Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)

Purpose

The purpose of this Policy Notification (PN) is to inform PWGSC Acquisitions Program (AP) contracting officers of the implementation of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

Effective date

This policy notification is effective December 30, 2018. CPTPP government procurement obligations enter into force on December 30, 2018. The Standard Acquisitions Clauses and Conditions (SACC) Manual and Supply Manual will be updated at a later date to reflect these obligations.

Introduction

The CPTPP is a free trade agreement between Canada, Australia, Brunei, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. It was signed on March 8, 2018, following the January 30, 2017 notification from the United States of its intent not to ratify the Trans-Pacific Partnership (TPP). The CPTPP is a trading bloc that represents 495 million people with a combined gross domestic product (GDP) of Can $13.5 trillion, or 13.5% of global GDP.

The Agreement provides suppliers of CPTPP countries with access to the government procurement markets of other CPTPP Parties. Like other free trade agreements, the government procurement chapter includes procedural obligations built on the principles of non-discrimination and open, fair and transparent competition.

Overview

The CPTPP incorporates the TPP by reference. As such, CPTPP government procurement provisions are set out in Chapter 15 of the TPP and in Annex 15-A of the TPP, which forms Canada’s Market Access Schedule. The text of the CPTPP outlines the incorporation of the TPP, as well as the suspension of certain TPP provisions which have no effect on PWGSC procurement.

The obligations, format, and thresholds of the CPTPP are similar to those of the World Trade Organization – Agreement on Government Procurement (WTO-AGP). Coverage under the CPTPP is determined in the same way as with all of Canada’s free trade agreements, i.e. a procurement is covered by the CPTPP if: its value is equal to or greater than the relevant threshold, the type of requirement is covered, the entity for which the procurement is being done is covered, and there is no specific exception applicable (e.g. shipbuilding) or invoked (e.g. national security). As such, the CPTPP will have minimal impact on federal procurement activities. However, as with all free trade agreements, the Government Procurement Chapter should be consulted to verify Canada’s obligations, coverage, and exceptions.

Covered entities

Information on covered entities can be found in the following sections of Annex 15-A – Schedule of Canada:

• covered federal departments and agencies are listed in Section A
• covered crown corporations are listed in Section C

Goods, services, and construction services

Information on coverage of goods, services, and construction services can be found in Annex 15-A – Schedule of Canada:

• all goods are covered unless specified in Section D
• the only services covered by the CPTPP are those listed in Section E
• coverage of construction services is set out in Section F
• exceptions are listed in Section G, as well as in the Notes to Sections A through F

Thresholds

Thresholds for the CPTPP are the same as those for the WTO-AGP.

Thresholds will be revised every two years commencing on January 1, 2020, and will be published on the Treasury Board Secretariat’s Trade Agreements: Thresholds Update page.

Procedural obligations

Procedural obligations of the CPTPP are found in Chapter 15 – Government Procurement. Procedural rules cover, for example, contract valuation, general exceptions, notices, the content of tender documentation, the circumstances for the use of limited tendering, and the publication of award information. The procedural obligations of the CPTPP are substantially the same as those of the WTO-AGP.

Exceptions

The following articles should be consulted for exceptions which may apply:

• Article 15.2: Scope in Chapter 15 – Government Procurement
• Article 15.3: Exceptions in Chapter 15 – Government Procurement
• Notes in Annex 15-A – Schedule of Canada and
• Article 29.2: Security Exceptions in Chapter 29 – Exceptions and General Provisions

Summary of differences

The coverage and procedural rules of the CPTPP are similar to the WTO-AGP and will therefore not have a significant effect on PWGSC procurement processes.

There are, however, a few CPTPP obligations, provisions, and procedures that differ from other international trade agreements that should be noted:

National Security Exception (NSE)

Unlike many of Canada’s free trade agreements, the NSE for the CPTPP is not included in the government procurement chapter. Instead, it appears as a general exception to the Agreement in Article 29.2: Security Exceptions in Chapter 29 – Exceptions and General Provisions. While the CPTPP NSE has different wording than the usual procurement-specific NSE, there is no substantive difference between the provisions. As such, there will be no impact on PWGSC procurement processes.

Services

The CPTPP has broader coverage of services than Canada’s other international trade agreements. For example, for the first time in an international trade agreement signed by Canada, the CPTPP covers all “Leasing or rental services without an operator” for federal departments and agencies and crown corporations, as opposed to only certain leasing or rental services without an operator.

Procurement officers should refer to Section E of Annex 15-A – Schedule of Canada to determine whether the service being procured is covered by the CPTPP.

Valuation of procurements

Article 15.2.9 of CPTPP Chapter 15 – Government Procurement requires that, if the total estimated maximum value of a procurement over its entire duration is not known, the procurement must be deemed to be covered by the CPTPP unless otherwise excluded from the Agreement. This requirement supersedes a similar provision in other international trade agreements which instead outlines methods for valuing contracts for which a total price cannot be specified (e.g. multiplying the estimated monthly instalment by 48, etc.).

Operationally, for procurements where the total estimated maximum value of a procurement is not known and cannot be determined, but where the total maximum value of the procurement would certainly not be equal to or greater than the applicable trade agreement threshold(s), procurement officers must include contract provisions that limit the Crown's total potential liability under the resulting contract to less than that threshold. Where this is done, the procurement may be considered not to be covered by the trade agreement(s).

For procurements where the total estimated maximum value of a procurement is not known and cannot be determined, but where the total maximum value of the procurement may be equal to or greater than the applicable trade agreement threshold(s), the procurement must be treated as covered by the by the applicable trade agreements, unless otherwise excluded.

Procurements funded by an international organisation

Under the CPTPP, where a procurement is funded by an international organisation, foreign or international grants, loans, or other assistance, and the funding comes with specified procurement procedures or conditions which do not restrict the participation of suppliers, the procurement is subject to the CPTPP's national treatment and non-discrimination provisions in Article 15.4.1 but no other provisions of the CPTPP. Such procurements are not subject to the other international trade agreements in any way.

The effect of this obligation is that, for such procurements, the Canadian Content Policy or other domestic preferences cannot be applied.

Where a procurement is funded by an international organisation, foreign or international grants, loans, or other assistance, and the funding comes with specified procurement procedures or conditions which restrict the participation of suppliers, the procurement is not subject to the CPTPP nor to any other international trade agreement.

Where a procurement is funded by an international organisation, foreign or international grants, loans, or other assistance to which procurement procedures or conditions of the international organisation or donor do not apply, the procurement is covered by the by the applicable international trade agreements, unless otherwise excluded.

Contact information

For assistance with the application of the CPTPP and other trade agreements, contracting officers may contact the Trade Agreement Unit of the Strategic Policy Sector at tpsgc.paaccordscommerciaux-aptradeagreements.pwgsc@tpsgc-pwgsc.gc.ca.