The question of when the Canada-EU Comprehensive Economic and Trade Agreement (CETA) is expected to enter into force is an increasingly important one among Canadian and EU stakeholders.  The implementation processes are well underway, and there is little question that the CETA will provisionally enter into force at some point in the months ahead. There is some uncertainty, however, about the particular point in time when this will happen.

For now, the short answer is at least five weeks, and is dependant on when the proposed regulations and regulatory amendments required for CETA implementation are pre-published in Part I of the Canada Gazette for a period of public review and comment.  For a detailed explanation of the process, please see the following article prepared by our senior associate,  Dan Hohnstein: Bill C-30 (the CETA Implementation Act) and the Parliamentary Process.

Bill C-30 (the CETA Implementation Act) and the Parliamentary Process

In Canada, Bill C-30 is the proposed legislation to implement Canada’s commitments under the CETA at the federal level, which is currently before Parliament. The legislative process in Canada involves three ‘readings’ of the bill and an intensive committee analysis in both parliamentary houses, the House of Commons and the Senate. As part of this process, two parliamentary committees from each house, each undertake a detailed examination of the draft legislation and consider the evidence received from stakeholders.

On Tuesday, February 14, 2017, the Bill was passed in the House of Commons and advanced to the Senate, with its Second Reading completed on Tuesday, March 7^th. It was subsequently referred to the Senate Committee on Foreign Affairs and International Trade. The Committee is expected to begin its analysis upon returning to session in late March, 2017. Although the Bill proceeded through the House of Commons on an expedited basis with little substantive debate and very few amendments, there are Senators who have called upon the Senate to undertake a more thorough review. The work of the Committee may take two weeks or more, after which the Bill will return to the Senate for its Third Reading. As substantive debate and proposed amendments are likely to occur, it is foreseeable that this step will require at least another week.

After Third Reading, Bill C-30 will either receive Royal Assent, at which point it will become law in Canada, or it will be referred back to the House of Commons for further examination and debate.

The Federal Regulatory Process

Once the Bill becomes law, the implementation process will continue with changes to Canada’s Federal regulatory regimes. In order to incorporate the rights and commitments established under the CETA, a host of new regulations will be created under the Customs Act and the Customs Tariff (e.g., the CETA Rules of Origin Regulations, the CETA Verification of Origin Regulations, the CETA Tariff Preference Regulations, et cetera), the Patent Act, and other statutes, while a number of existing regulations will also need to be amended.

Ordinarily, proposed regulations and regulatory amendments are pre-published in Part I of the Canada Gazette for a period of at least 30 days before they are approved. This pre-publication and review period allows the public an opportunity to review the proposed regulatory changes and submit comments. In most cases, this is merely a general policy requirement, and it can be waived if the Special Committee of Council (a committee of Cabinet) grants an exemption.

It should also be noted that official guidance provided by the Government of Canada regarding the Federal regulatory process with respect to the pre-publication period for “regulations covered under international trade agreements” provides as follows: “When draft regulations are pre-published, interested persons are allowed a period of time to express their views. The period is usually 30 days in the case of regulations pre-published under the Cabinet policy. In other cases, the length of pre-publication may be specified in the enabling Act. The pre-publication period may also be determined by international agreements, such as the World Trade Organization agreements and the North American Free Trade Agreement. In general, it is both prudent and a requirement of the Regulatory Policy that regulations covered under international trade agreements be pre-published for a minimum of 75 days” (underline emphasis added).

Arguably, all regulatory changes for the purposes of the CETA are covered under Article 27.1 (Transparency – Publication), which provides: first, that “[e]ach Party shall ensure that its laws, regulations, procedures and administrative rulings of general application respecting any matter covered by this Agreement are promptly published or made available in such a manner as to enable interested persons and the other Party to become acquainted with them”; and, second, that “[t]o the extent possible, each Party shall: (a) publish in advance any such measure that it proposes to adopt; and (b) provide interested persons and the other Party a reasonable opportunity to comment on such proposed measures” (underline emphasis added).

Reading Article 27.1 of the CETA together with the Federal Regulatory Policy requirement for pre-publication of “regulations covered under international trade agreements”, it would be reasonable to expect that the proposed regulations and regulatory amendments will be pre-published for a period of at least 75 days. It should be noted, however, that this policy requirement is also subject to an exemption by the Special Committee.

It is not known at this time which approach the Government of Canada will take with respect to the pre-publication of regulations necessary to implement the CETA; it may exempt this part of the process altogether in order to expedite implementation, or it could allow a period of 75 days, 30 days, or any other period that it deems appropriate under the circumstances.

Provisional Implementation

Once the new regulations and regulatory amendments have been approved, Canada will be in a position to exchange notices with the European Union under Article 30.7 (Final provisions – Entry into force and provisional application). In principle, Canada and the European Union could exchange notices for the purposes of sub-paragraph 30.7(3)(a), which provides as follows: “The Parties may provisionally apply this Agreement from the first day of the month following the date on which the Parties have notified each other that their respective internal requirements and procedures necessary for the provisional application of this Agreement have been completed or on such other date as the Parties may agree” (underline emphasis added).

As the European Union will be entering into provisional application of the CETA pending the implementation required in all of its Member States , it is reasonable to expect that Canada will follow the same approach, considering the implementation required in each of the ten provinces and three territories.

Implementation in the Provinces and Territories of Canada

The provincial and territorial legislatures are currently in the process of implementing the CETA provisions that fall within their exclusive jurisdictions pursuant to the Constitution.

In particular, provincial and territorial statutes, regulations, directives, and municipal by-laws relating to government procurement will need to be amended, as applicable, in order to ensure consistency with Canada’s commitments under CETA Chapter Nineteen (Government Procurement) and the associated annexes and schedules. The CETA provides unprecedented market access commitments to EU firms bidding on contracts owned by municipal governments and provincial government entities for the supply of construction services, goods, and other services, including a “national treatment” obligation and minimum standards for public procurement processes. These commitments apply to government procurements for which the value equals or exceeds the applicable monetary thresholds (e.g., for construction services procured at all levels of government, the threshold is $5 million Special Drawing Rights (SDR), which is approximately CAD$9.05 million at the March 31, 2017 exchange rate.

Conclusion

As indicated above, there are a number of variables that complicate an estimate of the date on which the CETA will provisionally enter into force. One of these variables is how long it will take the Canadian Senate to complete its work on Bill C-30. Another is the duration of the pre-publication and public comment period that may be provided prior to the approval of the proposed regulations and regulatory amendments necessary to implement the CETA.

If Royal Assent is granted to Bill C-30 at some point in April, and if a pre-publication and public comment period of at least 30 days is observed, then the exchange of notices for the purpose of triggering the provisional application of the CETA could potentially happen before the end of May 2017. If so, then the CETA could enter into force on a provisional basis by June 1st. However, this is a speculative estimate that contemplates relatively short timeframes. A longer timeline is just as plausible.

For more information on Canada’s federal regulatory policy, please see: Peter Bernhardt (former Senior Counsel with the Regulations Section of Justice Canada) & Paul Salembier (former Legal Counsel with the Standing Joint Committee for the Scrutiny of Regulations), “Understanding the Regulation Making Process”, presentation in a Library of Parliament Seminar (October 26, 2001), available online at: http://www.revparl.ca/english/issue.asp?param=82&art=245; and Privy Council Office, “Guide to Making Federal Acts and Regulations: Part 3 – Making Regulations” (2009), available online at http://www.pco-bcp.gc.ca/index.asp?lang=eng&page=information&sub=publications&doc=legislation/part3-eng.htm and http://www.pco.gc.ca/docs/information/publications/legislation/pdf-eng.pdf.