As widely known, Canada has applied sanctions against Russia as a result of that country’s aggressive actions in Crimea. The Canadian  sanctions flow from a law called the Special Economic Measures Act, which gives broad authority to the federal cabinet to apply sanctions where it is of the opinion that,

“. . . a grave breach of international peace and security has occurred that has resulted or is likely to result in a serious international crisis.”

The new sanctions don’t apply across the board to dealings with Russia or Russian companies. Rather, as a means of pressuring President Putin, they target only those high-profile persons – individuals and entities – specifically designated in the regulations. The sanctions prohibit Canadian individuals and companies anywhere in the world from:

• dealing in any property held by or on behalf of a Russian designated person, or facilitating or providing financial or other related services in respect of such a dealing;
• making any goods available to such designated person; and
• providing any financial or related services to or for the benefit of such designated person.

Causing, assisting or promoting the above prohibited activities is likewise an offense under the Russian sanctions.

The sanctions are a bit of a moving target. The government can add names to the list of designated persons as they deem necessary, as they did on March 21^st by adding Aktsionerny Bank Russian Federation (also known as Bank Rossiya) to the list. So care must be taken to monitor changes to the sanctions list.

It will also be important to take special care not to be caught unwittingly by these measures. Of particular note is the prohibition against dealing with or assisting in the provision of all kinds financial “or related services” “to or for the benefit of” a designated person. Commercial activities “for the benefit of” a designated person could be interpreted broadly.

According to media reports, many business dealings are being affected by the potentially wide sweep of these measures.  Financial dealings are on hold. Expectations are that this crisis will persist. There is no doubt Canada-Russia business is going to suffer.

Here is a piece I wrote as an op-ed in the Financial Post on 25 February 2014.

Lawrence L. Herman: Big Three stall Canada-Korea trade deal

The tug-of-war in Canada’s long-delayed trade agreement with South Korea, reported regularly in this newspaper, continues. It’s not a happy story.

Pulling in one direction are the Canadian branches of the Detroit Three, led by Ford Canada, joined by the Canadian auto-workers represented by Unifor.

Pulling in the opposite direction are a wide array of manufacturing industries, the aerospace and agrifood business and the financial community.

Canada’s Detroit Three have been lobbying against the Korean trade deal for years – a deal that Canada was on the verge of signing in 2008.

In the meantime, in 2011, the U.S. went ahead and signed its own free trade agreement with Korea, stealing a march while Canada dithered. Ironically, the U.S. deal was fully supported by the Detroit Three.

Since then, U.S. exports to the Korean market have grown, while Canadian exports have plummeted. As Michael McCain of Maple Leaf Foods has lamented recently, Canada’s agriculture and food exports to Korea alone have dropped from more than $1-billion to just over $300-million, a loss of more than 70% over the past two years.

Economic studies have shown that the Korean agreement would have resulted in $1.6-billion annually in trade gains for Canada, with benefits spread fairly evenly east and west.

Recognizing the economic and strategic importance of getting the deal done, the Harper government negotiated further adjustments to meet the auto industry’s concerns and now wants to finally sign the trade pact.

Yet it appears that the Canadian Detroit Three, Ford Canada particularly, continue to oppose the agreement. The president of Ford Canada recently described the U.S.-Korea agreement as a “disaster” for American auto makers, urging the Conservative government not to make the same mistake as the United States.

This is pretty odd, given the support of the Detroit Three for the U.S.-Korea deal. In December 2010, Ford’s president & CEO said that Ford “applauds” the agreement. He congratulated the Obama administration for its “tireless efforts” in getting the deal done.

Then on January 25, 2011, in testimony before the U.S. House Ways and Means Committee, Ford’sVice President of International Governmental Affairs said his company “strongly encouraged” the Congress to approve the agreement.

It’s true that the Korean agreement hasn’t led to a flood of U.S. cars going to that country. But the U.S.-Korea deal only entered into force in 2012 and it’s impossible to judge the long-term economic benefits after only one year of operation, let alone to describe it as a disaster.

Even if we take its first 12 months, U.S. exports to South Korea of such items—including aircraft, autos, wines, soybeans and orange juice—rose 4.1%. American-made auto exports to Korea went from $340-million in 2011 to over $800-million in 2013.

Now let’s look at some Canadian numbers.

Canada produces over 2.6 million vehicles each year, 85% of which are exported. Independent studies done both for Canada’s trade department and for Industry Canada have shown that removing the 6.1% duty on Korean vehicles will have almost no impact on Canadian production.

While, yes, the deal will modestly increase the number of Korean vehicles we import – by a mere 1.6% of total Canadian sales – these studies also show that a trade deal would leave annual Canadian production basically untouched, reducing the number of Canadian-made vehicles by an imperceptible .04%.

There are other aspects of the story that are lost in the rhetoric. For one thing, of the 124,000 vehicles Korean manufacturers shipped to Canada (2010 data), close to a third entered duty-free from the U.S. anyway, where they’re now being made.

In any case, this is not just about cars and trucks.

Canada is a country with long-term economic and trade interests in the Asia-Pacific region. Quite apart from the direct trade benefits, cementing this agreement with South Korea will have political significance and reinforce Canada’s engagement in that part of the world.

It will also provide an established framework for the conduct of our commercial relations and a dispute resolution process to resolve differences, something we don’t have now.

In 2013, the U.S. Congressional Research Service did an in-depth study of the impact of the U.S.-Korean agreement and signalled that its rejection or indefinite delay would have called into question the viability of trade agreements as a serious U.S. tool to strengthen economic ties with its major trading partners.

That point applies with equal force to Canada.

Lawrence L. Herman, Herman & Associates, is a Senior Fellow at the C.D. Howe Institute, Toronto.

There was an excellent article by Barrie McKenna in the Globe on February 9, 2014, pointing out the importance of the Obama administration getting trade negotiating authority from the Congress, called Trade Promotion Authority or “TPA”. That authority expired in 2002 and hasn’t been renewed. A new TPA bill has been introduced in both the Senate and the House of Representatives but is highly contentious and is very much caught up in the toxicity of partisan politics in Washington these days.

I wrote about the TPA and how it impacts on negotiations with the US in an earlier blog (www.hermancorp.net). I noted that without TPA, other countries, Canada included, were negotiating in the Trans-Pacific Partnership exercise on a large amount of faith with the American team. The reason is that no-one yet knows what kinds of conditions Congress will attach to TPA legislation, assuming the bills even get out of the morass of committee deliberations. My prediction is that Congress will set out some very onerous terms for the US administration to bring back a TPP agreement that will be approved.

A bit of history here. Under the US constitution, any treaty signed by the US executive must then obtain Congressional approval for the US to ratify the treaty and be legally bound by its terms. Remember the League of Nations episode, where the Wilson administration signed the treaty in 1919 but the Congress refused to approved it. The result was that the US remained outside the League for the duration of that body’s existence.

One of the serious problems as well was that, to give approval, Congress often required major changes to a signed treaty. This meant that countries, Canada included, that reached a negotiated deal with the US, then had to agree to make more concessions to get the deal through the Congress. In other words, the US got two kicks at the can. This was a particular roadblock to treaty negotiations with the Americans for many years.

To remedy the problem in trade talks, the concept of fast-track was developed in the 1970s. It was an arrangement by which the Congress agreed to give the Executive Branch full authority to negotiate and sign trade agreements with the proviso that the Congress could not insist on changes being made to that agreement later. All Congress could do under fast track was to approve or disapprove the agreement in its entirely. No changes could be insisted on.

Fast track worked well in the Uruguay Round negotiations in the 1990s, leading to the 1994 WTO Agreement. However, the last fast track bill expired in 2007. The Obama administration needs TPA renewed for the Pacific trade talks.

But fast track renewal is hitting stormy weather in Washington. Many in the Senate and the House, notably but not only on the Democrat side, are bent on changing the very concept. Instead of a clean bill, there are efforts to tack on many terms and conditions on Obama’s negotiating authority, meaning that the US team will come to the negotiating table with a long list of a priori demands to meet Congressional conditions. That will cause a lot of TPP countries a lot of angst.

Not only that. There is a move to include a requirement for full Congressional oversight during the Trans-Pacific negotiations. If this gains traction and is included in the final TPA bill, “oversight” will really mean that, once again, countries will be negotiating, not with the US executive branch, but with the Congress. This would be untenable and, in my estimation, could torpedo the talks. So all TPP countries should follow these twists and turns with interest and with some anxiety as the TPA bills tortuously wend their way through the Congressional maze.

The problem when you have a Canadian Trade Minister like Ed Fast inundating us with press releases all the time is that, when something really noteworthy is issued, it tends to get less attention than it merits.

This may be true of a couple of highly significant reports the Trade Department recently issued, which have not been commented on in policy circles as much as should have been. Pity. These reports give a valuable picture of where Canada stands in international trade, and more significantly, where the Conservatives see Canada going. I would have expected more informed comment on these.

One can quibble over some of the details. And yes, one can claim that all this is just more typical Conservative propaganda. But that does a disservice to the value of these documents.

The first one, “Canada’s State of Trade”, was released late in December. Prepared by economists in the Trade Department, it is a finely prepared report and tells us virtually everything we need to know about Canada’s place in the global economy. While it only has full data up to the end of 2012, it shows in raw numbers how Canada has slipped in relative terms in this highly competitive world.

The second document, “Global Market Action Plan” is the more significant in policy terms. It provides a defined roadmap for Canada’s trade and investment objectives and priorities in meeting these challenges. It talks about “economic diplomacy”, the government’s guiding principle in focussing trade, investment and Canadian business interests, as part of a new global strategy.

Unlike the mushy stuff often issued by the Department previously, this is a welcome change – a proactive and focussed document. It avoids the overly wordy and bureaucratic gobbledegook of similar reports. It does a fine job in identifying Canada’s major target markets with a strategic approach for exploiting those markets. In conjunction with the merging of CIDA into the newly titled Department of Foreign Affairs, Trade and Development, this report says how trade, investment and international development should be pursued consistent with hard Canadian economic interests.

For any one involved in international trade and trade policy, you can’t really understand the direction Canada is going under the Harper government’s international business and economic strategy without reading these documents.

The Trans-Pacific Partnership (or TPP) trade negotiations, the biggest floating trade game on the planet, will be re-engaging in earnest this year, having missed their 2013 deadline, an impossible goal to begin with.

Should the talks succeed, Canada and all TPP participants will gain from the effects of reduced barriers and other market-opening measures, especially for services and investments. But there are dark clouds that threaten this deal, whether in 2014 or later.

With the spectre of the failed WTO Doha Round hovering in the background, the TPP agenda is unfortunately over-layered with extreme complexity. As well, many of the twelve participating countries have deeply entrenched and diametrically opposed positions, all of which is frustrating consensus.

Second, the talks are over-weighted by the dominance of the United States, which has a highly aggressive agenda of its own. This doesn’t set the stage for the normal give-and-take and consensus building in trade talks.

Another problem, at least up to now, has been the lack of President Obama’s trade negotiating authority – which must be bestowed by the Congress.

Officially called Trade Promotion Authority or TPA (but more often called “fast-track”), negotiating authority is absolutely critical for the American team. Fast-track authorizes Obama to conclude a deal but prevents the Congress from later demanding that provisions be re-negotiated as a price for its approval. Under fast-track, the only thing the Congress can do is accept the deal as signed or reject it entirely.

Without fast-track authority, there’s no guaranty that any Trans-Pacific deal struck with the Americans will get the necessary Congressional approval. No country would be foolish enough to sign off on any agreement with the US in the absence of the fast-track guaranty.

The long-delayed fast-track bill was to be introduced in both the Senate and House of Representatives this week, but is again being held up by partisan wrangling, hostage to the toxic political atmosphere in Washington.

It’s unusual that the TPP negotiations have proceeded thus far without the American team having fast-track authority. Other TPP countries have been negotiating basically on faith, assuming that fast-track will one day be forthcoming.

An unfortunate development is that the chair of the critical Senate Finance Committee, Max Baucus of Montana, has been designated by President Obama as the next US ambassador to China. With Baucus’ impending departure, a major force in channelling fast track through the Congress will be gone, causing uncertainties over the ultimate fate of the legislation.

There’s another problem. While fast-track, if it comes, will give the US negotiators the required mandate, the price for getting that mandate through Washington’s byzantine legislative maze will be the tacking on by Congress of many conditions for fast-track approval. Those conditions will cause a lot of angst for a lot of other TPP countries.

All of this feeds concern that a final trans-Pacific deal can be successfully pulled off. Concerns are not assuaged by the fact that at each negotiating session there are more than 1,500 officials in attendance. That sends shudders, reminding us of the over-burdened WTO Doha Round negotiations in the Doha Round which, after 10 years of effort, ultimately collapsed under their own weight.

One of the lessons learned in the WTO talks, however, is that smaller, pragmatic trade deals can be achieved, less ambitious in scope but still important to global business. Witness the recent WTO agreement on trade facilitation – border procedures – reached at the WTO Bali meeting last December.

While a large-scale and broad-based TPP deal would be a huge step forward and in the collective interests of all participants, including Canada, there are these clouds across the Pacific that raise concerns that a comprehensive ptrade deal will be achievable.

Given the gathering clouds, it may be timely for Canada and the other Pacific countries to consider a more pragmatic course, to pull in their collective horns, and to pursue a smaller but more realistic set of objectives. It’s not in anyone’s interest to see the TPP talks drag on forever or collapse in disarray.

Without clear, meaningful movement and a realistic possibility of success in TPP over the next few months, less ambition and a more pragmatic focus by trans-Pacific governments will be needed.

http://opinion.financialpost.com/2014/01/10/darkening-clouds-threaten-trans-pacific-partnership-deal/

This past year saw dramatic developments for Canada on the trade front, by far the most prominent being the conclusion of negotiations with the European Union on a Comprehensive Economic and Trade Agreement (CETA).

Lots of fanfare last October in Brussels as the PM and EU President Barroso announced this milestone deal.

This was followed by intense rounds of PR by the Harper government, with cabinet ministers criss-crossing the country to tout the potential gains for Canada. Clearly, the CETA is vast in scope, much larger and intrusive (if that’s the right word) than the North American Free Trade Agreement.

What is likely to happen in 2014?

But even though the CETA’s general principles and an outline of its terms were announced, we still don’t have the actual text. Lawyers and other officials are still haggling over the legal wording. So a lot of the media discussion has been a bit on the theoretical side.

The public relations flurry mounted by the PMO masks the fact that we don’t have the details, wherein devils lurk.

We won’t get those details for several months. When we do, it’s going to unleash a lot of polemics about the pros and cons of the deal. The usual opponents, largely in the ranks of unionized labour, are gathering steam. There will be tugging for the hearts and minds of Canadians. However, even though Canadians appear largely supportive of CETA, this battle will clearly be something to watch in 2014.

Implementing the Deal

Another thing to watch is how the CETA will actually be implemented. There hasn’t been much discussion about this aspect but it’s an important and potentially vexing issue. That’s because both Canada and the EU have to bring the agreement into legal force throughout their respective territories. It’s one thing to sign a trade deal. Getting it into legally-binding effect is quite another operation.

In Brussels, the EU Commission has overriding authority to implement international trade agreements through regulation. Politically, however, the EU will have to ensure general consensus in all twenty-eight capitals. And the text will have to be translated into fifteen of the EU’s official languages. Will all of this happen in 2014.

In Canada, the Harper government will table the final text in the House of Commons and, while not constitutionally required, will ask for Parliamentary approval. A federal implementing bill will also be needed – for example, to reduce duties on European goods. The package will be referred to the House Foreign Affairs and Trade Committee, something that will produce interesting fireworks in 2014, particularly from the NDP and Ms. May of the Greens.

What will the provinces and territories have to do? Much of the CETA concerns their areas of jurisdiction. So one question is whether actual provincial or territorial legislation will be needed, something that would be a minefield. To avoid that – and because it is not legally necessary – provincial implementing legislation is not being sought.

Rather, the Feds will still seek provincial approval as a political matter. This will likely be by some sort of resolution or endorsement by all legislatures. The lay of the land in all ten provinces and three territories is that this will be forthcoming. All have been at the CETA negotiating table and all are seemingly on-side.

In the case of Ontario and Quebec, where there could be elections in 2014, the opposition parties have endorsed the deal. So the betting is that there won’t be the drama encountered with the Meech Lake accord in 1989.

A point of note here. When Canada and the EU ratify the CETA, possibly in the coming year, they will then be legally committed as treaty partners. In other words, Canada as a whole will be bound by the CETA. Should one or another of the provinces or territories fail to comply Canada’s obligations (or if one of the EU member states does), the other side will be able to invoke binding arbitration to enforce the deal.

The practical effect of this is that the provinces and territories will have to meet the terms of CETA or face enforcement litigation by the European Union. Of course, Canada will have the same rights if any of the EU member countries fail to adhere to the agreement.

So in as nutshell, while the flurry of attention has subsided recently, the CETA story should produce some interesting and potentially dramatic episodes in 2014 as we move on to the next chapter in this ground-breaking story.

One of the main features of the Canada-Europe trade agreement or “CETA”, announced in October, will be incorporation of the Most-Favoured-Nation (MFN) treatment rule. MFN is a pillar of the international trading system under the WTO Agreement. It means you can’t discriminate among WTO member countries in your trading arrangements. You have to give exporters from every country equal treatment – so that the best or “most favoured” level granted to one applies to all.

The question is – what does this mean for Canada’s other free trade agreements, like the NAFTA? Does the MFN rule mean that exporters or investors from other countries automatically get the benefit of the preferences – the most-favoured treatment – Canada has granted to the Europeans.

The answer is no. But it’s a qualified “no”.

While MFN is a universal rules, the WTO Agreement also sanctions bilateral and regional free trade agreements between members. By definition, these are preferential. They give better treatment to imports of goods and services from treaty partners than the treatment that applies for the rest of the world

The North American Free Trade Agreement (NAFTA) is a good example of this. Imports from the US and Mexico pay zero duties while imports from elsewhere are dutiable.

These preferential trade agreements or “PTAs” side-step the MFN rule. There’s a twist to this, however, and it’s an important one in the context of the Canada-EU Agreement.

While preferential trade agreements do an end-run around the MFN rule, countries can still agree in those PTAs that the MFN rule will continue to apply. It’s up to them.

And that is exactly what Canada has done in the case of investments.

Article 1103 in Chapter 11 of the NAFTA illustrates the point. Even though Canada, the US and Mexico have excluded the MFN rule generally, so that better tariff treatment applies to imports among the NAFTA countries, under Article 1103, the MFN rule specifically applies to NAFTA investors and their investments.

This is of major significance. It means that preferential treatment for investors or investments under any of Canada’s other bilateral free trade agreements extends equally to NAFTA investors and investments. It means American and Mexican investors must be treated on an equal footing with and given the same preferences as EU investors or investments under the CETA.

This has important implications for Canada’s investment review regime under the Investment Canada Act.

 While we await the final text of the CETA, we know from the explanatory material that EU investors will get special treatment for investments in the uranium sector.  As well, there will be a freezing of the regulatory status quo in respect of foreign investments in particular sectors.

 Among the most important benefits for EU investors will be the raising of the threshold for investment review from the current level of $1.0 billion to $1.5 billion.

Because of NAFTA Article 1103, NAFTA investors benefit from the MFN rule. Investors from the US and Mexico will thus be entitled to the same preferential benefits as EU investors get under the CETA. That means that the increased threshold of review of $1.5 billion will apply equally to them as it does to investors from the European Union.

Other Canadian trade agreements – such as the PTAs with Chile, Peru and Colombia – also apply the MFN rule to investors and their investments. It means these investors will also benefit from any new or additional advantages given to EU investors under the CETA.

This point is actually noted in Ottawa’s Technical Summary of the CETA, where the fine print says that in respect of the $1.5 billion investment review threshold, “other FTA partners will benefit as a result of the MFN commitment in those FTAs.” This point hasn’t been widely commented but it is of extraordinary importance.

Whether there are other benefits granted to EU investors in the CETA that will also extend automatically to investors from other countries will have to be analyzed when we have the complete text of the document.

Trade agreements are two-way streets. While this note discusses the MFN rule on inbound investment, Canadian investors in the EU will also profit under the MFN rule from EU investment treaties with third parties. Without wishing to overstate things, this illustrates the “pervasive character” of the MFN rule, to borrow from a decision of the WTO Appellate Body regarding Canada’s tariffs on imported automobiles.

The information material the Feds have been issuing on the benefits of CETA is pretty good and quite informative, particularly on things like CETA’s tariff rate reductions in key industrial and agri-food sectors. There are clear gains in the manufactured goods – including in advanced manufacturing – and processed foods sectors.

In some other areas, as has been noted by other commentators, the information still remains pretty vague. This is the case for the trade in services provision under the CETA. While the government talks about “a transparent approach”, providing Canadian service providers with “better, more predictable and secure access” to the EU market and ensuring that Canadian companies operate on a level playing field in terms of licensing and qualification requirements, there is an absence of detail so far as to how this will be done.

 What precise commitments and guarantees will there be to ensure that Canadian service providers are actually treated by EU government regulators in a non-discriminatory fashion?

Trade in services is a vital part of this deal. More and more international business involves services as major parts of a transaction. According to the Feds, Canada exported an average of $14.5 billion in services over the 2010-2012 period and this is growing. For several years, the WTO has reported on the tremendous expansion in international services trade.

So far, nothing in Ottawa’s material speaks about EU guarantees of national treatment for Canadian service providers. National treatment means that you give foreign companies in specified fields – with some special exceptions – the same treatment as accorded to your own service providers.

It’s great to be assured that qualifications and regulatory matters will be clear, open and transparent, but if there is no guaranty of non-discriminatory treatment, that could be a roadblock for Canadian companies.

Hopefully, as more detail unfolds this will become clear.

The other element that needs more explanation is in the institutional mechanisms that oversee the proper implementation of the CETA and ensures both sides live up to the bargain. I’m talking about the need for a more robust system  – better than the arrangements in the NAFTA.

This is where dispute settlement provisions become critical. The last thing a Canadian service provider needs if it isn’t treated fairly is to get bogged down in years of complex and costly litigation.

Commerce is highly dynamic and business moves quickly. Disputes have to be resolved impartially but efficiently. We hope that when the detailed text of the CETA is finally provided, there will be effective and efficient dispute settlement provisions so that a Canadian service provider with a complaint can get the matter effectively and rapidly resolved by an impartial arbitrator in a cost-effective fashion.

 We need these points clarified in the final treaty text.

While it’s too early to really know how each side (Ottawa and Brussels) will move toward implementing and ratifying the CETA – after all, we don’t even have the text of the treaty yet – there are some interesting scenarios that can be discussed.

One scenario concers provisional implementation of the CETA. Can this be done before the whole thing is ratified and in force?

Absolutely.

Once the treaty-drafting is finished and the full CETA document is available, it will be signed by the PM and the President of the EU. It then will proceed to the internal approval proceeses on both sides of the Atlantic. 

Over here, the CETA will be tabled in Parliament. An implementing bill will then be introduced and the necessary laws and regulations enacted. Once that is done here and in the EU, the treaty will be formally ratified and will enter into force.

But ahead of all of this being completed – it could take a year or more – there’s nothing to prevent each side agreeing on provisional implementation of certain CETA provisions. For example, tariff reduction – most duties are to be eliminated completely – could be done provisionally. This is an area under exclusion juridiction of Ottawa and Brussels and doesn’t require any agreement by the Provinces or the EU member states. It would be pretty easy.

There are other areas as well that could easily be put into effect pending full ratification. Rules of origin, easing of temporary entry and movement of personel, investment provisions and a range of other areas under exclusive jurisidction of Brussels and Ottawa could be implemented by means of a protocol of provisional application.

There are many precedents for this approach. The more than can be done in this regard after formal Parliamentary approval and pending full ratification the better. Why be held hostage to technical and procedural delays if there’s a better way?

Now that we have an agreement in principle for the CETA, announced with great fanfare on 18 October 2013, but no actual agreement, the question is: what are the next steps?

Here is a primer on how it will work.

FIRST, we DO need to have the actual text, a process that will take several months. As far as we know, all of the elements of the agreement have been agreed to by the Canadian and EU negotiators and accepted at the political levels on both sides. That includes the premiers of the Canadian provinces and the heads of government of the 27 EU member states.

That political agreement now has to be turned into treaty language, however. While the negotiators have produced compromise wording, lawyers have to review these and make the wording consistent throughout.

Once the treaty text is legally “scrubbed”, as they say, and there is a final document, it will be SIGNED on behalf of Canada and the European Union. But signature of a treaty isn’t enough. The signing just indicates that each side is now willing to be legally bound under international law.

The SECOND STEP after signature is RATIFICATION. It’s the act of ratification that brings the treaty into force under international law. It’s ratification that will create a legally binding contract between Canada and the EU – the contract being the CETA.

Under Canadian constitutional law, ratification is an executive act, meaning that under the Royal Prerogative, the Governor in Council – i.e., the Harper cabinet – can pass an order in council that allows Canada to ratify the CETA as signed. Ratification involves each side exchanging a so-called “instrument of ratification” with the other. Once instruments of ratification are exchanged, the treaty becomes binding between under international law.

BUT – before we get to ratification, the government of Canada and the European Commission have to ensure that all necessary INTERNAL steps have been taken to make sure that they can live up to the terms of the agreement. This step is called treaty implementation So, the CETA will not be ratified until this is done.

For Canada to be in a position to implement the terms of the CETA, federal as well as provincial legislation will have to be passed. For example, Canada will have to amend the Customs Tariff to provide for lower rates of duty for European goods. The Patent Act will have to be amended to give extent protection to EU patent holders. And a myriad of other things. SD, implementing legislation will be presented to the House to make these necessary changes.

It’s not clear whether the government will actually table the CETA itself for debate and adoption by Parliament. That step is not strictly necessary under our constitution. That being said, it is likely that as part of the CETA implementation bill, the government will table the treaty and seek parliamentary approval. That means that there will be a debate in the House on the CETA at some point. With a Conservative majority, the result is a foregone conclusion.

Similarly, provincial governments will table legislation so that the CETA can be implemented in those areas under provincial jurisdiction. Changes may be required, for example, to ensure that EU bidders have access to provincial procurement projects.

THIRD, after all these internal legislative and regulatory changes are made to allow Canada to implement the CETA, Canada will then be in a position to ratify the agreement. The same with the EU. These internal measures will take some time to put into effect. We are probably looking at a two-year period, perhaps more.

FOURTH, will be formal ratification, as explained, through an exchange of ratification instruments between the two parties.

FINALLY, after that, there will be a PHASE-IN period, so that full implementation of the CETA, even after ratification, will not occur immediately. In other words,there will not be a flood of European cheese at the grocery stores or the arrival of European cars in auto showrooms for some time to come.

So, sit back and relax.