When your Nation receives a Treaty Proposal, all members will receive a Diplomacy Status Change notification in chat. View the incoming Proposal by speaking with your Ambassador, and going to the View Proposals button. If you have a pending Incoming or Outgoing Treaty Proposal, the icons in this menu will be glowing.

Clicking on a specific incoming Proposal will bring up a menu with the terms being proposed, and an option to either accept or reject the Treaty. Rejecting a Proposal will not send a notification to the sender - however you can negotiate terms by immediately sending back a Proposal of your own, which will notify the other Nation. Once the recipient is happy with the terms, clicking Accept will immediately put the Treaty into effect.