Although a proponent of free trade, Canada has, until recently, lagged behind its trading partners in negotiating a network of bilateral and regional trade agreements. In 2007, Canada enunciated a “Global Commerce Strategy”, which signalled a re-invigoration of its efforts to engage in bilateral and regional trade negotiations as a means of securing Canada’s growth and prosperity. This strategy continues to be a key plank in the current government’s economic plan to maintain Canada’s comparative global advantage. In addition to the NAFTA, Canada is currently a party to preferential trade agreements with the following countries;
- Colombia (in force as of August 15, 2011);
- Peru (in force as of August 1, 2009);
- the European Free Trade Association (in force as of July 1, 2009);
- Costa Rica (in force as of November 1, 2002);
- Chile (in force as of July 5, 1997); and
- Israel (in force as of January 1, 1997)
Canada has signed agreements with both Jordan and Colombia, but these agreements are not yet in force. What is more telling than the agreements that are currently executed, are the countries with which Canada has entered into negotiations or exploratory discussions. Canada is currently at various stages of pursuing preferential trading arrangements with Morocco, Korea, the Andean Community, the Caribbean Community (CARICOM), the Dominican Republic, the Central Four American Countries (El Salvador, Guatemala, Honduras and Nicaragua), Singapore, India, Japan and Ukraine. Canada has recently concluded such negotiations with Honduras. Canada is also actively engaged in negotiations for a comprehensive trade agreement with the European Union.
The scope of Canada’s trade agreements and negotiations vary from comprehensive to merely incorporating the substantive obligations of the WTO with laudatory language regarding future negotiations. While all of Canada’s recent trade agreements address such issues as investment, the environment and labour standards, the manner by which these obligations are imposed, differ from agreement to agreement. Negotiations with the European Union are aimed at increasing the scope of Canada’s trade agreements beyond traditional market access issues to include areas such as competition, mutual recognition of professional services, small and medium-sized enterprises, and science and technology. As a result of the larger scope of these negotiations, at the request of the European Union, for the first time, the provinces and territories are direct participants in the negotiations where they relate to areas under their competencies.
In addition to entering into and negotiating free trade agreements, some of which, like the NAFTA, contain specific obligations pertaining to investor protection, Canada has also been very active in negotiating agreements that specifically promote and protect foreign investment through legally binding obligations. Canada has executed Foreign Investment Protection and Promotion Agreements (FIPAs) with 25 countries. In addition, Canada has concluded negotiations with an additional five countries. Although Canada’s original FIPAs are based on the OECD model, the bulk of Canada’s FIPAs were entered into after 2003 and are modeled on the more comprehensive NAFTA model. These later agreements include a more mature and comprehensive investor-state dispute mechanism.
Canada, in addition to the majority of other nations in the world, is a member of the WTO. The purpose of the WTO is to foster a multilateral trading environment by establishing global rules to ensure that trade flows as smoothly, fairly and predictably as possible. The basic premise of the WTO is non-discrimination. Thus, most of the agreements administered by the WTO are founded on the core principles of most favoured nation status (MFN) and national treatment.
The agreements that the WTO administers, and to which Canada is a party, cover many areas related to trade and investment in a member’s territory. In addition to the more commonly known agreements covering trade in goods and services, Canada has undertaken certain obligations related to such things as the procurement process, protection of intellectual property rights, subsidies, standards and agriculture.
As the WTO is a multilateral institution where consensus by exceedingly diverse members is required, the obligations created by it are limited. To facilitate further trade liberalization, the WTO permits members to depart from the core concept of MFN and enter into regional preferential agreements.
Canada is a dualist nation. International obligations entered into by Canada, such as those contained in trade agreements, are not automatically incorporated into domestic law. Canada’s international obligations are incorporated into the domestic legal structure by the passage of specific implementing legislation, which will contain provisions to amend existing legislation as required. Individuals can only enforce obligations in Canada as they are implemented into domestic law.
Implementation of international obligations may require the cooperation of the provinces. Canada is a federal state where treaty-making power is vested in the federal government. Although the power to enter international treaties is exclusive to the government of Canada, the ability to implement obligations undertaken is necessarily limited by the division of powers between the federal government and the provinces, as set out in the Constitution Act (Canada) (see the discussion under the heading “Canadian Constitutional System”). If an obligation affects a matter that belongs exclusively to the provinces, compliance will require the province to pass implementing legislation. Given the wide breadth of powers that the provinces have, compliance with international obligations may not be within the federal government’s control. Regardless of whether failure to adhere to an international obligation occurs at the federal or the provincial level, only the federal government can defend Canada in an international forum.