Canada-U.S. Blog Trade Lawyers Cyndee Todgham Cherniak and Susan K. Ross

We have a Deal: What are the next steps for Canada to implement the CPTPP?

Posted in Agriculture, Canada's Federal Government, Corporate Counsel, CPTPP, Cross-border deals, Cross-border trade, TPP-1

On January 23, 2018, Canada and Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam reached an agreement in principle that is the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (“CPTPP”) (formerly known as the TransPacific Partnership Agreement, TPP, TTTP-1, and TPP-11). The United States withdrew from TPP in January 2017.  It is expected that the signing ceremony will take place in Chile on March 8, 2018.

It is no coincidence that an agreement was reached on the first day of the sixth round of the NAFTA modernization re-negotiations in Montreal Canada.  Canada and Mexico are both signatories to NAFTA and CPTPP.  The CPTPP evolves many NAFTA provisions.  If the United States withdraws from NAFTA, Canada and Mexico can operate under the CPTPP or may choose to operate under NAFTA without the United States.  Both countries have a new option for bilateral trade.

Canada and Chile also have evolved. In 1997, Canada and Chile signed the Canada-Chile Free Trade Agreement.  In June 2017, Canada and Chile signed an amending agreement (which is not yet in force).  CPTPP further advances the trade relationship between Canada and Chile.

Global Affairs Canada has published an announcement and launched a webpage about the CPTPP. The text of the new side letters is not yet posted.  The CPTPP maintains the original TPP Agreement 9the agreement that included the United States) with minor modifications. There are a number of side letters.

The negotiated tariff schedules have been maintained and, as a result, custom duties on 95% of trade in goods between the parties will either be duty-free immediately or according to tariff reduction/elimination schedules. The tariffs are not reduced or eliminated on the day of signing the free trade agreement.  It is hoped that CPTPP will come into effect before the end of 2018.

The 11 countries, including Canada, must take domestic procedures to implement the CPTPP into domestic law.  Canada takes the following steps to implement a free trade agreement (or any treaty) in Canadian law?

Step 1: Signing Order (Instrument of Full Powers): This step should be taken before the signing ceremony. A signing order (that is, an Instrument of Full Powers) will designate one or more persons who have the authority to sign the treaty on behalf of Canada.

Step 2: Tabling the Treaty in the Parliament: The signed treaty is tabled in the House of Commons for discussion (not for a vote).  Before 2008, treaties were not brought to all members of Parliament.  In January 2008, Prime Minister Harper changed the procedures of ratifying treaties and added this step in order to improve transparency and the democratic process.  Global Affairs Canada has the 2008 Policy on its website. However, there is no vote on the treaty. There may be a full discussion about the treaty, but no opportunity to vote, undo the signature or change the text of the negotiated treaty.

The Clerk of the House of Commons distributes to all MPs (Members of Parliament) the full text of the treaty along with an Explanatory Memorandum about the treaty (often prepared by the negotiating team with input from the Minister responsible for the treaty).  The Explanatory Memorandum covers the following points:

  • Subject Matter: a description of the treaty;
  • Main Obligations: a description of the main obligations that will be imposed upon Canada by the treaty, should it be brought into force;
  • National Interest Summary: a description of the reasons why Canada should become a party;
  • Ministerial Responsibility: a listing of Ministers whose spheres of responsibility are implicated by the contents of the treaty;
  • Policy Considerations: an analyze as how the obligations contained in the treaty, as well as how the treaty’s implementation by Government departments are or will be consistent with the Government’s policies;
  • Federal-Provincial-Territorial implications: a determination of whether the obligations in the treaty relate in whole or in part to matters under provincial constitutional jurisdiction;
  • Time Considerations: details of any upcoming dates or events that make the ratification a matter of priority;
  • Implementation: a brief description of how the treaty will be implemented in Canadian law, including a description of the legislative or other authority under which it will fall (which will have already been determined by the Department of Justice);
  • Associated Instruments: information on any international instruments of any kind that are related to this treaty;
  • Reservations and Declarations: a description of any reservations or declarations;
  • Withdrawal or denunciation: a description of how the treaty could be terminated; and
  • Consultations: a description of the consultations undertaken with the House of Commons, self-governing Aboriginal Governments, other government departments and non-governmental organizations prior to the conclusion of the treaty, as appropriate.

The House of Commons then has 21 sitting days to consider the treaty before the Executive may take necessary steps to ratify the treaty (Step 4). The MPs often debate the treaty.

Step 3: Motion in House of Commons: When there is a majority government or sufficient support in the House of Commons, a motion will be tabled to recommend action, including ratification of the treaty.  The vote is not required.  The vote does not have legal effect.  If the vote fails, the government cannot be toppled.

Step 4: Order-in-Council (Instrument of Ratification): After the treaty has been in the House of Commons for 21 sitting days, the ratification of the treaty may occur.  The ratification process is controlled by Cabinet.  There is no requirement to pass legislation in the Parliament to ratify a signed treaty. The Governor-in-Council (Cabinet) prepares an Order-in-Council authorizing the Minister of Foreign Affairs to sign an Instrument of Ratification or Accession.

Step 5: Federal Implementing Legislation: Treaties must be implemented in Canadian law in order to have legal effect.  An implementing bill is tabled in the House of Commons.  The implementing bill contains the changes required to Canadian law at the national level to implement the provisions of the treaty.  The MPs debate the implementing bill and may suggest changes to the implementing laws.  The MPs cannot require changes to the substance of the treaty.  However, the MPs may ask questions of the Government and the questions must be answered.

After the implementing bill passes in the House of Commons, the implementing bill is sent to the Canadian Senate.  The implementing bill is debated in the Senate.  It is possible that the Senate will not pass the implementing bill.  This happened in 1988 when the Senate would not pass the Canada-United States Free Trade Agreement Implementation Act.  This triggered a federal election.

Step 6: Provincial/Territorial Implementing Legislation: It may be possible that implementing legislation is also required at the provincial level.

Step 7: Regulatory Changes: Often new regulations and/or changes to existing regulations are required to implement treaty provisions. The passing/changing of regulations is controlled by Cabinet.

Step 8: Taking Effect: The date that a treaty comes into force, or the terms and conditions necessary for the treaty to come into force, are established in the treaty itself.  CPTPP will be different than typical treaties in terms of when it will take effect.  We will comment on how the CPTPP will take effect after reviewing the text.

Step 9: Other Changes to Policies, Guides, Procedures of Government: Government departments will make necessary changes to government policies, guides, procedures, etc.  These changes take place over time and are not completed at the time the treaty takes effect.

More to follow…

For more information, please contact Cyndee Todgham Cherniak at 416-307-4168 or at cyndee@lexsage.com. Alternatively, visit www.lexsage.com.