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1.25.10. World Trade Organization Agreement on Government Procurement (WTO-AGP)

Attention: The Government Procurement provisions of the North American Free Trade Agreement (NAFTA) continue to apply until the recently announced United States-Mexico-Canada Agreement (USMCA) is ratified and enters into force. More information about the USMCA will be provided in the coming weeks.

  1. World Trade Organization Agreement on Government Procurement (WTO-AGP) is an agreement, which aims to secure greater international competition for government procurement. It provides procurement procedures, which Canada abided to.
  2. The Agreement also contains provisions of national treatment and non-discrimination that Canada must respect (Article III). National treatment means that
    "…each Party shall provide immediately and unconditionally to the products, services and suppliers of other Parties offering products or services of the Parties, treatment no less favorable than:
    1. that accorded to domestic products, services and suppliers; and
    2. that accorded to products, services and suppliers of any other Party."
  3. Non-discrimination means that
    "…each Party shall ensure:
    1. that its entities shall not treat a locally-established supplier less favorably than another locally-established supplier on the basis of degree of foreign affiliation or ownership; and
    2. that its entities shall not discriminate against locally-established suppliers on the basis of the country of production of the good or service being supplied, provided that the country of production is a Party to the Agreement in accordance with the provisions of Article IV."
  4. The use of measures to improve socioeconomic development (offsets) for procurements covered by WTO-AGP is generally prohibited. See Article IV: General Principles. Note that set-asides for minority businesses are permitted as described in paragraph h.vi. below.
  5. To fully determine whether the WTO-AGP is applicable, the Agreement must be consulted. In the following Sections on determining WTO-AGP coverage, all references to an "Annex" are to the annexes to the WTO-AGP.
  6. Each Party to the WTO-AGP has an Appendix, which includes five Annexes defining the coverage of that Party's obligations.
  7. A procurement is covered by the WTO-AGP if:
    1. its value is equal to or greater than the relevant threshold;
    2. if the type of requirement (e.g. plumbing supplies) is covered;
    3. if the entity for which the procurement is being done is covered, and
    4. if there is no specific exception applicable (e.g. shipbuilding) or invoked (e.g. national security). All four criteria must be met in order for the procurement to be covered by the WTO-AGP. See below for how to determine if these criteria are met.
  8. To determine if a procurement is subject to the WTO-AGP, refer to the following:
    1. Determine the value of the requisition. See Article II: Scope and Coverage of WTO-AGP. The thresholds in the WTO-AGP are presented in the Special Drawing Rights, the unit of account of the International Monetary Fund. The thresholds are converted to Canadian dollars and published in Treasury Board Contracting Policy Notice 2017-6, which is reviewed every two years. A procurement may be subject to WTO-AGP if the requisition value in Canadian dollars (including taxes) is as follows for the period January 1, 2018, to December 31, 2019:
      1. For goods and services being procured by a federal government entity: $237,700; and
      2. For construction services being procured by federal government entities: $9,100,000.
    2. Determine whether the client department is covered by determining if they are listed in Canada's Annex 1 Central Government Entities or
    3. Determine the coverage by the client. See Annex 1 Central Government Entities.
    4. Determine the coverage by type of requirement:
      1. goods – See Annex 1 Central Government Entities and Annex 4 Goods, or
      2. services – See Annex 1 Central Government Entities and Annex 5 Services. The WTO-AGP identifies services coverage, according to the United Nations Central Product Classification system of classification.
      3. construction services – See Annex 1 Central Government Entities and Annex 6 Construction Services.
    5. Determine if an exception, such as the one for national security, should be invoked for the requirement. Article III: Security and General Exceptions provides the complete list of exceptions. See Supply Manual section 3.105 National Security Exceptions for more information on National Security Exceptions.
    6. Determine if the requirement is excluded from the Agreement. Canada’s General Notes in Annex 7 provide the complete list of types of requirements that are excluded from WTO-AGP, for example, Article 1.(d) provides for set-asides for minority businesses. Therefore, procurements that are set aside (i.e. reserved) for either CLCA beneficiaries, or for aboriginal businesses under the Procurement Strategy for Aboriginal Business (PSAB), are excluded from the Agreement, making the obligations of the WTO-AGP no longer applicable. For more information on when procurements can be reserved for CLCA beneficiaries, see 9.35 Comprehensive Land Claims Agreements (CLCAs). For more information on PSAB, see 9.40 Procurement Strategy for Aboriginal Business.