Understanding your trade treaty obligations
A common question from potential bids&tenders clients is whether or not eProcurement platforms meet their obligations under trade treaties. The answer is, generally yes. Most of your trade treaty obligations are dependent on your organization’s processes, but as long as those processes are sound, translating them to a digital format does not violate the spirit of those agreements. In fact, some trade agreements even have stipulations that allow for more flexibility because you’re posting the opportunity online.
We’ve outlined some of the core principles of trade agreements that you need to be familiar with in this article. For a deeper dive into these points, we recommend viewing our on-demand webinar, “Trade treaty obligations in Canadian public procurement,” featuring guest presenter Timothy Cullen from McMillan LLP.
Core principles of trade agreements
- Treatment for foreign suppliers must be no less favourable than that granted to local suppliers
- Procurement should, generally speaking, not be viewed as a tool for local economic development (with exceptions)
- Neutral specifications
- No unnecessarily restrictive participation conditions
- Clear rules and procedures
- Includes how and where procurement notices and documentation can be published
- Domestic review procedure and dispute resolution mechanisms
- Consultations and negotiations if a supplier charges a buyer with a breach
Overview of applicable treaties
Canada participates in a number of trade treaties. The majority of them have similar requirements, so generally speaking a procurement process that meets the obligations of one will likely meet the obligations of the other.
To learn more about specific differences between treaties watch the on-demand webinar “Trade treaty obligations in Canadian public sector procurement.”
The procurement of goods, services, and construction are broadly covered by the agreements if you meet the purchasing dollar value thresholds. These amounts are updated every two years; as of May 1, 2021 the thresholds were as follows:
There are small differences in how these categories are defined, and what the exceptions are. CFTA uses a negative list, so they only list the things that are excluded. CFTA uses a positive list, so if it’s on the list it’s included in the agreement. Classification depends not just on what’s being procured, but also what the purpose of the good/service is. This is particularly important with construction-adjacent services and the “design-build-operate-maintain” style of contracts.
Valuation rules also have some slight differences. For example, a contract with the option to renew may be valued at the original contract value under one agreement, and at the total value with additional years under the other.
Process rules to maintain the principles of trade treaties specifically address:
- Supplier pre-conditions and pre-qualifications
- Use of multi-use lists, cooperative purchasing, and vendor-of-record arrangements
- Limited tendering and sole sourcing
- Posting location
One reasonable condition for both CETA and CFTA procurement processes includes disqualifying suppliers based on significant performance issues, as long as they are sufficiently documented. You can learn more about supplier performance processes in the Digital Speaker Series session “Supplier performance and management.”
Trade treaties have shown strong preference for electronic communication of opportunities and documentation, and may even have helped facilitate the shift toward eProcurement for some lagging industries. Make sure your eProcurement platform posts documentation and information for free online in order to remain compliant – bids&tenders allows a preview of all public opportunities without requiring an account. This transparency ensures neutral access to opportunities to comply with trade treaty requirements.