How trade and investment agreements develop in stages

International agreements generally go through the following progression, with some exceptions for different types of agreements:

  1. Exploratory discussions
  2. Negotiations
  3. Concluded negotiations
  4. Signed
  5. In force

Below you can read about what each stage means and learn what the exceptions are.

1) Exploratory discussions

For free trade agreements (FTA) and foreign investment promotion and protection agreements (FIPA), exploratory discussions are often the first step countries take to figure out what could be included in an agreement. Using economic modelling tools such as feasibility or joint studies, they determine if there would be enough interest or economic benefit in entering into an FTA or FIPA. They are not negotiations, and do not guarantee that the parties will decide to launch negotiations.

2) Negotiations

Negotiations are launched once a negotiating mandate is approved. The negotiating teams are led by a chief negotiator and include experts covering all topics under negotiation. The pace and duration of negotiations varies according to each initiative.

Some agreements generally begin directly with negotiations and do not have formal exploratory discussions. These include plurilateral agreements, World Trade Organization (WTO) agreements and mutual recognition agreements or arrangements (MRA).

3) Concluded negotiations

Negotiations conclude once the parties arrive at consensus on all elements of an agreement. The draft text of the agreement must then be reviewed by lawyers, translated and go through the domestic approval process of each party.

4) Signed

The agreement is signed by all parties after the domestic approval process is completed. Canada’s Minister of Foreign Affairs, or a person the minister designates, can sign the agreement after getting policy approval from Cabinet and legal authority through an order in council.

5) In force

Typically, an agreement will enter into force once parties to the agreement have completed their internal ratification processes and informed each other that they are ready for the agreement to enter into force.

In Canada, the ratification process begins with the agreement being tabled in the House of Commons for 21 days for consideration and debate. Implementing legislation is also normally required and will be reviewed and passed by Parliament in order to receive royal assent. Once the Government of Canada satisfies its legislative requirements and regulatory changes have been made, the agreement can enter into force. This is subject to an order in council which provides authority to the Government of Canada to complete steps to bring the treaty into force.

In the case of FTAs, the agreements can have provisions that are implemented in stages. For example, tariffs can be slowly phased out, quotas modified and regulations adjusted over time. “Full implementation” occurs when the longest tariff phase-outs or other transition measures in the agreement have been completed.

For plurilateral agreements or multilateral agreements, there are sometimes specific thresholds, such as requiring ratification by a certain number of countries, before the agreement can enter into force.

Finally, mutual recognition arrangements, which are not legally binding, are not subject to a ratification process. By contrast, mutual recognition agreements are legally binding and so have to be ratified.

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