegal under Indonesian law – that is, they conflicted with the regulations issued by the Indonesian government.  Following the consideration of evidence from experts in Indonesian law put forward by both sides, the SICC found that there were common grounds on which an agreement would be held to be unenforceable under Indonesian law.  In this case however, the SICC rejected the allegation that the agreements were tainted by illegality as they were consistent with the regulations introduced by the Indonesian government.  Further, the judgment provides detailed consideration of the pricing mechanisms in the coal supply agreements and related side letter which may prove useful in similar commercial settings.

Counterclaim

One of the contentious counterclaim issues was whether there was an implied term in the JV Deed:

… that in providing technical assistance to KSC in the development of the Patented Briquetting Process, BCBCS was under a contractual duty to use the reasonable skill and care to be expected of a competent designer, builder and operator of a coal preparation and briquetting plants.

The SICC addressed the approach to implied terms in Singapore noting that a court must first ascertain how the gap in the contract arises as the implication will only be considered where parties did not contemplate the gap.  Secondly, the court will consider whether it is necessary in business or commercial sense to imply the term to give the contract efficacy. Thirdly, the specific term to be implied will be considered and it must be one that the parties ‘would have responded “Oh, of course!” had the proposed term been put to them at the time of the contract.’

As to the implied term alleged in this instance, the SICC held that the obligation in the JV Deed for BCBCS to provide technical assistance did not go so far as to impose an obligation to provide this assistance as it related to design, building or operating of coal preparation and briquetting plants.  As such, there was no implied contractual duty to use the reasonable care and skill expected of a competent designer, builder or operator of the same.

The case concerned a joint venture in Indonesia between publicly listed parties from Australia and Indonesia and their associated companies. The joint venture sought to exploit a patented technology, a binderless coal briquetting process (“the BCB Process”), developed in Australia, to produce and sell upgraded sub-bituminous coal from East Kalimantan. A claim was brought by BCBC Singapore Pte Ltd (“BCBCS”) and its affiliate company in Australia against PT Bayan Resources TBK (“BR”), an Indonesian company, and its affiliate company in Singapore. BR conversely commenced a counterclaim against BCBCS and its parent company in Australia, White Energy Company Limited.

The parties’ commercial relationship began in 2006 when they signed a joint venture deed. However, due to unexpected developments and increased expenses pertaining to the joint venture, including intervening legislation in Indonesia which regulated the sale of coal, numerous agreements, memoranda and a side letter were entered into between the parties during the period 2007 to 2011, resulting in a complex contractual matrix.

The parties agreed to have the dispute resolved in tranches; the first tranche was devoted to ascertaining the true meaning and exact nature and scope of a number of provisions in the various agreements and the parties’ obligations thereunder. The decision to divide the suit into tranches was reached after conferring with the parties who shared the view that, given the complexity of the case, the Court’s interpretation of the various agreements would assist in narrowing the areas of dispute between them moving forward. The parties agreed on certain specified issues to be determined by the Court in the first tranche; these issues could be broadly grouped as (a) funding issues, (b) coal supply issues and illegality; and (c) counterclaim issues on implied duties.

After a nine-day trial, closing submissions were delivered by the parties on 14 January 2016. In its judgment, the Court held that BR was not obliged to provide funding to the joint venture during the period of November 2011 to March 2012, which was the period in which the dispute between the joint venture parties came to a head. Although the parties had entered into various subsequent agreements during the course of the joint venture, on a true construction of those agreements, the parties never gave up certain core rights under the original joint venture deed which required the agreement of both parties on the funding to be contributed to the joint venture and the right to refuse to provide additional funding at their absolute discretion.

The Court declined to decide whether BR had an obligation to supply coal during this same time period due to the lack of evidence led on this issue, preferring to decide the issue at a subsequent tranche when the parties have the opportunity to lead relevant evidence to enable findings of fact on which the issue could be properly decided. The Court further held that the arrangement between the parties regarding the supply of coal was not void for illegality as it did not contravene Indonesian law. The coal would be sold at the regulated price and the Indonesian government would receive full royalties and taxes on the coal transactions.

As for the counterclaim brought by BR, the Court found that BCBCS was only obliged to assist in the development of the BCB Process and that its obligations did not extend to designing, building or operating the coal upgrading plant. Given the above findings, it was not strictly necessary for the Court to determine whether BCBCS had an obligation to ensure that a certain minimum amount of upgraded coal briquettes would be produced within a reasonable period of time. Nevertheless, the Court found that BCBCS did not have such an obligation. The parties were aware at all times of the risks involved in the project and that the BCB Process was an unproven technology. Accordingly, an obligation of guaranteed performance could not be justified.

The Court has accorded the parties 30 days to consider the judgment and to then decide on the future conduct of the case.

SICC Judgement

In the case of PT BAYAN RESOURCES TBK v BCBC SINGAPORE PTE LTD & ORS [2015] HCA 36, the appellant, a company incorporated in Indonesia, owns shares in the second respondent, a company incorporated in Australia. The first respondent is a company incorporated in Singapore. The appellant and the first respondent are parties to a joint venture agreement which is governed by the law of Singapore. The first respondent commenced a proceeding against the appellant in the High Court of Singapore, claiming, amongst other things, damages for breach of that agreement.

The claims were dismissed by firstly, the defendants were not obliged to provide funding to the joint venture company, PT Kalsim Supacoal (KSC) The court ascertains parties intention at the time they entered the contract that relates to the clear context of the agreement. The Singapore Law approaches implied terms via the gap in the contract and the implications that may occur. The eficacy of the contract is determined by the business or commercial sense in the implied terms. And lastly, the specific terms has to be intended by both parties. The court looked at Bayan Resources’ who seeks clarification on their funding obligations and hence ruled this cost funding is a contextual evidence of Bayan Resources intention of its’ legal obligation to contribute to the funding.

Secondly, the coal apply issue for the supply of coal between November 2011 and March 2012 is illegal. The court held that this agreement entered by the parties is not void by the Indonesian Law because the issue of supplying coal as it not contravening the Indonesian Law. The coals sold at a regulated price and the Indonesian government is receiving royalties and taxes from the sales. The Indonesian government had introduced regulations on mining industries that had mandated the benchmark for minimal pricing on coal supplies.

Thirdly, the court held that the plaintiffs were not under an implied contractual duty to use the reasonable duty of skill and care to be expected of a competent designer in providing technical assistance. The Court later found that BCBCS’ obligations did not extend to designing, building or operating the coal upgrading plant. The parties were aware at all times of the risks involved in the project and that the BCB Process was an unproven technology. Accordingly, an obligation of guaranteed performance could not be justified.

Application of Principles and Rules

On Funding

The courts found that BR was not obliged to provide funding to KSC between November 2011 and 2 March 2012, contribute 49% of the expenses incurred for the care and maintenance of KSC and to consent to KSC obtaining a further advance of US$3.033m from SCB which would be used to repay BCBCS for its temporary loan to KSC.

BCBCS tried to claim that BR had promised to provide funding for the use of KSC at a fixed portion and therefore cannot revoke its promise. We found that BCBCS was actually claiming under the principle of “pacta sun servanda” which means that parties must honour their promise or “agreements must be kept” which is a basic principle of civil law, common law and international law.

One of the issues was whether BR was under any expressed or implied obligation to provide funding to KSC between November 2011 and 2 March 2012. The principle was that, on order for the courts to decide if there was indeed an implied term that BR was to provide such funding was to look at the conduct of the parties during the draft or before the performance of such obligations.

In this case, the courts found that BR only agreed that BR would fund the SCB Loan Facility to repay BCBCS for the monetary loan BCBCS had granted to KSC on 11 and 23 June 2010, but no further. The courts had also found and agreed to Mr. Xavier’s oral submission that:

  • The email correspondence that took place in June 2010, fairly read, shows that BR only agreed to the SCB Loan Facility being used for immediate re-payments of BCBCS’ 11 and 23 June 2010 loans. …
  • The immediate reimbursement of the 11 and 23 June 2010 BCBCS loans, are only two instances, and can only hardly constitute a fashion. In the absence of a clear representation to that effect, there cannot be an estoppel.

On coal supply and illegality

  1. i) On the first basis of illegality

The court held that, after considering the reports of the experts brought forward by the defendant and plaintiff, nothing in the terms set in the contract, whether express or implied, was found to have allowed any performance other than which is fully compliant with the Indonesian laws and HBA regulations by virtue of Regulation No. 17 of 2010 on Procedures to Determine the Benchmark Price for the Sale of Minerals and Coal.

The main principle that was applied when deciding on this issue was the principle of international mandatory rule. Cases like Foster v. Driscoll [1929] 1 KB 470 and Regazzoni v. K C Sethia (1994) Ltd [1958] AC 301 highlights principles of domestic policy that “a Singapore court will not enforce a contract or award damages for its breach, if its object or purpose would involve doing an act in a foreign and friendly state which would violate the law of that state.” Another case that was referred to in the judgement of this case was Ralli Brothers v. Compania Naviera Sota y Aznar [1920] 2 KB 287 which, in relation to this case, applied the principle of independent conflict of laws whereby it is highlighted that “a contract is, in general, invalid in so far as the performance of it is unlawful by the law of the country where the contract is to be performed (lex loci solutionis)”.

On the grounds of this principle, the court opined in the issues of the basis of illegality:

  • an agreement which is entered into for a purpose that is prohibited by law or violates public order is not a valid agreement and is unenforceable;
  • any agreement which is entered into for the purpose of contravening, circumventing, avoiding or getting around an Indonesian Regulation will be regarded as an agreement with a “prohibited cause” under the Indonesian Civil Code, and will be invalid and unenforceable;
  • compliance with the HBA Regulation is mandatory, … ;
  • …. Bara’s sale of feedstock coal to KSC and KSC’s sale of upgraded coal briquettes must be transacted at the HBA prices, and failure to conform to this price would render the contract illegal.

Applying the said principle and analyzing the evidence the brought forth to the court, the judges found that the 2011 April Side Letter and the 2010 CSAs are not illegal or tainted to be.

(ii) On the second basis of illegality

It was decided that the “ambiguity” and “gaps” which were present in the April 2011 Side Letter did not render the contract invalid as it was not of such nature that reaches the extend of the need to terminate or strike the contract down.

It was in this case that the courts considered the principle of freedom of contract by reaffirming the views of Lloyd LJ in Pagnan SpA v. Feed Products Ltd [1987] 2:

  • Parties may intend to be bound forthwith by an agreement even though there were further terms to be agreed or some further formality to be fulfilled;
  • There is no legal obstacle which stands in the way of parties agreeing to be bound now while deferring important matters to be agreed later. It is for the parties to decide whether they wish to be bound, and if so, by what terms, whether important or important.

However, the courts did apply the principle of freedom of contract subject to a certain limitation or restriction that a contract cannot be simply made or pronounced invalid for ambiguity or “gaps” or certain terms present in it unless such ambiguity or “gaps” would make the contract not performable. In this case, the court reaffirmed Lloyd LJ’s view in Pagnam SpA:

  • If the parties fail to reach agreement on such further terms, the existing contract would not be invalidated unless the failure to reach agreement on such further terms renders the contract unworkable or void for uncertainty.

This would mean that whether or not the contract can be struck down or vice versa, would depend on the facts of the case, whether the term in question was a warranty or a condition.

On counterclaim issues

BR claimed that BCBCS was under an implied contractual duty to use the reasonable skill and care to be expected of a competent designer, builder and operator of coal preparation and briquetting plants in providing technical assistance to KSC. They claimed so referring to Clause 3.8(a)(iii) of the JV Deed, which states that:

  • [BCBCS] must:

” …

(iii) provide technical assistance to [KSC] in the development of the [BCB] Process;”

The courts applied the rule of three steps to determine the presence of an implied term, namely;

  • ascertain how the gap in the contract arises; [how did this gap arise?]
  • whether it is necessary in the business or commercial sense to imply a term to give the contract efficacy; [would the contract be unworkable if such terms were not implied?]
  • consider the specific term to be implied. [What term should be implied?]

Applying these rules in considering an issue with implied terms, the courts decided in the negative. Due to the “unproven technology” and the fact that the parties “knew the risks”, in such circumstances, the court was in the view that it is difficult to impose such implied terms which results to a guarantee of a particular performance by KSC, by a particular date or a during particular period of time.

COMMENTARY

The commentary on this case begins with the brief introduction on the establishment of Singapore International Commercial Court (hereinafter “SICC”), and subsequently followed by the observation with clarification on the case of BCBC Singapore Pte Ltd v PT Bayan Resources TBK[1] (hereinafter “BCBC v PT Bayan Resources”). The observation touches on the issues such as the brief facts of the case, the counsel, the coram, the transfer of proceedings, questions pertaining to the determination of foreign law, and the discovery model in SICC. This commentary tied up with a concluding remarks.

(i) Establishment of SICC

5th January 2015 saw the birth of the Singapore International Commercial Court (“SICC”)[2], a new institution that was brought from vision to reality within a short span of two years.[3] Just slightly more than a year after its launch, the SICC rendered its first judgment in BCBC Singapore Pte Ltd v PT Bayan Resources TBK (“BCBC v PT Bayan Resources”).

(ii) BCBC Singapore Pte Ltd v PT Bayan Resources TBK

BCBC v PT Bayan Resources, on 4 March 2015 by way of a transfer to the SICC for adjudication from the High Court pursuant to O 110 r 12 of the Rules of Court.

By way of brief background, the case concerned a joint venture in Indonesia between publicly listed parties from Australia and Indonesia (including their associated companies) to exploit a patented technology developed in Australia to produce and sell upgraded sub-bituminous coal from East Kalimantan, and involved a complex contractual matrix.[4] The parties involved were variously incorporated in Singapore, Australia and Indonesia. The hearing of the first tranche of the trial in BCBC v PT Bayan Resources commenced   about   eight   months   after   the   case   was transferred.[5] The first tranche related to the issues of contractual construction and some issues of Indonesian law, while issues relating to the alleged breach of contract were reserved to be determined in later tranches.[6] The first tranche was initially fixed for a period of 15 days, from 16 November 2015 to 4 December 2015, but the evidence-taking process was completed six days ahead of schedule on 26 November 2015, with a full day of hearing for closing submissions conducted thereafter on 14 January 2016.[7] The SICC rendered its first written judgment on 12 May 2016.

The judgment has attracted much interest and, amongst other things, has been hailed as a “masterclass” in how to deal with rules of interpretation, public policy and the implication of terms.[8]

(iii) Counsel

The counsel involved were from two of the largest law firms in Singapore. The plaintiffs and the second defendant by counterclaim were represented by a team from Rajah & Tann LLP led by Francis Xavier SC, while the defendants were represented by a team from Drew & Napier LLC led by Davinder Singh SC.

(iv) The coram

The judges assigned to the coram were High Court Judge Quentin Loh and International Judges Vivian Ramsey and Anselmo Reyes. The members of the coram, who have been described as “international legal heavyweights”,[9] have a wealth of commercial law practice knowledge and expertise.

Judges Professional biographies
Quentin Loh J Was appointed as a Judicial Commissioner in 2009 and, later, a Judge of the Supreme Court in 2010. Prior to joining the Bench, he was the head of the Building and Engineering Construction and Insurance and Reinsurance practice groups, and a key member of the international arbitration group in one of Singapore’s largest law firms. As a High Court Judge, he continues to specialise in the hearing of complex commercial cases in the Supreme Court.
Vivian Ramsey IJ Was a Judge of the High Court (Queen’s Bench Division) of England and Wales for nine years, during which he also served as the Judge in charge of the Technology and Construction Court. He has an active arbitration practice and is a visiting  professor  at  the  Dickson Poon School of Law at King’s College, London.
Anselmo Reyes IJ A Judge in the Hong Kong Court of First Instance from 2003 to 2012, where he specialised in arbitration, commercial and admiralty matters. He is a professor of legal practice in the Faculty of Law at the University of Hong Kong and also has an active arbitration practice in commercial matters.

Diagram 1.1: The judges and their respective professional biographies

(v) The Transfer of case

BCBC v PT Bayan Resources was the first case transferred to the SICC from the High Court. The factors that were taken into account were recorded in the brief grounds for the order of transfer dated 4 March 2015, and were as follows:

(a)        First, in relation to the nature of the dispute, it was observed that the case concerned a transnational business dispute involving parties, business interests and commercial dealings in different jurisdictions.

(b)        Second, with respect to the reliefs sought, the claim and counterclaim of the parties arose mainly from alleged breaches of agreements relating to a joint venture for the application of a patented technology to produce upgraded coal from East Kalimantan for sale and the business and operations of the joint venture company that was incorporated in Indonesia. In addition, damages were sought for alleged breaches of guarantee, misrepresentation and negligence, and inducement to enter into the joint venture. The parties did not seek any relief in the form of, or connected with, a prerogative order.

It was further observed that the dispute was at its root concerned with the commercial expectations of the parties in respect of a large-scale industrial project that bore significant and substantial international elements, and therefore would, subject to necessary consequential orders, be more appropriately dealt with by the SICC as the SICC is a division of the High Court specifically established to hear and resolve international commercial disputes. Having heard the parties on the issue of the transfer of the proceedings to the SICC, and in view of the foregoing factors, the High Court made an order for transfer together with various consequential orders.

(vi) Determination of Foreign Law

In BCBC v PT Bayan Resources, the parties successfully sought and obtained an order pursuant to O 110 r 25 for certain questions of applicable Indonesian law to be determined on the basis of submissions instead of proof. This is an option not traditionally available under the common law for determining questions of foreign law. The SICC offers parties the flexibility of adopting the traditional “adversarial” approach, an approach of determining foreign law by way of submissions, or indeed, even a combination of both approaches in the same case. This last-mentioned scenario materialised in BCBC v PT Bayan Resources, where the SICC received both evidence and submissions on Indonesian law from various experts of Indonesian law. In particular, evidence on Indonesian law in BCBC v PT Bayan Resources was taken from an Indonesian law academic and an Indonesian legal consultant, and submissions on Indonesian law were received from two members of the Indonesian Bar.[10] Under the traditional approach, the SICC may determine a question of foreign law by way of proof, which is usually carried out by way of the parties tendering sworn statements on the foreign law in question. It bears mention that in a unique modification of the traditional approach, the SICC in BCBC v PT Bayan Resources, with the parties’ concurrence, proceeded on the basis that the oral testimony of one of the plaintiffs’ expert witnesses “would not be subject to cross- examination but with the reservation that not everything he submitted was necessarily accepted by the Defendants”.[11] The alternative approach available in the SICC (that is, determining questions of foreign law on the basis of submissions) is similar to the model commonly adopted in international arbitration.[12] Under this approach, the SICC may determine such questions on the basis of submissions, whether oral or written or both.[13]

The determination of foreign law by submissions at first instance is an option that is available to the parties in the SICC. It is neither a mandatory nor a default position. Upon the application of a party, the court will consider whether to proceed on the basis of submissions. So long as a party makes such an application and the court is of the view that proceeding on the basis of submissions would be appropriate, there is no requirement for all parties to consent to such an arrangement.[14] If the court is minded to grant the application to permit the determination of foreign law by way of submissions, the court is required to specify in its order one or more persons who may make submissions on the relevant questions of foreign law on behalf of each party.[15] In addition to considering the parties’ submissions on foreign law, the court may also have regard to the legislation of the relevant foreign country, decisions of the courts of the foreign country, judgments of the Singapore courts on similar questions of foreign law and any other material that in the view of the court is authoritative or persuasive in determining or interpreting the foreign law in question.[16] In an appeal from any decision of the SICC to the Court of Appeal, the Court of Appeal may determine any question of foreign law on a basis similar to that adopted at first instance. However, whereas at first instance a party’s application is required, the Court of Appeal may determine questions of foreign law on the basis of submissions on its own motion, regardless of whether a party takes out an application for the same, or whether the first instance court had done so.

The option of allowing foreign law to be determined on the basis of submissions can in practice translate into savings in time and costs since evidence of foreign law is received directly without cross- examination and re-examination. It is perhaps for these reasons that the parties in BCBC v PT Bayan Resources applied for questions of foreign law to be determined by submissions and applied to register one foreign lawyer each to make such submissions. The fact that there was no need for lengthy cross-examination of experts further helped to expedite the process of the trial and was likely a factor that contributed to the early completion of the first tranche of the trial. There is also an interesting question on whether the parties may agree in advance that a determination of foreign law by the court be treated as a finding of fact or a finding of law, but this point did not arise in BCBC v PT Bayan Resources.

(vii) Discovery Model in SICC

In keeping with its character as an international court, the procedure for disclosure of documents in the SICC is simplified from the traditional discovery model in common law jurisdictions. The objective is to make the process manageable and acceptable to the parties and lawyers from different legal traditions, and also to facilitate a quicker and more cost- efficient resolution of disputes. In BCBC v PT Bayan Resources, the High Court, when ordering the transfer, made various consequential orders pursuant to O 110 r 12(5) (d) for general discovery that had already commenced based on O 24 to continue and to be completed on the same legal basis. This addressed the concern raised by counsel for the defendants that general discovery would be necessary in view of the allegations involving, inter alia, fraud. The provisions for specific and further discovery under O 24 r 5 and other relevant parts of O 24 were consequently ordered to continue to apply to give proper effect to the existing orders and directions for discovery. This was considered to be necessary since applications for specific and further discovery would invariably be tied to discovery that had been given or that was to be completed in accordance with the O 24 principles – for example, if general discovery was found to be inadequate for any reason and specific and further discovery becomes necessary.[17]

(viii) Concluding remark

BCBC v PT Bayan Resources is significant in many ways. The complexity of the matter provided an excellent stress test for the rules and procedures of a new institution. With the flexibility exercised by the court as well as counsel, a massively complex commercial dispute was heard about eight months after its transfer to the SICC, with a thorough judgment issued about four months after the conclusion of the first tranche of trial. The first case is therefore a good illustration of the strengths of the SICC as well as the quality and flexibility of its procedures.[18]

Footnotes and References

[1] [2016] SGHC(I) 1. For a copy of the full judgment, see SICC website, “Recent Judgments” <http://www.sicc.gov.sg/HearingsJudgments.aspx?id=72> (accessed 17 November 2016).

[2] The establishment of the SICC  was  primarily  motivated  by two key ideas: first, the recognition that the exponential and unprecedented growth of commercial activity in Asia would be accompanied by a need for institutions to resolve transnational commercial disputes swiftly, efficiently and predictably, while providing a basis for developing a freestanding body of commercial law; and second, Singapore’s drive to provide an entire suite of dispute resolution services so as to bolster her status as a hub for resolving commercial disputes.

See Chief Justice  Sundaresh  Menon,  “Response  by  Chief  Justice  Sundaresh  Menon: Opening  of  the  Legal  Year  2015”  (5  January  2015)  at  para  20,  available  at <http://www.supremecourt.gov.sg/docs/default-source/default-document-library/ media-room/response-by-cj—opening-of-the-legal-year-2015-on-5-january-2015- (final).pdf> (accessed 17 November 2016); Chief Justice  Sundaresh  Menon,  “Response  by  Chief  Justice  Sundaresh  Menon: Opening of the Legal Year 2015” (5 January 2015) at para 20(a), available at <http://www.supremecourt.gov.sg/docs/default-source/default-document-library/ media-room/response-by-cj—opening-of-the-legal-year-2015-on-5-january-2015- (final).pdf> (accessed 17 November 2016) and Sundaresh Menon, “Origins and Aspirations: Developing an International Construction Court” [2014] ICLR 341 at 344 and Chief Justice Sundaresh Menon, “Response by Chief Justice Sundaresh Menon: Opening of the Legal Year 2015” (5 January 2015) at para 20(b), available at <http://www.supremecourt.gov.sg/docs/default-source/default-document-library/ media-room/response-by-cj—opening-of-the-legal-year-2015-on-5-january-2015- (final).pdf> (accessed 17 November 2016). The complete suite of international dispute resolution services would include litigation at the SICC, arbitration at the Singapore International Arbitration Centre and mediation at the Singapore International Mediation Centre.

[3] Chief Justice  Sundaresh  Menon,  “Response  by  Chief  Justice  Sundaresh  Menon: Opening  of  the  Legal  Year  2015”  (5  January  2015)  at  para  24,  available  at <http://www.supremecourt.gov.sg/docs/default-source/default-document-library/ media-room/response-by-cj—opening-of-the-legal-year-2015-on-5-january-2015- (final).pdf> (accessed 17 November 2016).

[4] [2016] SGHC(I) 1. For a copy of the full judgment, see SICC website, “Recent Judgments” <http://www.sicc.gov.sg/HearingsJudgments.aspx?id=72> (accessed 17 November 2016).

[5] See BCBC Singapore  Pte  Ltd  v  PT  Bayan  Resources  TBK  [2016] SGHC(I) 1 at [81]–[82].

[6] BCBC Singapore Pte Ltd v PT Bayan Resources TBK [2016] SGHC(I) 1 at [86].

[7] See Supreme Court of Singapore website, “Media Summaries” (12 May 2016) <http://www.supremecourt.gov.sg/news/media-summaries/bcbc-singapore-pte-ltd- and-anor-v-pt-bayan-resources-tbk-and-anor> (17 November 2016).

[8] Tom Jones, “SICC Hands Down First Judgment” Global Arbitration Review (accessed 17 November 2016) <http://globalarbitrationreview.com/news/article/35351/sicc- hands-down-first-judgment/> (accessed 17 November 2016), citing Rashda Rana SC, a dual qualified English-Australian barrister and arbitrator from Essex Chambers in London. See also St James Hall website, “Dominique Hogan-Doran SC reports on the Singapore International Commercial Court’s First Case” <http://www.sixstjameshall.com.au/news/2016/5/15/singapores-new-international- commercial-court-issues-first-written-judgment> (accessed 17 November 2016).

[9] Tom Jones, “SICC Hands Down First Judgment” Global Arbitration Review (24 May 2016) <http://globalarbitrationreview.com/news/article/35351/sicc-hands- down-first-judgment/> (accessed 17 November 2016).

[10] See BCBC Singapore Pte Ltd v PT Bayan Resources TBK [2016] SGHC(I) 1 at [184] and [187].

[11] Ibid.

[12] See Report of the Singapore International Commercial Court Committee (November 2013) at para 34. See also Denise Wong, “The Rise of the International Commercial Court: What Is It and Will It Work?” (2014) 33(2) CJQ 207 at 216.

[13] See s 18L of the Supreme Court of Judicature Act (Cap 322, 2007 Rev Ed) and O 110 r 25(1) of the Rules of Court (Cap 322, R 5, 2014 Rev Ed).

[14] Rules of Court (Cap 322, R 5, 2014 Rev Ed) O 110 r 25(1).

It should be noted that the SICC provides several unique safeguards to provide a measure of quality control in respect of arrangements that could be made for foreign counsel to appear and make submissions on foreign law before the SICC:

(a)           For instance, before allowing such an arrangement, the court must be satisfied that all parties are or will be represented by counsel who are competent to submit on that foreign law. This envisages that the court has to have some way of ascertaining the quality of the proposed foreign counsel before the court will even make an order to allow foreign law to be determined on the basis of submissions. In this regard, it should be noted that the curriculum vitae of proposed Indonesian law experts were tendered by the parties to the court for  its consideration in BCBC v PT Bayan Resources before an order pursuant to O 110 r 25 was made.

(b)           It is also a prerequisite that the relevant foreign law expert must successfully obtain either full or restricted registration with the SICC. It suffices to mention here that the requirements prescribed for registration ensure that registrants are, among other things, sufficiently proficient in the English language, have read and understood and agree to abide by the Code of Ethics, are of good standing in the jurisdiction the law of which they most frequently practise, and have not been disbarred, struck off, suspended, ordered to pay a penalty, censured or reprimanded in their capacities as a  legal practitioner in any jurisdiction.

[15] Rules of Court (Cap 322, R 5, 2014 Rev Ed) O 110 r 25(3).

[16] Rules of Court (Cap 322, R 5, 2014 Rev Ed) O 110 r 26(4). On a related note, the SICC in principle also has the option of relying on any applicable memorandum of understanding entered into with the courts of New South Wales, the Dubai International Financial Centre and the State of New York to refer questions of law involving the laws of those jurisdictions to the respective courts for determination.

[17] The traditional discovery model in common law jurisdictions requires the parties to a civil suit to disclose all documents which are relevant to the issues in the suit, including those which are or have at any time been in their possession, custody or power. At the initial stage of discovery (usually referred to as general discovery), each party is expected to disclose documents on which the party relies or will rely, as well as documents which could support or adversely affect the party’s case or another party’s case. Apart from general discovery, a party may also make an application for the specific discovery of a particular document or class of documents if the party believes that the party from whom discovery is sought has, or at some time had, these in his possession. This discovery process may be foreign to some civil law jurisdictions and to those practising international arbitration. In keeping with its character as an international court, the procedure for disclosure of documents in the SICC is simplified from the traditional discovery model in common law jurisdictions. The objective is to make the process manageable and acceptable to the parties and lawyers from different legal traditions, and also to facilitate a quicker and more cost- efficient resolution of disputes.

[18] See Nicholas Lingard et al, “The Singapore International Commercial Court Gets off to a Flying Start: First Judgment Released Only  Four  months  after Closing Submissions” Freshfields Bruckhaus Deringer website (30 May 2016) <https://communications.freshfields.com/SnapshotFiles/540819bc-1f4c-4904-a948- 10c04e293f90/Subscriber.snapshot> (accessed 17 November 2016).

GoFetch Company Culture

“Thousands of satisfied owners. Thousands of happy dogs.”

That’s what GoFetch.ca has to say for its service, and it’s bordering on modesty. GoFetch is Canada’s leading and number one choice for dog owners and sitters. The company has cultivated our country’s largest community platform for connecting dog owners and dog sitters. If you have a dog, it’s not unlikely that you’re greeted at the door with slobbery kisses on a regular basis— lucky you. Dog dads, mutt moms and canine companions across the board know that leaving town for well deserved vacation time can seem like more hassle than it’s worth. No pet likes a visit to the kennel. GoFetch makes life (yours and your dog’s) easier. With GoFetch, owners can discover, book and manage personalized care for their dogs. Think AirBnB, but for the four-legged friend.

Thousands of satisfied owners. Thousands of happy dogs. GoFetch connects dog owners and dog-sitters across Canada.

The proudly Canadian company is based out of Vancouver, but since its conception it has extended its frontiers and now stretches from coast to coast. With trusted dog sitters in Toronto, Montreal, Calgary and Ottawa, pooch lovers needn’t look far for peace of mind. It’s hard to believe that it was established only 2 years ago this summer. So how did GoFetch go from underdog to top dog so quickly? We sat down at GoFetch Headquarters with cofounder Willson Cross to find out.

Will’s primary occupations are shaping the GoFetch brand, innovating future growth opportunities, and crafting the company culture. That culture is evident even before the first handshake. The GoFetch office is fronted by floor to ceiling glass windows that put its signature orange interior on display for all to see. Walking through the cushy entryway, one is obliged to pad around a handful of dog toys strewn across the floor; GoFetch is home to two lovable corgis named Maple and Uma. Pictures of employees’ smiling faces (along with the dogs’) hang on the wall like an unconventional family portrait. Those same smiling faces wave a hello as we’re lead past the workspace. Here is what Will has to say about creating a company culture and why it’s just as vital as a product brand.

By ROBIN HAVERSTOCK

The Cross Company Culture

GoFetch values a fun-loving and innovative company culture.

Hudhaifah: Hello everybody. Today we’re sitting down with Willson Cross, cofounder of GoFetch Technologies, a Vancouver startup making dog ownership simple. I have a couple of quick questions ready for you today, Will. To begin, how do you develop a company culture and share that with others?

Will: The first part of that is how you develop company culture. I don’t think that that’s a single person’s task. This is a question that can’t be directed towards one person. It’s not how “you” develop it, it’s how “we” develop it. I think that it’s developed by the entire team and takes on a life of its own. The company has many facets. You’ve got technology, you have finance, product, marketing and everything else. You have to look at how all of the components come together, and it’s really a collaborative process. People create company culture together.

If you’re cofounder you do set standards to make sure that everyone is rowing in the same direction. They have to know how things are done around the company, what the goal is and what the north star is. But with company culture, the vibe in the office is really a team effort. You have to give autonomy and always keep your ear open to everybody as a building block for culture.

Hudhaifah: Is company culture different from brand? How so?

Will: Culture is different from brand though I would say that they have a relationship and there are some overlaps. Part of your brand is a by-product of your company culture. I think that the people in the company need to buy into the brand. They illustrate the brand knowingly and also, sometimes, unknowingly. They are its representatives. If you talk to someone on the inside of your operation and they see the brand vision, then they can probably explain a few elements of the company culture that are evident in the brand. I’m sure there are a lot of customers who feel the culture of a company through the brand too. We have a very fun-loving brand in GoFetch, and we have a very fun-loving company culture as well. Still, the brand is a stand-alone piece that is larger than the culture, though the culture has a large impact on it.

Hudhaifah: So to what extent do the individuals in the business shape the brand, and how do you find them?

Will: The people are the brand. They are the greatest asset to branding; they develop it, they refine it. Great people make great brands. Great brands attract an audience. An audience is an opportunity for monetization, which equals business in my mind. So how do you find these people? You want to build a startup around a real world problem, a large category with a good brand reputation that attracts people. I get resumes every day from people who range everywhere from software engineering to content marketing, product designing and graphic designing. With a great brand comes great people.

Hudhaifah: What makes them a fit? Based on that, do people have to fit the company culture or can they adopt it over time?

Will: First, anyone new must meet all of the key stakeholders of their team. If we were to bring in a graphic designer, for example, then he or she would meet the product team beforehand. They would meet on many levels including technical skill level. There’s also the level of whether the team can spend time with that individual, sit next to them all day long and solve hard technical problems with them. There’s many facets to this interaction, I could go on forever!

I think that people who have a running start when they come onto the team, people who are a culture-fit, will easily jive with the current team members. You can have people come in not knowing what to expect and they can maneuver and find their place— for sure, that always happens. When somebody leaves a business after a long time they’ll definitely understand the company culture. Wherever they are in their next role they’ll be able to relate it back and compare on how things are different, and it does make a difference.

Zip Codes or Cheat Codes?

GoFetch gives you peace of mind so you can take that vacation to paradise!

Hudhaifah: Lots of people associate startups with silicon valley. You’ve been down there several times, what do you think that Vancouver should take away from the valley and what do you think we can and should do differently?

Will: I don’t think that a successful startup is predicated on a zip code. The definition of a startup is a small to medium sized group of individuals working on a hard technical problem and trying to solve it, that can happen anywhere. I think that what makes San Francisco and Silicon Valley very unique and very good at that is that there are a lot of people there who are very interested in finding a problem to solve or are already solving a problem. The majority of the people there are doing that or wanting to do that.

I think that what Vancouver can take away from that is a willingness to put yourself out there and actually do it. There are a lot of doers down there. Here there are a lot of people who talk about it but only follow it on the sidelines. If you solve a problem effectively for consumers, or make a consumer’s life better in a certain category, industry or market, you’ll be able to find somebody who wants to fund your idea. The other thing I would say that Vancouver could take away is understanding that you don’t necessarily have to be down there to make something happen.

 

You can find out more about Willson’s ongoing projects through the following platforms:

LinkedIn

Twitter

Uma knows what the GoFetch company culture is all about.

Corruption Risk in South East Asia

Corruption can be defined as the abuse of entrusted power for private gain. It can be categorized as grand, petty and political, depending on the amounts of money lost and the sector where it is happening. So far as grand corruption is concerned, it consists of acts committed at a high level of government that distort policies or the central functioning of the state, enabling leaders to benefit at the expense of the public good. Petty corruption refers to everyday abuse of power by low-and mid –level public officials in their interactions with ordinary citizens, who often are trying to access basic goods or services in places like hospitals, schools, police departments and other agencies.[1] Corruption risk is a measure of decay in the decision-making process. The decision-maker consents to deviate or demands deviation from the criterion which should rule his or her decision-making, in exchange for a reward.[2] Most countries across the globe cannot run from the issue of corruption, being one of the problem that stops the economic growth.

By Athirah Dazalan

Statistical report on corruption in Southeast Asia

Issues on corruption in Southeast Asia are never a new thing. Srirak Plipat, the director of Transparency International’s Asia Pacific mentioned that “ if there was one common challenge to unite the Asia Pacific region, it would be corruption” upon ending his speech. The latest Corruption Perceptions Index 2015 released by Berlin-based graft watchdog Transparency International on January 27 shows that “tea money” remains an important requirement to grease business transaction and receive public services in Southeast Asia. Overall, in the ten member countries of the Association of Southeast Asian Nations, or Asean, only three improved in the index where the highest score of 100 indicates a corruption perception of “very clean” and the lowest of 0 “highly corrupt.” Singapore, Indonesia and Myanmar improved their scores slightly in the ranking, whereby Singapore remains very prominently placed in the list of least corrupt countries in the world, but, overall, in 2015 fell to eighth from seventh in the previous year.[3] Where Cambodia, Myanmar, and Laos are on top of the chart, for the world’s most corrupted countries, and Malaysia was being said as getting corrupt this year to be compared to last two years, this is due to the issue of 1MDB scandal that has not yet been settled. The information is as below:

SEA Corruption Risk

The top scoring Southeast Asia nation is Singapore, coming in at 85, which ranked the island the eighth least-corrupt nation in the world. It scored 84 the year before.[4]

Survey by AmCham; Concerns About Corruption And Optimism Of Growth

Based on the survey conducted by the amcham Singapore and the US chamber of commerce with analytical support from Control Risk, they received responses from471 AmCham member companies in all ten ASEAN countries, making it possible to draw out broad regional comparisons. There are two points that stands quite famous, that is first, the respondents mentioned about their concern on corruption as it can be a hindrance to business  and the second point is rather contrary to the first one, respondents view it as a broad sense of optimism about the prospects for commercial expansion. And if the expansion really works then the investors must take a step to try and nuanced the corruption risk, by taking into account the location and the kinds of demand they are likely to face.[5]

Concerns about Corruption Risk

They came out with a table and the responses to a question about satisfaction levels with “lack of corruption” point to a clear regional divide: Singapore and Brunei versus the rest.

What is suprising in the findings is not how cambodia and laos perform very poorly but rather how little difference there is between them and more advanced developing economies like Malaysia, Philipines and Thailand. And the reason behind is due to the fact that these countries are famous for their high profile political scandals, notably including Malaysia’s current 1MDB case. The fact that these scandals are widely reported may be seen as a sign of progress. However, failure to address deep-seated institutional weaknesses gives rise to a sense of pessimism.[6]

The same point applies to Indonesia where the Anti-Corruption Commission (KPK), the country’s lead anti-graft agency, has made considerable progress in tackling a number of high-profile cases. Currently, though, there are widespread concerns about the extent to which the KPK still has access to the resources and political support that it needs. In Vietnam, anti-corruption has a clear place on the political agenda, but there are major challenges in practice.  As for Myanmar, the country’s still unfinished political transition gives rise to a degree of optimism, but the country still at the beginning of a lengthy process of legal and judicial reform.

Optimism of growth

Despite the concern showed, the survey also points out to a broad sense of commercial optimism. Of 74% companies surveyed expected to expand their regional operation in the coming year. Even though Indonesia, Myanmar and Vietnam are the three countries placed in the highest corruption risks, they also surprisingly rank as the countries with the most attractive prospects for US commercial expansion. question to be answered is, whether the investors really care about corruption? It is true that corruption risks are only one of factor that decision makers take into account. However the answers to a further set of survey questions show that it is still a major one.[7]

Conclusion

As economies in the West remain shaky, Southeast Asia beckons investors. But alongside some of the world’s fastest growing economies is the risk of corporate corruption in a region where winning deals still sometimes means greasing the right wheels. Southeast Asia is growing economically that is why these US investors are so eager to come and expand their business. However, because of the corruption risks posed by each and every country in Southeast Asia, it has affect the us investors. how much they see the corruption risk as a concern, there are also companies that expect a positive result despite the corruption risk. Indonesia for example placed in a very dangerous spot on the most corrupted country, but they have proved that does not affect their economic activities as the investors are attracted to continue and expand business in Indonesia.

[1] “What is Corruption” retrieved from http://www.transparency.org/what-is-corruption/#define (18 April 2016)

[2] “ What is Corruption” retrieved from  http://www.corruptie.org/en/corruption/what-is-corruption/  (18 April 2016)

[3] Arno Maierbrugger, “ Corruption Remain Serious Issue in Southeast Asia” 2016, retrieved from http://www.gulf-times.com/story/477948/Corruption-remains-serious-issue-in-Southeast-Asia. ( 20 April 2016)

[4] Arno Maierbrugger, “ Corruption Remain Serious Issue in Southeast Asia” 2016, retrieved from http://www.gulf-times.com/story/477948/Corruption-remains-serious-issue-in-Southeast-Asia. ( 20 April 2016)

[5] John Bray ,” Corruption Risk in Southeast Asia-Where Are The Greatest Concerns Of US Investors”, 2016, retrieved (19 April 2016)  from http://www.forbes.com/sites/riskmap/2016/03/02/corruption-risks-in-south-east-asia-where-are-the-greatest-concerns-for-us-investors/#56d5a4da33ae

[6]John Bray ,” Corruption Risk in Southeast Asia-Where Are The Greatest Concerns Of US Investors”, 2016, retrieved (19 April 2016)  from http://www.forbes.com/sites/riskmap/2016/03/02/corruption-risks-in-south-east-asia-where-are-the-greatest-concerns-for-us-investors/#56d5a4da33ae

[7] John Bray ,” Corruption Risk in Southeast Asia-Where Are The Greatest Concerns Of US Investors”, 2016, retrieved (19 April 2016)  from http://www.forbes.com/sites/riskmap/2016/03/02/corruption-risks-in-south-east-asia-where-are-the-greatest-concerns-for-us-investors/#56d5a4da33ae

The Trans Mountain Pipeline: Necessary Evil or Necessarily Evil?

Over the summertime, Kinder Morgan released a preliminary schedule which projected construction on its infamous Trans Mountain pipeline to begin as early as September 1st. Now, October has arrived and the exact start date is still to be determined. With the support of the newly elected provincial government, hundreds of demonstrators continue to rally against the project, and opposition has only grown in strength. The National Energy Board, crucial for the final go-ahead, has received an abnormally copious 400 filed statements of opposition to the KM pipeline. Meanwhile, the BC government has taken up a campaign of disruption by delaying and denying permits. Still, crunch time is fast approaching. The fact of such clear-cut opposition between the two sides begs this question: is the KM pipeline a necessary evil or necessarily evil?

By Robin Haverstock

The Locals

As Vancouverites, we get the brunt of the resistance to Kinder Morgan’s Trans Mountain pipeline, and for good reason. The opposition movement is often associated most strongly with its environmental concerns. The KM pipeline presents a significant threat to BC coastal life, and that is true whether or not a spill occurs. Its construction will compromise the integrity of BCs interior wilderness. It runs through lands belonging to First Nations people, some of whom have consented to the deal, but most of whom have not. Symbolically, the pipeline is representative of a failure on behalf of the federal government to adhere to environmental sustainability commitments. For those who fear that this is the tip of the (melting) iceberg where these broken promises are concerned, the project does not bode well.

Locals attend a rally against the KM pipeline.

On their own, these are all strong arguments in favour of scrapping the project. Moreover, they are not the only arguments belonging to the territory of environmental sustainability concerns. Still, these pleas have been unable to achieve much clemency. Instead, economic factors have been given a higher priority. We can identify potential biases and certain parties’ interests, but for the most part environmental concerns have been systemically omitted. One of the main reasons that they’ve been overlooked is that they’re simply not factored into analysis.

The Model

Kinder Morgan commissioned the economic case for the pipeline using an approach called input-output modeling. It’s a model that is regularly used by governments to justify large and controversial projects and it comes with drawbacks. Firstly, while they sound similar, the input-output approach is not the same as a cost-benefit analysis. As the moniker suggests, the input-output approach is modeled on machine production. Its analyses operate in a closed system and count all economic activity as positive output. Therefore, it omits social, environmental and even periphery economic costs.

KM pipelines at a facility in Edmonton, the beginning of the line.

A balanced assessment would address all of these concerns. It would also account for the indirect effects of the KM pipeline. Many people are concerned about the risk of an oil spill, for example. Kinder Morgan’s economic case ignores this possibility, because it is not yet manifest. In the event of a tanker accident or a spill on land, the damages could be catastrophic. This has obvious environmental implications, but it would also be a whopper of a cleanup bill. Given Kinder Morgan’s emphasis on dollar figures, one would think that this event should be accounted for. The same goes for damage from carbon emissions in the atmosphere, which could rack up $4 billion per year. Even pollution’s adverse effects to economic industries like BC tourism are discounted by input-output analysis.

In 2014, the SFU School of Public Policy conducted a cost-benefit analysis which concluded that the loss incurred by any major oil spill would “exceed or greatly exceed, the benefits for BC and Metro Vancouver”. If environmental concerns have not swayed the course of the KM pipeline, then perhaps it is due to the number of ‘what-ifs’ involved, no matter their probability or magnitude. SFU’s study makes it clear that whatever the costs, Vancouver and BC bear the greatest burden. On a provincial level, the deal holds little appeal. For our neighbours to the east, however, there is greater advantage, though it does not come for free.

The Compromise

If British Columbia is so obviously impoverished by the Trans Mountain pipeline, then it makes sense that there be benefits elsewhere. The primary recipient of these benefits? Alberta. Unlike some energy honchos, Kinder Morgan only required one province to vote yes to the pipeline, and it got that from Alberta. It is their hope that this project will help to relieve the province’s near-record budget deficit. The federal government has stood in support of the project, despite BC’s new anti-pipeline NDP-Green coalition government. The general argument that Trudeau makes is that the project’s benefits will be distributed across Canada. Therefore, it follows, the KM pipeline is of national interest.

An oil sands facility in Albeerta.

Still, Trudeau is aware that an oil project of this scale could not be carried out without a reaffirmation of commitment to end global warming. That is why Alberta’s pursuit of the Trans Mountain pipeline had to come with a compromise. Under its NDP provincial government, Alberta has implemented stringent climate change policy in exchange for the project. This will include a broad-based carbon tax of $30 per ton, equal to BC’s tax. There will be a 100 megaton per year cap on oil sands emissions. Current output is around 70 megatons per year, but the cap should stand indefinitely. Finally, Alberta will phase out coal-fired power by 2030. Together, these measures aim to stabilize emissions at 270 megatons per year. This represents real and meaningful action. Alberta Premier Notley has made it clear, however, that the price for this policy is a new pipeline.

Climate change is by nature a collective action problem. No lone group wants to take on sustainability policies without the commitments of its peers. Natural resources and energy, however, fall under provincial jurisdiction. If we accept that political feasibility matters, then we must acknowledge the reality of provincial interests. Alberta offered a deal to the rest of Canada, and Canada shook on it. Without this deal, advocates say, there lurks a worse collective outcome. Were Alberta not bound by its climate change action plan, it might be prone to abandoning policy altogether in order to maximize its local economic benefits. In that case, Canada has no chance of meeting global emissions targets.

The oil sands occupy vast stretches of land, and Alberta has plenty more oil left to export.

The KM pipeline is clearly an environmental hazard. It is of comparatively little use or benefit to BC. On the other hand, it is very important to Alberta. Alberta’s economy is largely oil-driven, and this project would certainly increase output from oil sands. On a national level, we can see that the project has merit. One may dispute Alberta’s prerogative to pose ultimatums at all, but they have done so regardless. If we grant that Alberta has some political and economic leverage, compromise cannot be avoided. This applies only on an internal national scale, however. The main recipients of Canada’s oil will be foreign countries. Canada obviously has an international interest in the project, and the final step is to evaluate from that perspective.

The World

The simplest measure of international interest where economic projects are concerned is the capacity to boost gross domestic product. Now, Alberta may have incentive to export more oil simply owing to its current budget deficit. However, it has good reason to assume that it is capable of exporting more. Current oil exports are severely hampered by the means of transport. The current pipeline is degraded, and carries a third of the oil that a new KM pipeline would hold. Much of Alberta’s oil is currently transported by trucks, which are slower and smaller. We can think of it this way: since the current pipeline is insufficient, Alberta is forced both to export less oil, and to transport part of it by means both less efficient and more dangerous.

An oil tanker receives its load from KM pipelines at the end of their route.

Premier Notley points out that Alberta’s oil accounts for over a fifth of Canada’s annual exports, and almost two fifths of the Albertan economy. The economy is straight jacketed, however, because it cannot reach its ideal markets. Our main buyer is the United States, which pays only two thirds of the global market value. We sell oil for this price primarily because we are unable to reach foreign markets. Notley says that this is not only bad economics but bad management. Expanding the Trans Mountain pipeline, then, is a way to clean up our act. With a new KM pipeline, we could do what we already do, but better.

Prime Minister Trudeau has emphasized the global impact of the project. People are anxious about the future right now, he says, and international trade could bring about benefits that could help to put them at ease. The KM pipeline promises to bring economic growth for Canada in the face of an unstable world order. He says that it will benefit all Canadian citizens, not just the wealthiest. Notley pitched the KM pipeline to BC in December. She argues that it will bring economic benefits and jobs to BC’s interior, in particular. This prosperity, she says, would more than offset the environmental risks posed by coastal oil tankers.

The Situation

Kinder Morgan and its supporters claim that the pipeline will increase GDP by optimizing the supply chain, that it will be a secure source of revenue on which Canadians can rely, and that it will benefit citizens of all walks of life. These are integral to its economic case for oil. All three of these claims rest on shaky and disputed foundations.

Notley and Trudeau boast the KM pipeline's employment prospects.

Black Gold Puts Us in the Red

The Trans Mountain pipeline will definitely make it easier to transport oil. Contrary to industry insistence, however, it may not result in a higher selling price. Overseas markets in Asia and Europe, which are the pipeline’s primary targets, actually pay less for bitumen and heavy oil than the US Gulf Coast. The Gulf coast is in fact home to the world’s largest heavy oil refinery hub, and demand there is higher. Global refined oil prices are higher outside of the US, but for Canada’s main product that is not the case.

It’s true that Alberta’s crude oils sell at a lower price compared to refined oils, but the KM pipeline won’t change that. Its price reflects the product’s inferiority, refining costs and higher transport costs. The income calculated by Kinder Morgan’s input-output model assumes a higher world price, so it’s much higher than other estimates. This year, Albertan oil producers wanted and predicted $65 a barrel but got $55. We can expect oil scarcity to drive prices up, but estimates are always a gamble.

A Slippery Slope

The KM pipeline doesn’t seem likely to bring immediate economic benefits on an international level, but could it still bring Canadians future prosperity? The Trudeau administration promises that this will be a secure and reliable investment that will endure through the years. On the contrary, the industry’s prospects continue to decline. Heavy oils and bitumen were once essential to meet global demand. Now, US shale production, record OPEC and Russian output have rendered our oil sands redundant. The market is saturated.

Even if we could capture world prices for light oil, production would still be unable to break even. Oil sands production is high cost and first to be cut amid declining world prices. The expensive new project could require prices to go as high as $80 to $100 per barrel, will these needs be met? It seems unlikely as long as bitumen producers worldwide refuse to cut production. This pipeline will bring temporary returns, but in the end demand for oil probably won’t economically justify the scale of the project. Combined with significant international pressure to reduce carbon emissions and in particular to shut down the oil sands, this is neither a secure nor a reliable investment.

Albertan Premier Notley and Prime Minister Trudeau meet to discuss going forth with the KM pipeline.

Crude Solutions

Many of the international economic detractors to the KM pipeline are lost to Canadian citizens. That’s why Premier Notley first emphasized its direct significance to BC and Alberta residents when she made her sales pitch. Notley and Trudeau together have highlighted the pipeline’s potential immediate benefits for these populations. The project should mean good-paying jobs in the oil and gas sector for Albertans and for the many British Columbians who travel there to work. Notley says that the project will bring economic security to BC’s interior too. The deal even includes a condition that Kinder Morgan hire BC workers wherever possible.  The benefits of construction and operations will be accrued to BC. The KM pipeline’s presence should also attract economic activity— direct and indirect.

Kinder Morgan estimates that over the course of the pipeline’s construction and the next two decades of operation, it can create up to 79000 direct jobs.  The magnitude of that number of well-paying jobs shouldn’t be undervalued. The project will even provide training for employees. Still, it is a somewhat misleading number given that at peak manpower the project will employ only 4500 workers. When the KM pipeline’s supporters advertise its potential for employment, they have good reason, but they also use the numbers to their advantage. Above all, it’s this principle that we should keep in mind when we evaluate claims from the input-output model.

The Environment

We’ve gone into depth on the economic viability of the project. This was done in an effort to confront the mostly economic case that Kinder Morgan makes for the pipeline. There are legitimate benefits to the project, but its economic case is not as strong as it boasts. The opposition’s strength compounds when we take into account their main qualms. Premier Notley points out that there are two main streams of opposition in BC; “there’s the coastal safety stream and then there’s the pipeline as a symbol for climate change,” she says. This is generally true. We can think of these two streams as representing those concerned with local environmental impact and those concerned with a global sustainability movement. The hope is that Alberta’s climate change policy compromise will assuage protestors, but they are refusing to take the bait.

The KM pipeline construction will inevitably involve deforestation and disrupt wildlife habitats.

To recap: Alberta’s compromise promises a 100Mt cap on carbon emissions from oil sands, a carbon tax of $30/tonne and a plan to phase out coal-fired power by 2030. The carbon emissions cap in particular has raised concerns. We’ve already established that this cap is higher than current output, at 70Mt, but this is reasonable given that it is expected to stand indefinitely. More worrying is the fact that the cap includes some exemptions, meaning that total oil sands emissions will likely rise higher.

It is still more worrying again that already that 100Mt cap represents a fifth of Canada’s 523Mt Paris Agreement emissions target for 2030. Alberta’s total emissions are equal to 274Mt. That’s half of the target, and it’s likely to go up, not down. Canada’s nine other provinces will be left to divvy up the remainder, averaging 28Mt each. That’s unrealistic. The federal government promises that this pipeline will give us the boost we need to fund more sustainable and environmentally friendly projects. That may very well be the case, but it’s difficult to maintain trust given that this project blatantly overrides the Paris Agreement commitments.

Dump trucks in Fort McMurray head out for the day.

There are more concerns on the level of provincial government. Alberta’s climate change policy has flaws, but overall it’s a positive step forward and certainly better than nothing. Right now, Alberta has elected an NDP government, the first non-conservative party in government for about forty years. The NDP’s platform generally puts more emphasis on sustainable policy than does the conservative. The worry here is that a change in provincial government will result in the new policy to be scrapped. The 100Mt cap is not set in stone, any may not survive the current NDP government. Then, we’ll be left with a pipeline and no compromise whatsoever.

The Verdict

The KM pipeline is treated by advocates as a necessary evil and by opposition as necessarily evil. In reality it is not so simply either. It’s an offense to our capacity for free choice to suggest that this is the only route available to Canada— that it is ‘necessary’. We should recognize that it is by no means the only available option to us. If we are willing to refer to the project as an evil, then let’s own up and call it a chosen evil. Nevertheless, the pipeline won’t be built without reason, and it isn’t just some manifestation of spite.

By the same token, the project shouldn’t be so readily slandered. Notwithstanding a great deal of legitimate antagonism, the KM pipeline isn’t devoid of merit. When I suggest that the project is not necessarily evil, I mean to say that it is not irredeemably evil in every conceivable form and function. Let this not be taken as a pipeline apology nor an attempt to dissuade. Instead, it’s an open urge to both sides to abide by their stances in full knowledge of their opposition’s laudable virtues.

 

 

Intellectual Property: NAFTA’s Prime Real Estate

As of August 16th, NAFTA talks are officially underway. Amid rehashed old bickering between Canada and the USA, a fresh new item has popped up on the NAFTA agenda, and it’s one that hopes to take the deal into the next stage. The digital economy was first up for consideration as North American leaders met for negotiations. It is new territory for the trade deal, however it not likely to be void of conflict. Already, NAFTA modernization has incited calls for caution. One of the topics of controversy? Intellectual property. Canada and the US differ in their policy towards patent ownership, and it promises to cause a division. You get the idea.

By ROBIN HAVERSTOCK

A Great Divide

Prime minister Trudeau and President Trump spoke at the G7 summit, NAFTA's modernization is a high priority for both Canada and the US.

NAFTA throws Canada, Mexico and the States into the same economic boat. It binds the three together more intimately than does their shared continental status. Among the labour and resources exchanged, culture also flows more freely across the nations’ borders. NAFTA links together the futures of all of these economies. Still, despite acknowledging similar economic values and shared goals, NAFTA cannot and should not set out to homogenize the countries. In fact, it is the disparate specialties that each country brings to the table which form the basis for a good trade deal. Each one has access to exclusive materials which are of value to the others by nature of their variation. NAFTA works in part due to the similarities of its parts, but more so because of their difference.

When it comes to Canada’s future, there’s debate about whether the country’s interests can or should align with those of the US. Canadian representatives at the August 16th talks framed their discussion around the modernization of NAFTA. Traditionally controversial topics like autoparts origin rules, dairy subsidization and softwood lumber quotas will dominate the debate in its later stages. Modernization, however, is a new addition to the usual lineup, and it has taken center stage in the preliminary talks. Canadian and Mexican leaders emphasized the importance of ushering in the digital era. The US has ostensibly been on board with these plans, but thus far its appeals have not lined up with those of its neighbours to North and South.

The Modern Age

Canadian Foreign Affairs Minister steps out to meet press after her adress on NAFTA's modernizaiton. Freeland addressed updates to intellectual property provisions.

This year, NAFTA celebrates its 23rd birthday, so maybe it’s about time for the deal to grow up and move out. NAFTA was conceived at the brink of the digital age, and its progenitors could hardly have anticipated the extent of the technological renaissance that we’ve undergone since then. Still, over the course of numerous evaluations and reworkings, very little attention has been devoted to keeping the deal up to date with this rapidly changing tech environment.

The global tech renaissance has transformed Canadian, American and Mexican economies alike. NAFTA must address this in order to ensure an innovative and competitive tech sector. Without these renewals, North America will prove unable to reap the full benefits of the digital revolution. Canadian foreign minister Chrystia Freeland delivered remarks stressing the importance of NAFTA’s modernization. Among her recommendations were updating e-commerce guidelines, conserving data localization laws and standardizing the protection of intellectual property.

Intellectual Property

Where Canadian policy has supported net neutrality policies, the US has disputed its worth. While Canada has set in place data localization laws mandating the retention of data flows within its borders, the US has called for their prohibition. All parties are keen on modernization, but imbalances in each country’s stage and style of technological development are making compromise difficult.

One more contentious area of debate is intellectual property. Intellectual property, otherwise referred to as IP, has to do with the ownership, protection and profit of ideas. This manifests itself by way of tools like patents and copyrights. The rationale behind IP provisions in NAFTA is to ensure consistency with free trade conventions and the principle of non-discrimination. If IP laws differ across borders, trade is liable to be inhibited. Under-enforcement and over-enforcement alike can lead to abuse of these standards. Although it is not exclusive to the technology sector, some experts see IP  as crucial to the future of the information era, going hand in hand with the digital economy.

Prime Real Estate

Hot debate surrounded IP during the Trans-Pacific Partnership talks, now fizzled out. Some say that Canada dodged a bullet when US withdrawal caused the TPP to fall through. Its IP provisions would likely have favoured patent-dominant countries and could have swept away Canadian entrepreneurship. Now, NAFTA updates could pose the same problem for Canada. Intellectual property standards have an increasingly important role in the share of our economy driven by innovation. Over time, standards which neglect this growing sector could spell billions of dollars in lost prosperity.

When it comes to intellectual property, the US owns the best real estate. Its economy is larger than either of its neighbours’, and it is home to some of the world’s largest companies. It’s in their interest to gain access to Canadian and Mexican markets, where they could stand to monopolize some industries. These dominant American companies have already amassed a large stockpile of patents, copyrights and trademarks. This gives them a head start. That’s why the US has such a great deal of power over IP negotiations, and it’s why harmonizing their standards across North America will be a high priority for them in NAFTA’s modernization.

Grey Matter

Intellectual property provisions could have a profound effect on the Canadian healthcare system.

Intellectual property plays a role in everything from data protection to prevention of counterfeited and pirated products. Experts anticipate that it could have significant negative impacts for Canadian pharmaceuticals. When it comes to the price of prescription drugs, Canada and the US operate very differently. While the US sells drugs at market prices, Canada puts a cap on prices. This cap means that Canadian pharmaceuticals can cost less than half of their American equivalents. Unfortunately, many of these drugs end up sold to the US on the ‘grey market’ of internet pharmacies.

This shady dealing raises the issue of whether Canadian policy violates the protection of American patent-holders under NAFTA law. NAFTA’s modernization will seek to eliminate the price discrepancies in order to level the playing field for pharmaceutical companies. The US has already proposed a 12-year patent style protection for new medical technologies. This means that pharmaceutical companies have monopoly pricing power on mediation for that term. It’s a number significantly higher than that of both Canada and Mexico. The lengthened term encourages investment but inevitably raises prices. If NAFTA updates impose the same term on Canadian patents, we could see drug prices double.

Handy Cap Or Handicap?

While Canada’s price cap and shortened patent term keep prices down, they also discourage investment. The Canadian Intellectual Property Council reports that Canada has fallen behind its global competitors in patent protection. This June, the Supreme Court ruled that Canadian inventors could make unsubstantiated claims about their inventions and still receive patents. The ruling will make it easier to obtain a patent, but may not help Canadian firms as much as it hopes to.

The drawbacks are twofold. Firstly, since roughly 87% of all patents granted in Canada are owned by international firms, the lowered standard will likely just mean more of the same. The market could become flooded with foreign patents of lower quality. These are essentially roadblocks to any Canadian firms looking to develop similar products. In order to bypass them, these firms need to invest money and use leverage. Oftentimes, Canadian firms are smaller than their international competitors, and they don’t have this clout in spades.

The ruling is a risky one to begin with, even isolated from the ongoing NAFTA negotiations. The second drawback further complicates matters. By eliminating barriers to secure patents, Canada has made its economy more receptive to foreign patent holders than that of the US. It’s perceived as an unfair advantage that could draw foreign investment away from American firms. This has weakened Canada’s position in negotiations for NAFTA. When the patent term was a trade irritant, Canada could have haggled for compromise. Now, Canada has dug itself a deeper hole.

Innovative Solutions

E-commerce guidelines and data flow regulation will prove to have far reaching consequences for any sector touched by the digital economy. The uncertainty surrounding intellectual property provisions, however, has already prompted warnings from those who will feel its affects most acutely. The Canadian government has reported receiving cautionary calls to stay on its toes as NAFTA talks shift towards the subject of IP. Among these callers is Blackberry co-founder Jim Balsillie, whose comments have revived TPP qualms. He has advised that the government bring to the negotiating table economic models detailing IP’s projected repercussions. If these can demonstrate the extent of its impact, they could serve as key bargaining chips.

In a bid to foster Canadian innovation by lowering the threshold for patent grants, the Supreme Court has delivered a blow to our NAFTA negotiators. Going into the September talks, Canada must retain a focus on long-term growth in the innovation sector to ensure domestic firms a level playing field.

In her address on NAFTA’s modernization, Chrystia Freeland stated that “First, we need to avoid scapegoating the ‘other’.” Canada and the US have adopted different approaches to modernization, but both have shortcomings. The US’s 12 year patent term may well be unsuitable for Canada’s healthcare system, but it is well adapted to the American environment. Likewise, Canada could stand to learn from the more rigourous product-testing of the American patent-granting process. NAFTA is founded on mutually beneficial difference, but by nature it draws Canada, the US and Mexico together by their strengths.

A Bubble Worth Leaving: Travelling through Southeast Asia

UBC Student Ray Yiu leaves his bubble and travels broke through SouthEast Asia.

After finishing my fourth year of university, I embarked on a six week backpacking trip through Southeast Asia with two close friends. I had desired to leave the Western bubble for years, but it was never a responsible thing to do financially. But i had long been desirous of travel and adventure, of discomfort and the beauty of faraway lands, to be put in places that were totally out of my element. I wanted back alleys, and street food, seedy markets, motorcycles and beaches. A few of my best friends were from the region, and I had studied it in a course at UBC. As a political science student, and as someone who greatly enjoys observation, the region seemed perfect. Every country was so different culturally, politically and economically from each other, with different colonial pasts, and religious, architectural and demographic differences throughout the cities. I made the decision to go, at a point where I could afford to go in the cheapest way possible, on the cheapest flight, with nothing but a backpack and my paltry savings, with the expectation of being broke in Asia. It was the decision of a compulsive spender, an irresponsible financial decision that I have no regrets towards. I grew and reflected on my own self, enjoyed a fantastic amount of adventure and discomfort and was exposed to a region that was politically, culturally and economically different than anything I had ever seen. We covered 5200km of overland travel in a month and a half. The insight I gained on the region was greater than any of the readings I had done or any of the history I had read about the region, insight that could only be gained by knee deep immersion and adventure.

The Western Liberal Bubble

One often hears the term “living in a bubble’ when growing up within a western liberal democracy, especially one that possesses the wealth that Vancouver has. The bubble is real, and can extend far, Vancouver is home to a incredibly diverse population, from Chinatown to Main, Kingsway to Marine Drive, UBC to Commercial, each area carries its own diverse local culture. I would never dream to say that I have explored Vancouver to its depths, I have seen much of the city and gotten to know many of its inhabitants, but there is still much that I have not been exposed to, much I have not seen. But even if one goes to the other side of the city, and throws away their phone, they’re still in a familiar setting, surrounded by the same city. The bubble can extend and be as large as the city, but it doesn’t change the fact that you know people, know the streets and have a home, there is always comfort in the omnipresent familiarity that comes from having lived in one place your whole life. I had lived in Vancouver my whole life, though I had gone to great lengths to try to prevent the formation of a bubble, I was still trapped in the giant bubble that is the west coast.  

Lose Yourself

Granted, I personally love putting myself in uncomfortable scenarios. I’ve explored Vancouver extensively, mostly on a bicycle, through the nights and days getting as hopelessly lost as possible, and have spent much time in many of its varied neighbourhoods. But I wanted to become truly lost, to leave the bubble entirely, and travelling across the globe to Asia on the cheapest possible flight, on a budget that made a customs official question my sanity seemed like a truly viable solution to my boredom.

Whats a Budget Anyways

I have to stress the importance of the small budget here, finding cheap housing and cheap food, while avoiding places we knew would be expensive tourist traps was essential to the success of our trip, had we used planes as opposed to trains, and eaten in restaurants as opposed to curbsides, I would have run out of money by the third week of the six week trip. Southeast Asia is full of tourists, and the governments have greatly capitalized on this, catering to them in such a way so that it creates a new tourist bubble, comfortably allowing for people to get a manufactured experience, to see some of the sites and beauty, in safety, controlled by what the locals want you to see. Having no money prevents this, no one wants to invite you into a bubble if you can’t afford to stay in the bubble. Me and my companions were still undeniably outsiders to the locals, but also to the majority of the tourists, we were dirtier, eating in places where no one else was, and taking trains that no other tourists rode. Everything around us was incredibly foreign, equally so to us as we were to it. I felt small, incredibly inconsequential, and alone, in a massive world, with only two familiar faces. I had gotten the exact type of discomfort I sought, a feeling that makes you learn and confront parts of yourself, while widening your world view.

The Beauty of Sensory Overload

I had left my bubble, I had never been so physically isolated from the majority of the people that I knew, with nothing but my paltry savings and the backpack I carried. When one leaves the comfort of a bubble, there is sensory overload, an incredible feeling where all the senses are filled with new inputs; looking around the depths of the Bangkok gutter or the peaceful serenity of Candidasa in the off-season(a complete ghost town), or the wind howling in my ears on a motorcycle on the Indonesian highway, sometimes all I could do was sit down and laugh till my body shook, at the absurdity and beauty of the world around me.  

Buses over Planes

We were too poor to afford plane tickets, and were too lazy to actually properly research the conventionally traveled bus and train routes that most travelers would take. Several occasions we ended up in towns that were deserted, whether on motorcycles, buses or having taken a train to a border without knowing how to get from the border to the place we wanted to be. Had we had money, we could have structured our trip in such a way where we stayed exclusively in cities, rather, we covered 5200 km using buses and trains and motorcycles. Short of the actual physical discomfort of travelling this much this far using overland means, we saw so much more, places within the countries we never would have seen otherwise. At one point on an overnight train leaving Bangkok, I looked out a window, a single tree stood in the middle of a grass field, with the sky split in half, one half blue and cloudless, split with a massive set of storm clouds that stretched to fill the rest of the horizon. Lightning struck, the sky lit on fire, the scene became burnt into my memory. Riding motorcycles through the highways of Vietnam and Bali and taking wrong turns into incredibly rural villages that I’d never see again, taking the wrong trains and ending up in the middle of nowhere, all this would have been impossible with responsible planning and adequate financing.

A Very Irresponsible Conclusion

But one’s exposure to the world does not need to be responsible, obviously great effort should be put into ensuring survival and coming back alive, but becoming lost and poor in a foreign country forced me away from familiarity and changed my perspective. Travelling gave me time to reflect, and travelling broke gave me the discomfort I needed to know myself better; it was just me, with my two friends in a completely foreign environment, surrounded by people, places and perspectives I had never encountered. I am not advocating that one jump on a plane with no money, it’s not for everyone. But without exposure to discomfort, to differences and a bit of fear, one cannot know oneself, and in the development of the self, and the expansion of perspective,  a bit of adventure goes a long way.