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Comprehensive Economic and Trade Agreement

Comprehensive Economic and Trade Agreement

What you need to know about CETA

As you may know, the Canada-EU Comprehensive Economic and Trade Agreement (CETA) will come into effect as of September 21, 2017. This will have an impact on the ways that municipalities procure goods and services.

Similarly to other international and domestic trade agreements, the procurement obligations in the CETA are based on four core principles: non-discrimination, equal treatment, transparency and accountability.

For covered procurements, procuring entities from Canada and the EU, including at the municipal level, will treat goods, services and suppliers of the other Party in the same manner as domestic goods, services and suppliers. The emphasis is on allowing for open competition and free trade.

Still, many communities will be exempt from these procurement obligations if they are purchasing products or services that cost less than approximately $340,600, and for construction services of less than $8.5 million.

Below is more detailed information on how the implementation of CETA will impact municipalities. 

Background  

The Canada-European Union Comprehensive Economic and Trade Agreement (CETA) was signed by Canada and the EU on October 30, 2016. On February 15, 2017, the EU Parliament voted to approve CETA. The Canadian federal government introduced legislation to ratify the agreement in the House of Commons: Bill C-30, An Act to implement the Comprehensive Economic and Trade Agreement between Canada and the European Union and its Member States and to provide for certain other measures. This bill received Royal Assent on May 16, 2017.  

The governance and procurement provisions of the agreement are anticipated to come into effect as of September 21, 2017. The investor-state dispute settlement provisions will not immediately apply. They must wait for full ratification by individual countries in the EU.  

The government procurement chapter of CETA extends procurement obligations to sub-national entities in the EU and Canada, which includes not only provincial and territorial departments and agencies, but importantly, municipalities, school boards, academic institutions, and health and social service entities.  

CETA: current status   

The updated International Trade Agreements and Local Government: A Guide for Canadian Municipalities, is now available through the Global Affairs Canada website. A new section has been added with detailed information on the government procurement provisions under CETA and frequently asked questions. FCM will continue to work with Global Affairs Canada on tools for implementation.

Please review the updated guide to ensure that your municipal procurement practices align with CETA provisions. The guide lays out helpful information, such as key questions for assessing whether a procurement is covered under the CETA government procurement chapter and for considering whether a Public Private Partnership (P3) is covered by CETA.

FCM has undertaken further analysis to assist members with CETA implementation, including clarifying what practices would inhibit international trade obligations. Municipalities are defined broadly in CETA as "sub-central government entities" and may include unincorporated areas. Municipal-owned entities and corporations may also be considered as "other entities" under the agreement and subject to specific obligations.

Like other international and domestic trade agreements, the procurement obligations of CETA are built on four core principles: non-discrimination, equal treatment, transparency and accountability. These principles overlay the specific provisions detailed in Chapter 19 on Government Procurement.

  • The principle of non-discrimination requires that procuring authorities treat foreign suppliers in the same way that domestic or local suppliers are treated. Restrictions cannot be imposed against foreign suppliers and there cannot be preferences applied that favor domestic suppliers.
  • The principle of transparency requires that information on procurement procedures, notices and awards be made clear and public. Over time, Canada will be required to publish all public tenders covered under CETA on a "single point of access" procurement website, following a five-year transition period. Global Affairs Canada has indicated that work on the Canada-wide, electronic single point of access procurement window for posting tender notices is still in the early stages of development. In the interim, municipalities will still be subject to the procurement provisions of CETA once it comes into effect.
  • Equal treatment prohibits procuring authorities from imposing conditions for participation or qualifications of suppliers that prevent open competition, and from framing technical specifications in a way that limits competition. It also requires that procuring authorities evaluate tenders fairly, based on the criteria set out in the tender documents.
  • For accountability, Canada must implement domestic bid challenge processes to legally enforce obligations (e.g. at the federal level, the Canadian International Trade Tribunal and the Federal Court of Appeal as its reviewing court).

As with other trade agreements, only procurements that meet certain financial thresholds are subject to the procurement obligations. Under CETA, the thresholds for sub-national entities, including municipalities, for goods and services are approximately CDN$340,600 and for construction services are CDN$8.5 million. If a municipality is undertaking a procurement for an amount less than the thresholds, then CETA's procurement obligations do not apply.

For more information:  

Should you have specific comments or questions related to the CETA, please contact Global Affairs Canada at CETA-AECG@international.gc.ca.

Global Affairs Canada also updates information on CETA and the impact for municipalities on its website. In addition, the government has developed fact sheets on key sectors under CETA that are available on its website, including sectors such as agriculture, forestry, and infrastructure.  

Provincial and territorial departments responsible for trade:  

Page Updated: 07/09/2017