The Canadian government has joined forces with the European Union and numerous business and manufacturing groups in opposing a piece of legislation that they say would be cost prohibitive for foreign businesses and could violate international trading standards, according to The Toronto Star.
The Foreign Manufacturers Legal Accountability Act, which lawmakers could vote on as early as this week, has drawn the ire of several foreign entities, worried that the legislation would make it much easier for American consumers to sue them for injuries resulting from defective products.
That, in fact, is the intent of the legislation. As the law currently stands, it is extremely difficult to sue a foreign company in an American court. Even if a lawsuit is filed and litigated, some foreign companies will not even acknowledge the legal action, fail to accept jurisdiction in U.S. courts and neglect to pay any awarded damages.
More often than not, it is the U.S. distributors and retailers that are stuck footing the bill for their foreign suppliers.
The legislation would require, as a condition of market access, foreign companies to identify a registered agent to accept service of process on behalf of non-U.S. manufacturers. Doing so would constitute an acceptance of jurisdiction in U.S. courts.
The Canadian Ambassador to the U.S., Gary Doer, however, believes that the measure would be a both a violation of the North American Free Trade Agreement as well as international rules under the World Trade Organization.
“As Congress considers this legislation, we trust that any legislation that moves forward would respect United States’ international trade obligations,” he wrote in a letter to congressional leaders earlier this month, according to The Toronto Star.
He says that the law should exempt low-risk countries such as Canada, and focus instead on protecting American citizens from toxic imports from Third World countries known for utilizing cost-cutting measures that often result in safety violations. Doer also pointed out the fact that American citizens rarely face any trouble when suing a Canadian company.
“Injured American plaintiffs can sue a Canadian manufacturer just as easily as they could sue an American manufacturer,” he wrote. “In these circumstances, service upon a person or a corporation in Canada can be made directly through a process server in Canada. More importantly, Canadian courts routinely enforce American court judgments where the American court has jurisdiction and due process is followed.”
Last week, manufacturers in the European Union, India and Japan let their opposition to the proposed law be known. Indian exporters claim that the bill could cost their manufacturers up to $500 million per year to comply with the law. Officials for other nations have raised much the same argument.
Some American manufacturers have opposed the legislation as well, claiming that that foreign manufacturers will view the measure as protectionist, and respond in kind, adopting laws that make it more difficult for American manufacturers to export goods.