CETA Presentation - UBC April 16, 2012

8/2/2019 CETA Presentation - UBC April 16, 2012

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What are Implications of the

Expanding Role of

the Provinces in the Negotiationand Implementation of

Canadian Trade Commitments?

Lessons from the Canada-EUComprehensive

Economic and Trade Agreement

Negotiations

J. Anthony VanDuzer


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Outline of Presentation

Background Canada-EU negotiations for a Comprehensive

Economic and Trade Agreement (CETA)

A new role for the provinces

The Constitutional Context: The Rules for Treaty Making and

Implementation Why provincial commitments are so central in CETAnegotiations

Implications of the increasing significance of trade treatyobligations affecting the provinces for

the negotiation, content and implementation of treatyobligations in CETA and future agreements

Presentation to UBC National Centre for Business Law


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CETA Negotiations are Significant

Trade Minister Ed Fast: the most ambitious plan of its kind in history.

First trade agreement negotiated by EU with a developed country Canadas first since NAFTA

Substantial existing trade and investment relationship with EU

Canadas 2nd most important trade and investment partner after the US

May produce substantial economic benefits

One study shows

Increase in Canadian Annual GDP of more than of 1%

Canadian exports to EU to increase $10.8 billion more than 20%

Significant concerns expressed by various groups, including

Municipalities, academic institutions, school boards and hospitals (MASH)regarding possible procurement commitments

Impact on public water services

Transparency of negotiation process



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New Role for Provinces in CETA

Negotiations

At the table with federal negotiators for the first time CETA agenda likely to include more significant obligations in areas of

provincial jurisdiction than any previous agreement

E.g. provincial procurement

EU insisted on high level of provincial engagement

Resulting negotiation challenges Different provincial priorities

Differences in capacity, resources and engagement across provinces

Impact on effectiveness and efficiency of negotiations

Increased importance of treaty obligations affecting provinces may

mean need to Find ways to provide assurances of provincial compliance

Re-design dispute settlement provisions



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The Constitutional Context: The Rules

for Treaty Making and Implementation

Federal executive has exclusive power to bind Canada tointernational treaties Once a treaty is ratified, Canada is bound to comply under

international law

BUT- Where implementing legislation is required to maketreaty obligations effective as a matter of domestic law

Implementation is by federal parliamentif the subject matter is within federal

jurisdiction (s. 91 of the Constitution Act, 1867)

by provincial legislaturesif the subject matter is withinprovincial jurisdiction (s. 92 of the Constitution Act, 1867)

Labour Conventionscase (1937)

Even if implementing legislation not required

Provinces must comply with Canadian treaty obligations thatapply to them for Canada to be in compliance



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Why provincial commitments are socentral in CETA negotiations

CETA obligations likely to go farther beyond matters clearlywithin federal competence than any previous treaty

Far beyond tariffs and other national border measures

to behind the border regulation within provincial jurisdiction

Goods

E.g. comprehensive cooperation regarding all aspects ofproduct standard setting and application

Services

E.g. recognition of foreign qualifications and experience forlicensing services providers in particular services sectors

Provincial and municipal procurement of goods and services E.g. commitments not to discriminate against foreign suppliers

and to meet certain standards for transparency and fairprocedures



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Why provincial commitments are so

central in CETA negotiations (ii)

European frustration with provinces in prior negotiations Provinces refused to agree to an earlier regulatory cooperation initiative

Rejected electrical safety standards annex to 1998 MutualRecognition Agreement

Provinces lack of commitment led to failure of Canada-EU Trade andInvestment Enhancement Agreement negotiations in 2006

Two events in 2010 raised EU concerns

Newfoundland and Labrador expropriated AbitibiBowater withoutcompensation

AbitibiBowater claimed compensation under NAFTA Chapter 11

federal government paid $130 million to settle claim

Quebec passed special legislation directing Montreal Transit Authority tocontract with Bombardier for supply of subway cars

pre-empting a competitive bid by a Spanish company



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Implications of the increasingimportance of treaty obligationsaffecting provinces Provinces needed to be more involved in CETA negotiations

Their interests are at stake

EU requires credible assurances of provincial compliance

Has affected organization of negotiations

Will it result in

New kinds of assurances regarding provincial compliance?

Provincial participation in dispute settlement procedureswhere provincial measures at issue?



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Implications of the increasingimportance of treaty obligationsaffecting provinces Organization of Negotiations:

For the first time - provinces present at negotiating table

But control of negotiations remains with federal negotiators

What will be the implications for efficiency of negotiations?

Multiple provinces with different

Priorities

Capacity, resources and level of engagement

Challenges for federal negotiators to manage Canadianposition

Led to more complex, expensive (and slower?) negotiations Though so far CETA still on track to complete by end of

2012



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Implications of the increasingimportance of treaty obligationsaffecting provinces (ii) Will Canada need to give more credible assurances to EU that

provinces will comply?

Will there be an extra-constitutional commitment by theprovinces to implement and comply with treaty obligations?

What form might such a commitment take? Provincial legislation implementing provincial obligations?

A political statement from the Council of the Federation orprovinces individually accepting obligations?

An internal understanding among provinces and the federal

government regarding continuing provincial compliance? Some form of commitment addressed directly to the EU?



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Implications of the increasingimportance of treaty obligationsaffecting provinces (iii) Dispute Settlement

When (not if) a dispute relating to a provincial measure is addressedthrough the formal procedures in a treaty for state-to-state disputes orinvestor-state disputes

Should the province be able (or required) to participate directly in the

conduct of the case? Does there need to be some mechanism to ensure provincial

compliance if the measure is found not to be consistent withCanadas obligations in a state-to-state dispute

beyond simply relying on the federal government to seekcompliance?

Would provincial involvement in dispute settlement in relation to areas ofprovincial jurisdiction make Canadian treaty commitments more credibleand so improve Canadas position in treaty negotiations?



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Implications of the increasingimportance of treaty obligationsaffecting provinces (iv) Dispute settlement (ii)

Should a mechanism be put in place that permits the federal governmentto be compensated for

The cost of defending a provincial measure in a dispute settlementproceeding?

Any damage award or settlement amount that has to be paid as aresult of an investor-state arbitral claim that a province hasbreached a treaty obligation regarding investment?

What would this look like?

Some kind of federal provincial understanding or protocol?

Better than presenting a bill to province or withholding federaltransfers to encourage compliance or obtain reimbursement

Would such provincial financial responsibility enhance the credibility ofCanadian commitments?



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CETAs Impact on Future Negotiations

Will provinces be directly involved in future negotiations as inCETA?

Some of the factors that drove this development in the CETAnegotiations will continue to apply

Focus on trade and investment obligations dealing with behind theborder measures in areas within provincial jurisdiction will continue

to intensify

Means continuing significance of

For provinces - Provincial involvement in negotiations

For negotiating partners - Provincial commitment toresulting international obligations

Especially where obligations are customized for each province Substantial provincial engagement required

E.g. procurement



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CETAs Impact on Future Negotiations (ii) BUTare offsetting considerations

CETA negotiations have been complex and resourceintensive (and slow?)

Differential provincial priorities, capacity and level ofengagement

Efficiency - an issue for all negotiating parties

Some provinces may decide that benefits of directparticipation in future negotiations not worth the cost

May prefer to leave to federal negotiators

Future negotiating partners may not have same concerns asEU about provincial compliance

Agreement may not involve same level of provincialcommitment as CETA

May depend on whether there are other effective commitmentdevices



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Concluding Remarks CETA likely marks the beginning of a new era for federal-

provincial cooperation with respect to the negotiation andimplementation of international trade and investment obligations

But

Nature of federal-provincial cooperation in treaty negotiationsand use of commitment devices likely to continue to evolve

Effects on provincial involvement in dispute settlement remain

to be seen

Impact of CETA on how future treaty negotiations are organizedand nature of future commitments will depend, in part, on

CETAs ultimate success in addressing provincial interests

All parties assessment of the costs and benefits of direct

provincial participation in negotiations Extent to which CETA commitments will be used as a template for

future treaty obligations - New forms of commitments will requiregreater provincial engagement



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Thank you.

CETA Presentation - UBC April 16, 2012

Documents

Transcript of CETA Presentation - UBC April 16, 2012