Maximilien Larivière
Advisor | ing. jr, M. Ing. | Tax

Even though aeronautical technologies are the result of leading edge work from scientist and engineers, the development cycle of the related products is somewhat difficult to achieve.

Because of the enormous quantity of testing that must be carried out to certify the new technologies, years and sometimes decades can go by from the time an idea is chosen for development to the time the technology is actually being used in an aircraft. Composite materials (a combination of two or more immiscible components whose properties are mutually compatible) were introduced for use in manufacturing aeronautical components several years ago. Used initially for non-structural components, such as trims and cabin panels, composites are nowadays used in structural elements. Aircraft such as the Bombardier C-Series use high-performance composite materials for such critical elements as the wings and empennage, which result is an aircraft that is up to 5,500 kg lighter than the competition’s.

Composite materials may take years to develop and their application in the aeronautics industry may not be straightforward, but they clearly represent performance benefits over comparable metal parts. Composite materials have repeatedly proven their performance, whether they are used in internal components such as partitions, monuments, ventilation ducts, floors, etc.) or for primary structural components, such as the fuselage or wings. The main benefit of using composite materials is their lighter weight compared with equivalent metal parts. Airline operators are drawn to the weight reduction factor which cuts fuel costs and increases the ecological value of the aircraft. Additionally, composite materials used in aeronautics are more resistant in fatigue than equivalent metal parts. This results in a longer useful life, which translates into greater efficiency over the aircraft’s life cycle.

Some turbine engine manufacturers, such as CFM, a GE / SAFRAN association, focus on developing jet engine parts using composite materials: certain low-temperature parts, such as fan blades, have been developed and used in commercial motors. By using composite materials in the new LEAP engine, CFM has been able to reduce the weight of each motor by 220 kg, compared to engines using standard metal parts.

There are considerable benefits to using composite materials for certain equipment, such as on-board trolleys, which can result in considerable weight reductions. Norduyn has developed the Quantum line of trolleys, made from composite materials, which are 40% lighter than conventional aluminium-frame trolleys and more corrosion- and fatigue-resistant.

While the use of composite materials may be beneficial in helping to reduce the weight of certain aircraft by thousands of kilos, the materials developed to date cannot survive the extreme temperatures of a turbojet core. If researchers are able to increase the temperature resistance of high-performance composites, in the coming years it may be possible, for example, to develop low-pressure compressor parts. This would be another advance in materials that has fostered developments in the field of aeronautics in recent years. Considering their current and future applications, there is no doubt that composites are the way to go in aeronautics!

22 Feb 2017  |  Written by :

Maximilien Larivière is an advisor at Raymond Chabot Grant Thornton. He is your expert in taxation...

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Benoit Turcotte
Partner | M. Fisc. | Tax

America first

Donald Trump’s election on an ‘America First’ platform signals a powerful shift in US trade policy. Though specific changes haven’t been proposed, President Trump’s intention is clear, ‘to rebuild the American economy by fighting for free trade’.

It’s an ambitious goal built upon an ambitious to-do list, which includes US withdrawal from the Trans-Pacific Partnership (TPP) agreement, a review of the North American Free Trade Agreement (NAFTA), and a greater focus on trade enforcement efforts.

While these changes won’t happen overnight, businesses will need to keep an eye on the developing policies and agreements. In this article, I take a look at how President Trump’s proposed plans will impact current and future trade arrangements.

Withdrawal from the TPP

Wasting no time, President Trump has issued a memorandum directing the United States Trade Representative to withdraw the US from the TPP.

Despite being a complicated instrument, withdrawal from the TPP is actually quite straightforward. Under the terms of the agreement, the USTR will need to notify the other signatories of the US’ decision. Assuming that all of this is all done in January, the TPP will come to an official end in mid-2017.

  • Described as a state-of-the-art trade agreement, the TPP involved 12 countries on both sides of the Pacific: the United States, Japan, Malaysia, Vietnam, Singapore, Brunei, Australia, New Zealand, Canada, Mexico, Chile, and Peru. TPP also covers more than half a billion people and roughly 40% of the world’s GDP. Although the agreement was signed on 4 February 2016, it’s expected to come to an end in 2017.

How will the US exit impact the TPP?

The TPP would usually prevail following the withdrawal of a single country. However, given the US’ standing in the agreement, its withdrawal will bring the TPP to an official end. This is because the TPP in its current form can only enter into force in one of two ways, both of which require US ratification:

  1. All original signatories must ratify the agreement. In the US, this would involve Congress passing ‘implementing legislation’. While there were suggestions that Congress could have passed a bill during the recent ‘lame-duck’ session, Senate Majority Leader Mitch McConnell and the newly elected Senate Minority Leader Chuck Schumer indicated that this wouldn’t happen.
  2. At least six of the original signatories (which together must be at least 85% of the combined GDP of the original signatories) must ratify the agreement. Given that the US accounts for 60.3% of the combined GDP, it won’t be possible for the remaining signatories to keep the TPP alive.

New agreements on the way

Prior to his inauguration, President Trump announced that his incoming administration will negotiate new bilateral trade agreements that ‘bring jobs and industry back onto American shores’ in place of the TPP. While President Trump has directed the USTR to withdraw from the TPP, his administration could potentially initiate fresh trade negotiations with specific TPP countries, including Vietnam, Malaysia, Brunei, New Zealand, and Japan.

If the US seeks bilateral trade agreements with each of these countries, it’ll be interesting to see how non-tariff barriers (NTBs) are addressed.[1] One of the reasons why the TPP has been described as a state-of-the-art agreement is because it was designed primarily to eliminate NTBs. The Trump-administration could potentially eliminate various US NTBs, but continue to maintain traditional tariff barriers in order to protect certain US industries.

  • New appointments to the United States Trade Representative (USTR) – During his election campaign, Donald Trump promised to appoint tough and smart trade negotiators to fight on behalf of American workers. At the start of 2017, Trump appointed Robert Lighthizer as the USTR. Lighthizer has previously served as the Deputy USTR in the Reagan administration.[2]

One to watch: new appointments to the Advisory Committee for Trade Policy and Negotiations (ACTPN)

The ACTPN (3) will play a critical role in formulating president Trump’s trade policy.  Comprised of 45 Presidential appointees, the ACTPN provides advice on: 

  • negotiating objectives and bargaining positions before entering into a trade agreement
  • the operation of any trade agreement once entered into ;
  • other matters arising in connection with the development, implementation, and administration of the trade policy of the United States

Most of President Obama’s ACTPN members endorsed the TPP. Given president Trump’s opposing position, it’s worth paying attention to the members he appoints and whether or not they share his views.

Although the President is required to appoint ACTPN members who broadly represent key sectors of the US economy, the Trade Act of 1974 doesn’t set any geographical requirements for membership. So President Trump could potentially appoint members from industrial heartlands, like Wisconsin, Pennsylvania, Ohio and Michigan.  Trump was particularly successful in linking the TPP and NAFTA with the decline of manufacturing jobs in these states.


Will NAFTA go the same way as TPP?

Ever since inception in 1994, NAFTA has been highly controversial. Politicians, trade groups, and labour unions, from the US, Canada, and Mexico, have openly called for its renegotiation, citing job and profit losses, lax labour and environmental protection provisions, and colossal trade deficits. Building on 20 years of debate, President Trump has proposed that if Canada and Mexico are unwilling to renegotiate NAFTA he will withdraw the US from the agreement.

The agreement’s renegotiation is likely to be a complex process involving a number of parties. It’s expected that the Free Trade Commission and its various working groups and committees will be involved in NAFTA’s renegotiation, as well as senior trade officials from the USTR, Global Affairs Canada, and the Mexican Secretariat of Economy. Under NAFTA, amendments must be uniformly approved by all legislative bodies, which include the Mexican Congress of the Union, the Canadian Parliament, and the US Congress. Given the sensitivity of certain trade issues and industries, any single legislative body could potentially block an amended agreement if certain provisions prove to be unpopular.

What about trade with China?

The US and China have been fairly proactive in launching World Trade Organisation (WTO) cases against one other. These disputes mostly stem from countervailing duties (CVDs) on subsidised imports. In recent years, the US has imposed CVDs on a variety of imports from China. It’s not all been one-way. China also imposed CVDs on certain US goods, including automobiles and broiler products.

With China the main subject of President Trump’s trade plan, tensions over the use of subsidies and CVDs are expected to continue. In his plan, Trump says he’ll ‘instruct the USTR to bring trade cases against China’, stating that ‘China’s unfair subsidy behaviour is prohibited by the terms of its entrance to the WTO. In its 2016 report to Congress, the US-China Economic and Security Review Commission raised similar issues. It advised Congress to strengthen trade dispute procedures and legislation to counteract China’s ‘on-going failure to uphold its WTO commitments’. Given President Trump’s focus on China’s subsidy behaviour, it’ll be interesting to see whether the Republican-dominated Congress adopts the Commission’s ‘hard line’ policy recommendations.

A powerful shift in US trade policy

Having been a powerful topic during the United States presidential election, trade is expected to be a focal point of the Trump administration. Although specific regulatory and legislative changes haven’t been proposed, the broader policy themes of TPP withdrawal, trade enforcement, and trade renegotiation, signal a powerful shift in US trade policy.



[1] NTB’s refer to ‘behind the border’ restrictions and regulations that effectively limit market access for businesses from other jurisdictions.

[2] The USTR serves as the President’s principal trade advisor and is responsible for developing and coordinating US international trade, commodity, and direct investment policy, and overseeing negotiations with other countries.

[3] The ACTPN is one of 28 advisory committees that provide information and industry advice to the USTR with respect to trade negotiations and policy.

17 Feb 2017  |  Written by :

Mr. Turcotte is a partner at RCGT. He is your expert in taxation for the Montréal office. Contact...

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Stephen Marchant has worked in biotechnology in the fields of immunology, molecular imaging and stem cell research in both academia and industry.

A born entrepreneur, in 2013 he started his own business, MediLumine, which specializes in developing contrast agents for research using small animal imaging. An expert in his field, he works closely with numerous international laboratories and research centers specializing in research on cancer and other human diseases.  

Here is summary of an interview with Stephen on this fascinating field.

What is a contrast agent?

It’s a substance that’s used to enhance the contrast of soft tissue structures for certain medical imaging modalities such as computed tomography (CT). Without a contrast agent, for example an x-ray imaging contrast agent,  CT scans of the the human body only shows the skeleton and it’s virtually impossible to see all of the organs (commonly known as soft tissues), such as the liver, spleen or heart and any potential cancers affecting them.

What progress has there been to date?

To date, imaging contrast agents are available on the market for human beings. These products are safe and are excreted rapidly within minutes after injection. However, because they are excreted so quickly, it’s not possible to take advantage of high resolution of CT and see organs and cancerous tumours in high resolution. To take advantage of this high resolution of CT imaging, contrast agents capable of penetrating the actual cell must be used in conjuction with imaging hardware which enables higher resolution scanning such as a micro-computed tomographer used in research.

In humans, using this high resolution imaging methodology to detect cancer is still experimental and medical professionals use magnetic resonance imaging (MRI) and nuclear medicine instead.

This explains the extensive research into both imaging equipment (such as spectral CT imaging or dual-energy CT imaging) and contrast agents which are non-toxic and capable of getting inside cells.

It’s a known fact that the timing of cancer detection is critical and the earlier the detection, the greater the chances of treatment and recovery. Improved resolution in future equipment could help detect cancer in its very early stages and help to prevent it.

Lastly, it’s important to note that contrast agents must be absolutely safe and quickly excreted from the body. A contrast agent penetrating cells and staying in body for a few hours instead of a few minutes could expose the patient to two major problems; a high dose of radiation (for extended scans) and a high risk of toxicity. This is why research is being conducted globally to develop a contrast agent capable of penetrating cells (such as cancer cells) and, at the same time, design a high resolutng modality that does not does not expose patients to high doses of radiation.

How are these methods and products more ethical even though they are tested on mice?

The number of animals used in research with micro-CT contrast agents is significantly reduced. Small animal micro-CT imaging with contrast agents have enabled ways of obtaining data at different time points with imaging instead of animal sacrifice thus reducing size of examined animal cohorts.

How is MediLumine involved in this research?

Since its creation, MediLumine has been focussing on developing medical imaging contrast agents for small animal imaging, and, more specifically, more specifically angiography (vascular imaging) and liver tumor imaging agents. Major research laboratories are currently using products developed by MediLumine to detect cancer in laboratory mice or measure the effectiveness of a therapeutic intervention. The products’ strength resides in their ability to penetrate the organism’s cells while being excreted within 72 hours. The slow clearance time enables high resolution micro-CT scanning. We are also working on new theranostic concepts (or diapeutics), that is, combining delivery of imaging agents and therapeutic compounds which allows for assessing the effectiveness of a drug during the course of multiple imaging sessions.

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Mylène Tétreault
Partner | M. Fisc., B.B.A. Fin. | Tax

International staff postings provide an excellent growth opportunity for a business.

Whether the company prefers to hire from abroad or send resources from here, this decision includes multiple human, financial, legal and tax aspects that will influence the success of this process.

Posting impacts

A business with some of its staff posted abroad would not be able to function efficiently and reduce posting costs without proper tax planning and efficient compliance services.

It is imperative for both employers and employees to comply with the foreign country’s tax laws and regulations, otherwise the tax authorities could impose hefty fines or penalties. Employees must have a clear understanding of the impact of the posting on their personal tax and resulting compliance obligations for both the country of residence and the host country. Employers must establish a fair and just remuneration plan, pay taxes as applicable, file income tax returns and comply with indirect taxes accurately and in a timely fashion, locally and internationally.

Tax obligations, even without a head office

Entrepreneurs often believe that they do not have to worry about payroll deductions for an employee sent abroad, corporate taxes and the sales taxes of the country in question when they do not have a head office abroad. This is not always the case!

As an example, a Canadian company carrying on sales in the United States that decides to send a sales person there for a certain amount of time to develop the U.S. market could be subject to the following U.S. tax obligations:

  • Registration as a U.S. employer;
  • Remittance of the sales person’s U.S. payroll deductions;
  • Filing of employee and company U.S. state and federal tax returns;
  • Registration for U.S. sales taxes.

These resulting tax obligations may be considerable for a Canadian company that is not familiar with the laws of the host country. As such, it is important for entrepreneurs to learn more about their organizational and tax structure. The objective is to minimize the overall tax rate and avoid situations where foreign activities could increase the tax burden.

A company that knows how to plan and rigorously adheres to the tax laws can considerably reduce the operating risks and expenses related to its international activities. Our team of international tax experts can guide you in your foreign posting process by offering you integrated consulting and compliance services that cover all of the tax, personal and organizational aspects of international staff mobility.

24 Jan 2017  |  Written by :

Mylène Tétreault is your expert in taxation for the Québec office. Contact her today!

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