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Signing the TPP isn’t ratifying, but the Liberals do have to sign

Matthew Kronby is partner, international trade and investment, at Bennett Jones LLP. He is the former head of the federal Trade Law Bureau.

Last week, when New Zealand issued an invitation to the other 11 countries that negotiated the Trans-Pacific Partnership to sign the agreement in Auckland on Feb. 4, it seemed it might pose a dilemma for Canada's Liberal government. On Monday, International Trade Minister Chrystia Freeland announced that Canada will participate in the signing ceremony. That was the right choice. It was also the only practical one.

Having not even seen the TPP text until they took office, the Liberals have trod cautiously, withholding support for the deal while they gain a better grasp of its merits. Among other things, Ms. Freeland promised broad consultations with interested Canadians, which are under way. Some opponents of the deal may now claim that by signing on Feb. 4, the Liberals have revealed the consultations as a sham and have prejudged their outcome.

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That would be doubly unfair. It would reflect a misunderstanding of how trade treaties come into force. It also would ignore the reality that by not signing at the same time as the other countries that negotiated the treaty, Canada might have lost control over whether and under what conditions it could ever be a party to the TPP.

On Monday, Ms. Freeland was at pains to address the first issue. She explained in a statement that signing is not the same as ratifying; signing will simply acknowledge that the signed text is the final outcome of the negotiations and is the agreement the parties plan to bring into force if they later choose to do so.

The background to this is that the text released publicly last November was not a final text. Because the negotiations were conducted in English, the treaty had to be translated into its other official languages, French and Spanish. It has also undergone a "legal scrub," a process in which lawyers from the negotiating countries review the text to ensure its overall coherence and that it says what the negotiators meant it to say. The result is a final text in all three languages.

The TPP sets out a number of ways that it can enter into force, but in all cases, the parties involved must have completed their "applicable legal procedures." For Canada, that means two things:

  • First, Parliament must pass implementing legislation that makes Canada’s laws consistent with its TPP obligations. The most obvious example of a law that will need to change is the customs tariff, which establishes the rates of duty that Canada imposes on imported goods. Those rates will need to be amended to reflect the tariff reductions to which Canada agreed in the TPP.
  • Second, Canada will need to ratify the TPP, meaning to give its formal consent to be bound by it. Contrary to what is sometimes reported, ratification requires a decision by cabinet but does not involve Parliament.

The Liberals also may choose to maintain the policy adopted by the previous government of allowing Parliament time to consider and offer its views on the treaty before it is ratified. The outcome of that process is not binding on the government. It is also, to some extent, redundant for a treaty that requires implementing legislation. However, it would provide a further opportunity for deliberation before Canada commits to being bound.

Ms. Freeland also noted, more obliquely, that "signing next week preserves Canada's status as a potential full partner in the agreement, with all of the rights and powers that go with it." This was what really made it essential for Canada to sign now.

The TPP contemplates a range of scenarios for its entry into force. The first is that it will do so 60 days after "all original signatories" have completed their legal procedures. If that does not happen within two years of signature, entry into force requires six or more of the original signatories representing at least 85 per cent of the combined 2013 GDP of the original signatories. (As a practical matter, this ensures that the TPP can only enter force with the United States and Japan on board.)

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The problem is that the TPP does not define an "original signatory." Instead, it assumes that all of the 12 negotiating countries would sign the agreement at the same time. But what if that were not the case? Could a negotiating party such as Canada still have qualified as an "original signatory" if it signed at a later date but before the TPP entered into force?

The agreement's text offers no clear answers. The TPP does provide that after it is in force for the first group of six or more original signatories, other original signatories can join if the first group agrees. It also offers an accession process for new parties that were not among the original negotiating parties to join. But it is silent on when or how it can enter force for any of the 12 original negotiating parties that are not "original signatories."

This uncertainty meant that the risks for Canada in not signing on Feb. 4 greatly outweighed any criticism the Liberals may endure by signing it. Not signing also would have implied to the other TPP countries that Canada was disengaging from the process.

Faced with those risks, the path forward for Ms. Freeland was clear: Accept New Zealand's invitation, then come home and continue the consultations.

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