EXTRA Vol. 151, No. 1

Canada Gazette

Part Ⅱ

OTTAWA, THURSDAY, SEPTEMBER 7, 2017

Registration
SI/2017-47 September 7, 2017

CANADA–EUROPEAN UNION COMPREHENSIVE ECONOMIC AND TRADE AGREEMENT IMPLEMENTATION ACT

Order Fixing September 21, 2017 as the Day on which the Act Comes into Force, other than Certain Provisions

P.C. 2017-1113 August 31, 2017

His Excellency the Governor General in Council, on the recommendation of the Minister for International Trade, pursuant to subsections 138(1), (3) and (4) of the Canada–European Union Comprehensive Economic and Trade Agreement Implementation Act, chapter 6 of the Statutes of Canada, 2017, fixes September 21, 2017 as the day on which that Act comes into force, other than subsection 8(3), paragraph 11(1)(a), subsection 11(2), paragraph 13(a) and sections 45 to 58, 90 and 133 to 137.

EXPLANATORY NOTE

(This note is not part of the Order.)

Proposal

This Order fixes September 21, 2017, as the day on which the Canada–European Union Comprehensive Economic and Trade Agreement Implementation Act (the Act) comes into force, other than subsection 8(3), paragraph 11(1)(a), subsection 11(2), paragraph 13(a) and sections 45 to 58, 90, and 133 to 137.

Objectives

This Order brings into force the provisions of the Act that are necessary to provisionally apply the Canada-European Union (EU) Comprehensive and Economic Trade Agreement (CETA). When in force, CETA will provide a wide range of benefits and opportunities for Canadians, covering all sectors and aspects of our commercial relations and eliminating or reducing barriers to trade. It is by far one of Canada’s most ambitious trade initiatives, setting new standards in the trade in goods and services, non-tariff barriers, investment, government procurement, as well as in other areas like labour and environment. CETA will open new markets in the EU for Canadian exporters and generate significant benefits for all Canadians. Preferential access to the EU’s 28 Member States (Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and the United Kingdom), as well as new opportunities in the EU’s $3.3 trillion government procurement market, offers a real competitive edge for Canada.

Background

The Act brings Canada in conformity with its commitments made under CETA. CETA negotiations began in May 2009 and ended in August 2014. The legal review of the Agreement, including refinements made to the investment protection provisions, such as the elaboration of an article on investment and regulatory measures, and modifications of the investment dispute resolution provisions to include a standing tribunal and appellate tribunal, was completed in February 2016. Canada and the EU signed CETA during the Canada-EU Summit on October 30, 2016. The European Parliament approved CETA on February 15, 2017.

The EU determined CETA to be a “mixed agreement” under its Treaty law, meaning that the Agreement needs to be signed by both the EU and Member States, and ratified by all national and necessary regional parliaments for the full Agreement to enter into force. However, pending the ratification of CETA by all 28 Member States, the EU can provisionally apply the Agreement for those sections under EU competence (jurisdiction), as well as those that Member States have agreed can be provisionally applied.

On February 17, 2017, the EU notified Canada that it intends to provisionally apply CETA, subject to the following:

  • (a) only the following provisions of Chapter Eight of the Agreement (Investment) shall be provisionally applied, and only in so far as foreign direct investment is concerned:
    • — Articles 8.1 to 8.8; (These include the provisions relating to: Definitions [Art. 8.1], Scope [Art. 8.2], Relation to other chapters [Art. 8.3], Market access [Art. 8.4] Performance requirements (Art. 8.5), National treatment [Art. 8.6], Most-favoured-nation treatment [Art. 8.7], and Senior management and boards of directors [Art. 8.8]);
    • — Article 8.13 (Transfers);
    • — Article 8.15 (Reservations and exceptions), with the exception of paragraph 3 thereof; and
    • — Article 8.16 (Denial of benefits);
  • (b) the following provisions of Chapter Thirteen of the Agreement (Financial Services) shall not be provisionally applied in so far as they concern portfolio investment, protection of investment or the resolution of investment disputes between investors and States:
    • — Paragraphs 3 and 4 of Article 13.2 (Scope);
    • — Article 13.3 (National treatment) and Article 13.4 (Most-favoured-nation treatment);
    • — Article 13.9 (Performance requirements); and
    • — Article 13.21 (Investment disputes in financial services);
  • (c) the following provisions of the Agreement shall not be provisionally applied:
    • — Article 20.12 (Camcording);
    • — Article 27.3 (Administrative proceedings) and Article 27.4 (Review and appeal), to the extent that those Articles apply to administrative proceedings, review and appeal at Member State level;
    • — Paragraph 7 of Article 28.7 (Taxation filter for investment dispute settlement mechanism); and
  • (d) the provisional application of Chapters 22 (Trade and Sustainable Development), 23 (Trade and Labour) and 24 (Trade and Environment) of the Agreement shall respect the allocation of competences between the Union and the Member States.

On March 15, Canada notified the EU that it intends to provisionally apply CETA, subject to the following:

  • (a) only the following provisions of Chapter Eight of the Agreement (Investment) shall be provisionally applied, and only in so far as foreign direct investment is concerned:
    • — Articles 8.1 to 8.8; (These include the provisions relating to: Definitions [Art. 8.1], Scope [Art. 8.2], Relationship to other chapters [Art. 8.3], Market access [Art. 8.4], Performance requirements [Art. 8.5], National treatment [Art. 8.6], Most-favoured-nation treatment [Art. 8.7], and Senior management and boards of directors [Art. 8.8]);
    • — Article 8.13 (Transfers);
    • — Article 8.15 (Reservations and exceptions), with the exception of paragraph 3 thereof; and
    • — Article 8.16 (Denial of benefits);
  • (b) the following provisions of Chapter Thirteen of the Agreement (Financial Services) shall not be provisionally applied in so far as they concern portfolio investment, protection of investment or the resolution of investment disputes between investors and States:
    • — Paragraphs 3 and 4 of Article 13.2 (Scope);
    • — Article 13.3 (National treatment) and Article 13.4 (Most-favoured-nation treatment);
    • — Article 13.9 (Performance requirements); and
    • — Article 13.21 (Investment disputes in financial services);
  • (c) the following provisions of the Agreement shall not be provisionally applied:
    • — Article 20.12 (Camcording);
    • — Paragraph 7 of Article 28.7 (Taxation); and
  • (d) the provisions of Chapters 22 (Trade and Sustainable Development), 23 (Trade and Labour) and 24 (Trade and Environment) of the Agreement shall be provisionally applied to the same extent as they are applied by the European Union.

Those provisions identified under subsections 138(2) and 138(5) of the coming-into-force provision of the Act are not immediately being brought into force. Subsection 138(2), which refers to subsection 8(3), paragraph 11(1)(a), subsection 11(2), paragraph 13(a) and section 90, governs the coming into force of the amendments required to implement the CETA’s investment dispute settlement mechanism, which the Parties have agreed will not be provisionally applied. Once all Member States have ratified CETA according to their own domestic ratification procedures, the EU will notify Canada that it is ready to proceed with the ratification of the Agreement. Canada would then seek another order in council to bring into force these provisions of the Act, and ratify the Agreement.

Subsection 138(5), which refers to sections 45 through 58 of the Act, governs the coming into force of amendments to provisions of the Patent Act that provide for the Patented Medicine Prices Review Board (PMPRB). The amendments extend PMPRB price-review powers to include medicines protected by the new Certificate of Supplementary Protection (CSP) regime that is required by CETA. It is the government’s intention to bring these provisions into force together with corresponding amendments to the PMPRB-related regulations.

The EU is a vital partner for Canada across the full range of Canadian interests and is Canada’s second-largest trade and investment partner behind the United States. The EU is the world’s second-largest market with a $22 trillion economy and more than 500 million consumers. It is also the world’s second-largest importing market for goods with annual imports alone worth more than Canada’s GDP. In 2016, Canada exported $40 billion and imported $61 billion from the EU in goods. For services, Canadian exports to the EU reached $16 billion in 2015, with imports totalling $22 billion. The stock of known Canadian investment in the EU at the end of 2016 was valued at $232 billion, while the stock of known EU investment in Canada for the same year reached $247 billion.

With one in six jobs linked to international trade, enhancing the ability of Canadian businesses to access foreign markets is a key element of the Government’s economic agenda. With provisional application of CETA, Canada will be one of the few developed economies and the only G7 country to have free trade agreements (FTAs) with both the EU and the North American Free Trade Agreement (NAFTA) countries. CETA will position Canada as a uniquely attractive base for foreign investment and as a springboard to other markets, especially in Asia, as it offers the opportunity to be part of broader global supply chains. CETA will offer Canadian businesses a first mover advantage to establish customer relationships, networks, and joint projects over competitors from markets that do not have an FTA with the EU.

CETA is the most progressive agreement that Canada has ever negotiated and it sets a high standard for future FTAs. CETA supports inclusive economic growth and ensures that the liberalization of markets through trade and investment does not undermine the ability of governments to regulate in the public interest or pursue policies in support of inclusive economic outcomes. The investment protection provisions in CETA explicitly recognize governments’ right to regulate, include detailed commitments on ethics and conflicts of interest for tribunal members in investment disputes, and establishes an Appellate Tribunal. CETA also includes a Sustainable Development Chapter, while the Labour and Environment Chapters go further in a number of areas than existing FTAs, including the automatic commitment of Canada’s provinces and territories in these areas.

Financial implications

Relevant departments will absorb the cost related to the implementation of CETA within their existing allocated resources.

Federal-provincial implications

While the federal government has jurisdiction over all international treaties and would be held responsible for a treaty violation under international law, the federal government relies on provinces and territories to take implementing measures and comply with treaty obligations in areas under their jurisdictions. Provinces and territories were actively engaged throughout the negotiations of CETA, ensuring that CETA will serve the interests of all provinces and territories, as well as the broader interests of Canadians. Premiers reiterated their support for CETA at the Conference of the Federation in Whitehorse, on July 21, 2016, while calling on the Government of Canada to bring CETA into force as quickly as possible. The Government also regularly consulted with municipalities to ensure all levels of government worked together to arrive at an agreement that will generate benefits for our shared constituents.

Policy implications

Provisional application will help to ensure that Canadians can take advantage of the economic and strategic benefits of CETA without waiting several years for its ratification by EU Member States. It would also be consistent with the Government’s commitment to increase trade and investment with large, fast-growing markets while deepening trade links with traditional partners, and the Minister of International Trade’s Mandate Letter from the Prime Minister which includes as its top priority the ratification and implementation of CETA.

Consultation

The Government conducted broad consultations to hear from Canadians and stakeholders on CETA, including businesses, labour, farmers, civil society, academics and youth. Stakeholders from all regions across the country and from all key economic sectors were regularly consulted on all aspects of the negotiation, on broad direction, negotiating positions and specific issues. The Minister and Parliamentary Secretary of International Trade have held consultations with Canadian workers, small businesses, and other stakeholders across the country. In addition, Canadian officials across multiple federal departments have held hundreds of meetings with stakeholders to consult on all aspects of the negotiation, including broad direction, negotiating positions and specific issues. Consultations included representatives from a variety of areas.

Canadians were consulted before CETA negotiations began and throughout the negotiations, beginning with the December 2008 Canada Gazette notice that invited all Canadians to submit their views and comments regarding Canada’s trade negotiations with the EU. Shortly after the May 2009 announcement by Canada and the EU to launch negotiations, online consultations invited stakeholders and all interested Canadians were invited to submit comments and expressions of interest. The initial environmental assessment process for CETA also included consultations with the Canadian public, provincial and territorial governments, and with the non-governmental Environmental Assessment Advisory Group.

Canada’s Chief Trade Negotiator followed an extensive consultation plan with provinces and territories, municipalities, civil society representatives (including trade unions), and with both an industry advisory committee and a larger industry group, to ensure their interests and concerns were taken into consideration in developing Canada’s negotiating positions with the European Union, to provide updates on the status of negotiations, to solicit input and views on specific issues, and to answer questions.

As soon as the negotiations were concluded, the consolidated text of CETA was made public so that all stakeholders could review its contents. The unsigned text of the CETA was made available to the public on two occasions in 2016: in February, following the completion of the legal review of CETA in English, and in July, after the translations into all of the EU’s official treaty languages. The purpose of these releases was to ensure collaborative and transparent access to the text of the Agreement by parliamentarians and Canadians while demonstrating a commitment to transparency. Tabling of the full treaty text on October 31, 2016, alongside its implementing legislation provides the opportunity for Parliament to examine the treaty throughout the legislative debate.

Differing views have been expressed by certain groups. While some groups see the revisions to CETA’s investment dispute resolution provisions as a move in the right direction, there have been calls by certain groups for its removal altogether. Other issues commonly raised are: perceived threats to public services such as health care and water services, lack of transparency of the negotiations, loss of manufacturing jobs, municipalities’ ability to pursue buy-local policies and potential increased drug costs.

Canada and the EU acknowledge that some stakeholders had concerns on CETA. The Joint Interpretative Instrument, issued as part of the package approved by leaders at the Canada-EU Summit on October 30, 2017, serves to clarify Canada and the EU’s shared understanding of the progressive elements of CETA.

During the legislative process in the House and Senate, parliamentary committees reviewed the legislation and held hearings that included representation by organizations and individuals with expertise or interest in the subject matter.

Departmental contact

Canada-European Union Comprehensive Economic and Trade Agreement Secretariat
Global Affairs Canada
Email: CETA-AECG@international.gc.ca