Canada and Europe – The Road Ahead for CETA

By | September 25, 2014

Prime Minister Harper and EU President Barroso have signed the formal text of the Canada-EU Comprehensive Economic and Trade Agreement (CETA).

Don’t be surprised when I tell you that this isn’t the final step. It isn’t.

Under the Law of Treaties (yes, there is such a thing) signature by authorized representatives is a necessary first step that signifies acceptance of the treaty as negotiated. But signature isn’t the same as ratification. Treaties have to be formally ratified to enter into force and become binding under international law.

What is Ratification?

Ratification requires each party to first take all the internal steps needed to implement treaty obligations within their own laws. Only when all of that is done, is each side be in a position to ratify.

As one simple example, in the case of the CETA there are reductions in duties on imports from each side. So Canada will have to amend its Customs Tariff to reduce duties on EU products. The same is true for the EU. And there are host of other legislative changes needed before both sides are in a position formally ratify the agreement.

This requires bills to be tabled and approved by Parliament. All this will take time and won’t likely be completed until sometime in 2015.

Once all the legislation is in place on the Canadian side, an order in council will be passed by the Governor-in-Council (i.e., by the federal cabinet) allowing an instrument of ratification to be issued. There will then be a formal exchange of these instruments with the EU, following which the treaty then enters into force and becomes legally binding on both parties.

Parliamentary Approval

Under Canada’s constitution, the executive branch (i.e., the Federal cabinet) has full authority to negotiate, sign and ratify treaties. There is no written constitutional requirement for the treaty itself – as opposed to specific statutes – to be approved by Parliament.

In recent years, it’s become the practice to seek Parliamentary approval of major international agreements, as was done with the NAFTA. Whether the Harper government will request Parliamentary approval of the CETA is uncertain but it is expected that this will be done.

But Parliamentary approval on its own doesn’t bring the treaty into force in Canadian law. It merely signifies that the legislative branch has approved the treaty in principle. For the treaty to be given legal effect and for Canada to be able to implement treaty obligations, as noted, legislation will be needed.

Situation in Europe

In the case of the EU, the situation is different. Under the Lisbon Treaty, once the EU Commission concludes a major treaty (i.e., one with significant financial consequences), it requires approval of the European Parliament. Once approved, that treaty then binds all EU member states and the Commission can enact the necessary regulations to implement it.

The Commission is taking the position that there is no need for CETA to be approved by each of the EU’s 28 member States. However, some members of the European Parliament (MEPs) and some interest groups have been claiming that the CETA is a so-called “mixed agreement” under Lisbon and legally requires the approval of each EU member state.

If this becomes necessary – and it’s far from certain it will be – it will enormously complicate matters on the other side of the Atlantic. Apart from its impact on the Canadian deal, it will signal to the Americans that successfully doing a deal with the EU is highly uncertain.

The Role of the Provinces

What about the Provinces? What do they have to do for Canada to be able to ratify CETA?

The short answer is nothing. No provincial approvals or legislation will be needed ahead of Canadian ratification. This was true in the case of the NAFTA and it’s true for CETA as well.

All the provinces have been privy to the CETA negotiations and have given their political approval to the deal. None of the recent electoral changes in the provinces, such as in Quebec or New Brunswick or even in Alberta, have changed the landscape as far as CETA acceptance is concerned.


Once ratified, the CETA becomes binding on Canada as a whole vis-à-vis the European Union. If any provincial law is inconsistent with the treaty, the EU – or an EU investor – can bring binding arbitration against Canada. Should the EU succeed and the provincial measure not be changed or repealed, the EU can retaliate, targeting goods exported from that particular province.

So even if the CETA doesn’t require provincial measures before ratification, there is leverage to ensure provincial compliance. It’s safe to expect that all the provinces will take the necessary steps to comply with treaty obligations one way or another.

Time Factors

As is abundantly clear, implementation of the CETA won’t happen tomorrow. The interesting question is whether it will be in force before the next Federal election in 2015. What if it isn’t and there is a change of government?

If history is any guide, political changes in Canada shouldn’t change things. It would be a dramatic step for a country that signed an international treaty to refuse to implement it after a change of government. However, it has happened before.

The danger isn’t on this side of the Atlantic. The situation to watch is on the European side.