Originally published in Blakes Bulletin on International
Trade & Investment, June 2010
On May 14, 2010, Canada and Panama signed the Canada-Panama Free
Trade Agreement (CPFTA), which is intended to significantly
increase access for Canadian businesses to bids on Panamanian
government procurement relating to infrastructure. In particular,
the CPFTA is intended to provide increased market access to a
number of contracts awarded by Panama's central government,
such as access to contracts of goods, services and construction
services, including contracts awarded by the Panama Canal Authority
(ACP) relating to the US$5.4-billion Panama Canal expansion project
that is currently underway.
The ACP indicates that the expansion project, which is slated
for completion in 2014, involves the construction of two new sets
of locks, one on each side of the Canal as well as the widening and
deepening of the existing navigational channels. Due to the high
cost of the project, it is likely to involve a substantial number
of procurement opportunities. According to the Canadian government,
Canadian suppliers were awarded procurements by the ACP valued at
just under US$30-million between 2000 and 2007. The Canadian
government believes that the CPFTA will provide even further
opportunities for Canadian businesses to access contracts under
Beyond the Canal expansion, the Panamanian government has
indicated that it is planning other improvement projects,
particularly in the areas of infrastructure, transportation and
services. The Canadian government considers that the CPFTA will
allow Canadian businesses access to this growing government
procurement market and has the potential to create long-term growth
opportunities between Canadian businesses and Panama.
The Canadian government argues that the CPFTA provides increased
opportunities to bid on Panamanian projects in several ways. First,
the CPFTA requires Panama to treat Canadian suppliers in the same
way as domestic suppliers for specified listed procurements covered
by the CPFTA. This non-discriminatory treatment ("national
treatment") means that Canadian suppliers will be entitled to
bid on Panamanian procurement of goods and services in Panama
covered by the CPFTA on the same legal basis as Panamanian
suppliers. Second, the government of Panama will be prohibited from
discriminating against locally established Panamanian suppliers on
the basis that the degree of Canadian ownership of a Canadian-
Panamanian joint venture is such as to make it Canadian owned or
controlled. Third, the CPFTA provides that a notice inviting
tenders, like those for the Panama Canal expansion project, must be
published, widely disseminated and readily accessible to the public
for the entire tendering period. Fourth, Panama (and Canada) will
be required to publish additional notices throughout the
procurement process, such as the requirement for specific
evaluation criteria and notice of the actual contract award.
There are other provisions in the CPFTA that the Canadian
government argues may increase the profitability of Canadian
infrastructure suppliers and allow for greater transparency in the
procurement process. In particular, the Canadian government notes
that the CPFTA prohibits the use of offsets by Panama (or Canada)
such as, for example, local Panamanian content requirements or
other conditions to improve local development related to the supply
of materials and services to main contractors and sub-contractors
at any stage of the procurement process. The CPFTA also imposes
obligations on procuring entities to avoid conflicts of interest
and prevent corrupt practices. Finally, the CPFTA requires that all
laws, judicial or administrative decisions, and procedures related
to procurement must be promptly published and made accessible to
Canada and Panama must now bring the CPFTA into law through
implementing legislation in a process that is known as treaty
ratification. While both the governments of Panama and Canada have
not disclosed their respective legislative timelines to implement
the CPFTA, some parliamentary observers have projected as early as
Fall 2010 for the mutual ratification of the treaty. Consequently,
companies with an interest in Panamanian infrastructure projects
and their advisors will want to track the progress of the
implementing legislation and develop strategies to make full use of
In our view, the CPFTA offers Canadian companies the opportunity
to capitalize on the infrastructure procurement contracts arising
from improvements to the Panama Canal, large-scale Panamanian
infrastructure and other procurement projects.
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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