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Yves Faguy


Updating NAFTA's labour and environmental standards

By Yves Faguy August 14, 2017 14 August 2017

Updating NAFTA's labour and environmental standards

NAFTA talks begin this week, a challenge John Geddes notes that “has emerged, unexpectedly, as a defining issue for Prime Minister Justin Trudeau’s still-young Liberal government.” 

Today, Foreign Affairs Minister Chrystia Freeland was at the University of Ottawa to talk about Canada’s goals in modernizing NAFTA, namely by pushing for stronger labour and environmental safeguards into the core of the trade deal. “We are seizing this opportunity to make what is already a good agreement, even better,” was Freeland’s main message.

Freeland has in the past praised Canada’s trade deal with the EU and its labour and environmental provisions as model for NAFTA.

But in their primer on what to expect from the upcoming talks, trade lawyers at McCarthy throw a measure of cold water on those twin objectives:

There are two points of interest here. First, while both sets of US Objectives discuss incorporating the sections into NAFTA itself, and contain provisions requiring certain actions and panels to investigate and ensure commitments are met, there is no US Objective setting out proposed consequences for breach. CETA attracted a great deal of attention for being a “Green” free trade agreement because it included a chapter on the environment. However, without concrete enforcement provisions, including the loss of concessions up on a breach, these commitments remain window dressing. CETA, for all of its progressive claims, falls into this category: the environmental and labour chapters lack teeth.

Second, the US Objectives on labour do not deal with the freedom of movement of citizens or residents of the countries for business or other purposes. One of the key elements of CETA was a recognition that, to properly supply services, there had to be a guarantee for business travellers and business travel between the participating countries. There were also ground-breaking provisions relating to the framework for mutual recognition of credentials for professional workers (such as architects, engineers, or lawyers).

It will likely be difficult for the Canadian government to extract any concessions on this front from the United States. All the same, given the current trajectory of US demands, including broad access for service suppliers conducting business internationally, there may be limited room for liberalization for professional and business workers.

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Risk management

A new normal: Climate and cybersecurity risks in financial disclosures

By Yves Faguy August 9, 2017 9 August 2017

A new normal: Climate and cybersecurity risks in financial disclosures

Kevin LaCroix, discussing directors' and officers' liability, points to some telling signs of the times:

One of the fundamental principles on which our system of securities regulation is based is the importance of disclosure. The system is built on the notion that companies must disclose certain basic information about their operations and performance so that investors can make informed investment decisions. While the disclosures required are a matter of regulation and statute, investors’ and regulators’ expectations about what must be disclosed changes over time. Signs are that disclosure expectations  — and as a result disclosure practices — are changing rapidly in two particular areas: cybersecurity and climate change.

As if to underline the point, Australia's top bank is now the target of a shareholder suit over climate change risks. As The Guardian reports, the case marks a first test to gauge how courts will hold companies to account on disclosure requirements that should be identified in their annual reports:

The move comes six months after the Australian financial regulator warned climate change poses a material risk to the entire financial system, and called for companies to report on climate change-related risks as financial risks.

The sorts of risks the Commonwealth Bank might face as a result of climate change are diverse, said David Barnden, a lawyer at Environmental Justice Australia.

“CBA has exposure to the Australian economy in general. We could be talking about anything from extractive projects to the housing market, which might face risks from sea level rise,” Barnden said.

Reputational risks for the bank as the economy moves away from fossil fuels could also be significant, Barnden said, with the shareholders raising concerns about the bank’s position on funding Adani’s proposed Carmichael coalmine and associated infrastructure.



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Criminal law

Algorithms that predict crime need more public scrutiny

By Yves Faguy August 8, 2017 8 August 2017

Algorithms that predict crime need more public scrutiny


The predictive value of algorithms in criminal matters is obviously a controversial one.  Last year, the not-for-profit ProPublica newsroom published an investigative piece arguing that there is racial bias in a tool called COMPASS, used by courts in bail sentencing to predict the likelihood of people reoffending.

The case study found that black defendants are more likely to be incorrectly labeled high risk and white defendants low-risk, in large part because the algorithm itself tends to reflect existing social inequality and therefore reinforcing the bias. Ultimately, the study found that risk scores were unreliable in forecasting violent crime. The Chicago Police Department's Strategic Subject List, commonly called the Heat List, has also come under attack for its reliance on an algorithm that critics charge is assigning risk scores in an overly simplistic manner and without proper transparency (often because the owner of the predictive software will cite proprietary technology as a reason not to share details of its inner workings).

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Freedom of expression

Free speech on social media: Whose right is it anyway?

By Yves Faguy August 2, 2017 2 August 2017

Free speech on social media: Whose right is it anyway?


One of the privileges that presumably come with freedom of speech is that you don’t have to listen to what your critics say — unless, perhaps, you happen to be the President of the United States. 

Last month, a group of Twitter users, blocked by Trump, sued him on grounds that the president's account is a “public forum” and that they have a right to participate in public debate. The lawsuit reads:

The @realDonaldTrump account is a kind of digital town hall in which the president and his aides use the tweet function to communicate news and information to the public, and members of the public use the reply function to respond to the president and his aides and exchange views with one another.

Noah Feldman has suggested that the legal arguments are specious at best:

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Securities law

What the SEC's DAO ruling means for Canadian initial coin offerings

By Yves Faguy August 1, 2017 1 August 2017

What the SEC's DAO ruling means for Canadian initial coin offerings


Addison Cameron-Huff points to last week’s Securities and Exchange Commission report ruling that an initial coin offering (ICO) of Decentralized Autonomous Organization (DAO) tokens, dating back to 2016, are securities.  An ICO is essentially is similar to an initial public offering; only here it is the practice of raising funds in exchange for “digital tokens.” It has been mostly unregulated until now, but the SEC report confirms that U.S. securities law will apply to ICOs with a similar structure as the DAO.  The DAO, which was crowdfunded through its token sale in 2016, is a blockchain-enabled organization that exists as a set of contracts tied to the Ethereum network.

As Cameron-Huff notes, the SEC has opted not to enforce any action against the DAO at this particular time. But the message is pretty clear. The SEC is open to blockchain technologies and token sales, but is putting future ICO issuers on notice that they must register and be compliant:

Blair Wiley and Evan Thomas at Osler boil it down:

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