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1.25.3. Determining coverage under a trade agreement

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  1. Determine the value of the requisition. A procurement may be subject to a trade agreement if the estimated value in Canadian dollars (including options and applicable taxes) is equal to or greater than the applicable threshold. Current trade agreement thresholds are published in Treasury Board Contracting Policy Notice 2021-1 (valid until December 31, 2021). Thresholds are reviewed and converted to Canadian dollars every two years by the Treasury Board Secretariat.
    1. Rules regarding the valuation of a procurement can be found in the Government Procurement Chapter of the trade agreements. Contracting officers must not divide a procurement, or select or use a particular valuation method, with the intention of totally or partially excluding the procurement from coverage of the trade agreement(s). For example, see:
      1. The 'Valuation' Article of the Government Procurement Chapter of the CFTA;
      2. Article II Scope and Coverage of the WTO-AGP;
      3. Article 19.2 – Scope and Coverage of Chapter 19 of CETA; and
      4. Article 15.2: Scope of Chapter 15 of the CPTPP.
    2. The Canada-Korea Free Trade Agreement (CKFTA) currently provides the lowest threshold for services at $100,000. When WTO-AGP procedural obligations are applied, the obligations of the CKFTA will also be met. Therefore, WTO-AGP procedural obligations are to be applied to all services procurements valued at or above $100,000 that are covered by the CKFTA. The determination of whether or not a procurement is covered by the CKFTA must still be made pursuant to the Market Access Schedules of the Government Procurement Chapter of that Agreement.
    3. 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 definitely not be equal to or greater than the applicable trade agreement thresholds, and where the contracting officer wishes to conduct the procurement without regard to the obligations of the trade agreements, contracting officers must include tender/contract provisions that limit Canada's total potential liability under the resulting contract(s) to less than the applicable trade agreement threshold(s).
    4. 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 applicable trade agreements, unless otherwise excluded from the agreement(s).
  2. Determine whether the client department is covered by looking at the trade agreement's Market Access Schedule of Canada.
    1. For the CFTA, all federal departments and agencies are subject to the CFTA procurement obligations, except those listed in the Schedule of Canada in the Party-Specific Exceptions Annex to the Government Procurement Chapter.

      For the international trade agreements, the covered federal government entities are generally indicated in the first Annex or Section of Canada's Market Access Schedule. For examples, see:

      1. Annex 1 – Central Government Entities of the WTO-AGP;
      2. Annex 19-1 of CETA; and
      3. Section A of Annex 15-A of the CPTPP.
    2. For the CFTA, all crown corporations are subject to the CFTA procurement obligations, except those listed in the Schedule of Canada in the Party-Specific Exceptions Annex to the Government Procurement Chapter.

      For the international trade agreements, covered crown corporations are generally indicated in the third Annex or Section of Canada's Market Access Schedule. For examples, see:

      1. Annex 3 – Other Entities of the WTO-AGP;
      2. Annex 19-3 of CETA; and
      3. Section C of Annex 15-A of the CPTPP.
  3. Determine whether the requirement is covered. A procurement may be subject to a trade agreement if the requirement is covered by the trade agreement.
    1. Coverage of goods, services, and construction services is generally found in the fourth, fifth, and sixth Annexes or Sections, respectively, of Canada's Market Access Schedule.
      1. Goods:
        For the CFTA, all goods are covered unless specified in the 'Non-Application' provision of the Government Procurement Chapter or the Schedule of Canada in the Party-Specific Exceptions Annex to the Government Procurement Chapter.

        In general, international trade agreements cover all goods. For the Department of National Defence (DND), the Royal Canadian Mounted Police (RCMP), and the Canadian Coast Guard (CCG), only certain goods are covered. For examples, see:

        1. Annex 4 – Goods of the WTO-AGP;
        2. Annex 19-4 of CETA; and
        3. Section D of Annex 15-A of the CPTPP; and
        4. Annex 14-B of Chapter 14 the Canada-Korea Free Trade Agreement.
      2. Services:
        For the CFTA, all services are covered unless specified in the 'Non-Application' provision of the Government Procurement Chapter or the Schedule of Canada in the Party-Specific Exceptions Annex to the Government Procurement Chapter.

        Coverage of services varies between international trade agreements. It is important to note that in some ITAs, such as the WTO-AGP, the general rule is that only the services expressly listed are covered, while in other ITAs, such as the Canada-Chile Free Trade Agreement, the general rule is that all services are covered except for those expressly listed. For examples, see:

        1. Annex 5 - Services of the WTO-AGP;
        2. Annex 19-5 of CETA;
        3. Section E of Annex 15-A of the CPTPP;
        4. Annex 14-C of Chapter 14 of the Canada-Korea Free Trade Agreement; and
        5. Annex K bis-01.1-4 of the Canada-Chile Free Trade Agreement.

        For the DND, the RCMP, and the CCG, services related to goods are only covered if the goods they relate to are covered.

      3. Construction Services:
        For the CFTA, all construction services, including dredging services and construction services procured by or on behalf of the Department of Transport, are covered unless specified in the 'Non-Application' provision of the Government Procurement Chapter or the Schedule of Canada in the Party-Specific Exceptions Annex to the Government Procurement Chapter.

        In general, ITAs cover all construction services identified in Division 51 of the United Nations Central Product Classification (CPC), with the exception of construction services procured by or on behalf of the Department of Transport. Further, dredging services are only covered by CETA and the Canada-UK TCA. For more information on dredging services, see 1.25.3.1 Coverage of dredging services. For example:

        1. Annex 6 – Construction Services of the WTO-AGP;
        2. Annex 19-6 of CETA; and
        3. Section F of Annex 15-A of the CPTPP.
  4. Determine if any exclusions apply. Trade agreements do not apply to any procurement where an express exclusion exists.
    1. List of exclusions are found in Canada's Market Access Schedule in the seventh Annex or Section, as well as in the Notes to other Annexes or Sections. For examples, see:
      1. the General Exceptions Chapter of the CFTA;
      2. Annex 7 – General Notes of the WTO-AGP;
      3. Annex 19-7 of CETA; and
      4. Section G of Annex 15-A of the CPTPP.
  5. Decide if any exceptions, such as a National Security Exception (NSE) or the general exception for human life and safety, will be invoked or relied upon for the requirement. If an exception will be used, some or all aspects of the procurement may not be subject to certain trade agreement obligations. In order to reduce risk, contracting officers should continue to follow the obligations of the trade agreements to the greatest extent possible, deviating only where necessary to serve the purpose(s) for which the exception is being used.

    The list of general exceptions for a trade agreement can typically be found in the Security and General Exceptions Article of the Government Procurement Chapter; however, some trade agreements, such as the CPTPP, also include exceptions in a specific 'Exceptions' Chapter. For examples, see:

    1. the General Exceptions Chapter of the CFTA;
    2. Article III – Security and General Exceptions of the WTO-AGP;
    3. Article 19.3: Security and General Exceptions of Chapter 19 of CETA; and
    4. Article 15.3: Exceptions of Chapter 15 and Article 29.2: Security Exceptions of Chapter 29 of the CPTPP.

    See section 3.105 National Security Exceptions for more information on NSEs.

    Canada's free trade agreements pose no impediment to the inclusion of measures for the benefit of Indigenous Peoples and/or businesses in a procurement. This includes procurement obligations pursuant to Modern Treaties (Comprehensive Land Claims Agreements). For more information on Comprehensive Land Claims Agreements (CLCAs), see 9.35 Modern Treaties. For more information on the Procurement Strategy for Aboriginal Business (PSAB), see 9.40 Procurement Strategy for Aboriginal Business.

  6. Decide if any set-asides, such as the set-aside for minority businesses, will be applied. Set-asides may apply to the entire procurement or to only part of the procurement. If all or part of a procurement is set-aside, some or all aspects of the procurement may not be subject to certain trade agreement obligations. In order to reduce risk, contracting officers should continue to follow the obligations of the trade agreements to the greatest extent possible, deviating only where necessary consistent with achieving the goal(s) for which the set-aside was applied.

    Canada's set-asides are found in Canada's Market Access Schedule in the seventh Annex or Section. For examples, see:

    1. the 'Set-asides' provision of the Government Procurement Chapter of the CFTA;
    2. Annex 7 – General Notes of the WTO-AGP;
    3. Annex 19-7 of CETA; and
    4. Section G of Annex 15-A of the CPTPP.

    Canada's free trade agreements pose no impediment to the inclusion of measures for the benefit of Indigenous Peoples and/or businesses in a procurement. This includes procurement obligations pursuant to Modern Treaties (Comprehensive Land Claims Agreements). For more information on Comprehensive Land Claims Agreements (CLCAs), see 9.35 Modern Treaties. For more information on the Procurement Strategy for Aboriginal Business (PSAB), see 9.40 Procurement Strategy for Aboriginal Business.

  7. If:
    1. the estimated value of the procurement is equal to or greater than the relevant threshold;
    2. the client department is covered;
    3. the requirement is covered; and
    4. there is no express exclusion applicable;

    then the procurement is covered by the trade agreement and the obligations of the trade agreement apply.

    If a set-aside or an exception is made use of or relied upon, some or all aspects of the procurement may not be subject to certain trade agreement obligations. In such cases, in order to reduce risk, contracting officers should continue to follow the obligations of the trade agreements to the greatest extent possible, deviating only where necessary to serve the purpose(s) for which the exception is being used or the set-aside is being applied.

    If the procurement is covered by more than one trade agreement, all applicable trade agreements must be complied with at the same time by following the trade agreement procedures that are considered the most rigorous.

  8. For complex procurements, it may be difficult to determine coverage. For example, a procurement may consist of both goods and services, making it difficult to classify, or may include a variety of client departments and commodities where some are covered by trade agreements and others are not. In such cases, contracting officers should contact the Trade Agreement Unit of the Strategic Policy Sector at tpsgc.paaccordscommerciaux-aptradeagreements.pwgsc@tpsgc-pwgsc.gc.ca.

1.25.3.1 Coverage of dredging services

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  1. The Canada-European Union Comprehensive Economic and Trade Agreement (CETA) and the Canada-United Kingdom Trade Continuity Agreement (Canada-UK TCA) are the only international trade agreements that cover dredging services (see CETA Annex 19-6 – Construction services and Canada-UK TCA Article I). As such, when CETA and the Canada-UK TCA apply, in addition to dredging equipment of Canadian make and manufacture, dredging equipment and vessels of European Union (EU) member state and United Kingdom (UK) make and manufacture are permitted on the work, whether in dredging procurements or construction services procurements with dredging as a component.
  2. Dredging services and dredging services that are incidental to construction services contracts are only covered for central government entities. The CETA and Canada-UK TCA construction services thresholds for central government entities apply.
  3. For dredging procurements subject to CETA and the Canada-UK TCA, or dredging services that are incidental to CETA and Canada-UK TCA -covered construction services contracts, the following requirements apply:
    1. the vessel or other floating plant equipment used in the supply of the dredging services:
      1. is of Canadian, European Union or United Kingdom make or manufacture; or
      2. has been predominantly modified in Canada, the European Union or the United Kingdom and has been owned by a person located in Canada, the European Union or the United Kingdom for at least a year prior to the submission of the tender by the bidder; and
    2. the vessel must be registered in:
      1. Canada; or
      2. The United Kingdom or a Member State of the European Union and have been granted a temporary licence under the Coasting Trade Act, S.C. 1992, c. 31. The temporary licence will be granted to the United Kingdom or European Union vessel, subject to applicable non-discretionary requirements. The requirement that a temporary licence will only be issued if there is no Canadian duty or non-duty paid vessel available will not be applied to the application for that temporary licence.