Update – Ratifying and Implementing Trade and Investment Treaties in Canada

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(Disponible en français : Mise à jour : Ratification et mise en œuvre des traités de commerce et d’investissement au Canada)

Under Canada’s constitutional system, the conduct of foreign affairs is a royal prerogative power of the federal Crown.

Consequently, the Executive Branch has the exclusive power to negotiate and conclude international treaties. Parliament has the exclusive power to enact legislation to implement those treaties.

As Canada continues to enter into such treaties, a number of important questions arise:

  • What is the interaction between Canadian and international law in the treaty-making and implementation processes, particularly in relation to trade and investment?
  • What measures must the Executive and Legislative branches take so that these treaties can come into force?
  • What formal role do the provinces and territories play in the negotiation, ratification and implementation of trade and investment treaties?

Interaction between Canadian and international law

International law governs the legal relationship between sovereign states that enter into a treaty. An international treaty is similar to a contract: each sovereign state agrees to do, or not do, certain things. Once each state formally gives consent, binding legal obligations are created.

The domestic law of a state that has ratified a treaty is irrelevant; it cannot be invoked to justify the violation of international treaty obligations. Canada is a state party to the Vienna Convention on the Law of Treaties, which codifies this principle.

A country’s constitutional framework governs the way in which treaty obligations are implemented domestically. Legislative or other government steps needed for implementation occur in accordance with a country’s domestic law.

Executive Branch measures

In Canada, once the text of a treaty is finalized, a minister requests Cabinet approval and submits an explanatory document setting out the treaty’s details. A signing order – an “Instrument of Full Powers” – gives one or more individuals the authority to sign the treaty on Canada’s behalf.

Once the treaty is signed, Canada may not act in a way that would defeat the treaty’s object and purpose. However, the treaty is not legally binding on Canada until it is ratified. If a treaty between multiple states has already been negotiated and has entered into force, Canada can join the treaty in a single step, called accession. Accession has the same legal effect as ratification.

International treaty obligations do not automatically apply under Canadian law. Therefore, Canada normally will not ratify an international treaty until measures are in place to ensure that its terms are enforceable in domestic law.

Legislative Branch measures

After the Executive Branch decides that a treaty should be ratified, Parliament may still need to pass implementing legislation to incorporate the international obligations into domestic law. If such implementing legislation is required, it must be passed before the Executive Branch ratifies the treaty or Canada will be in breach of its international obligations. Thus, after Cabinet approval, a treaty implementation bill is often introduced and goes through the parliamentary legislative process.

Canada’s trade treaties generally change the way in which Canada treats the exports of the other state or states that have ratified the treaty. Consequently, amendments to existing federal legislation – most notably the Customs Tariff – are needed.

Once the federal government concludes that the treaty’s obligations will be respected at the domestic level, Cabinet prepares an Order in Council authorizing a minister to sign an “Instrument of Ratification or Accession.” Ratifying or acceding to a treaty means that Canada agrees to be bound by it.

Treaties come into force either on a specified date or when specified terms and conditions, such as ratification by a minimum number of states, have been met. Coming into force provisions are included in the treaty itself or in an agreement between the parties.

Investment agreements

Unlike in trade treaties, in Canada’s foreign investment promotion and protection agreements (FIPAs) the usual core obligation is non‑discrimination against foreign investors.

As Canadian law does not normally oblige the federal government to discriminate on the basis of an investor’s nationality, treaties between Canada and other states that provide reciprocal minimum guarantees to investors generally do not require implementing legislation.

Although FIPAs are tabled in the House of Commons as a matter of policy, as long as no implementing legislation is required, Parliament plays no formal role before Canada can consent to be bound under international law. However, a motion requesting a non‑binding vote on a FIPA that has been tabled can be introduced by a member of the House.

Role of the provinces and territories

As a sovereign state, Canada signs and ratifies international treaties. Under international law, Canada is financially and otherwise responsible for any breach of treaty obligations. Once a treaty has been ratified, there is a legal presumption under international law that Canada will comply in good faith.

The federal government may discuss the country’s position on a particular treaty with the provinces and territories, and may invite their participation in negotiations. However, neither international law nor Canada’s Constitution gives the provinces and territories any formal role in the signature or ratification processes.

That said, section 92 of the Constitution Act, 1867 gives the provinces exclusive jurisdiction over certain matters. Only they can implement Canada’s international obligations in these areas.

Articles 26 and 27 of the Vienna Convention on the Law of Treaties make states accountable for implementing international treaties. Therefore, when applicable, the federal government must provide compensation and/or other remedies to foreign states or investors if a sub-national jurisdiction breaches one of Canada’s trade or investment treaties.

Accordingly, both levels of government – federal and provincial/territorial – have areas of responsibility for treaty implementation and compliance.

Related Resources

Authors: Laura Barnett, Erin Shaw and Alexandre Gauthier, Library of Parliament

Categories: Business, industry and trade

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