Compliance with Canada's Trade and Investment Treaty Obligations: Addressing the Gap between Provincial Action and Federal Responsibility
57 Pages Posted: 22 May 2016 Last revised: 14 Jun 2016
Date Written: May 13, 2016
The main intent of current trade and investment treaties is dismantling barriers to international economic activities between treaty partners. Whereas earlier generations of trade treaties dealt primarily with discriminatory measures at the border, newer treaties address barriers that lie deeply behind the border, often in areas of subsidiary government jurisdiction. In Canada, new trade and investment treaties like the Comprehensive Economic and Trade Agreement with the European Union (EU) or CETA, address a range of barriers to trade and investment that fall squarely in provincial competence. In the CETA negotiations, the EU sought unprecedented concessions that Canada would dismantle barriers to access in areas like provincial government procurement.
As it enters this new era of trade and investment treaty-making, Canada is faced with the dual challenge of managing expectations and relationships with treaty partners, while also respecting provincial jurisdiction and the constitutional division of powers. The CETA negotiations and finalized agreement offer a recent example of Canada’s untidy divide between the federal government’s treaty-making power and treaty-implementing powers, which are split between the federal government and the provinces.
This paper speaks first to the why past measures that addressed treaty commitments in areas of provincial jurisdiction are less effective in current times. That section also includes a discussion of the limited provincial role in treaty-based dispute settlement. We conclude this section by setting out specific areas of EU concern regarding provincial government actions heading into the CETA negotiations.
The paper’s emphasis then shifts to how Canada’s constitutional arrangements clash with the exigencies of treaty formation and implementation. We discuss relevant sources of federal and provincial economic authority that are most germane to the trade and investment context, revisiting past scholarship in the light of new trends in the case law. This discussion underlines that the federal government lacks the requisite jurisdiction to guarantee implementation of all CETA commitments. This section concludes with the observation that Canada’s constitutional arrangements are as much of a stumbling block to fully implementing trade promises as they ever were. New case law has only affirmed this view.
We conclude our discussion by examining inter-governmental agreements (IGA’s) as a possible workaround to constitutional strictures. That section speaks to the promise and limits of IGA’s, while also setting out some design issues that would have to be addressed to create a workable agreement in the trade and investment context.
Keywords: Canada, constitution, international trade, international investment, treaty, federalism
JEL Classification: F00, H7, K33
Suggested Citation: Suggested Citation