European Union: Update - Canada-EU Comprehensive Economic And Trade Agreement (CETA)

Last Updated: June 3 2016
Article by Roy Nieuwenburg

In our September 29, 2014 Construction Law Bulletin, we alerted readers to the projected implications of the Canada-EU Comprehensive Economic Trade Agreement. [“MASH Sector Needs to Brace for Possible New Era in Procurement - Canada-EU Comprehensive Economic Trade Agreement (CETA)”]. The final CETA text was published February 29, 2016. Here is an overview and summary:

Timing – legal review has been completed – now projected to be signed in 2016 and in force in 2017

The Canada-EU joint statement dated 29 February 2016 stated:

“Canada and the European Commission are very pleased to announce that the legal review of the Canada-European Union Comprehensive Economic and Trade Agreement (CETA) English text has been completed...

Canada and the European Commission will now complete the translation and review of the text in French and the 21 other EU treaty languages.

Once finalized, we will focus on the swift ratification of CETA so that individuals and businesses, both large and small, are able to benefit from the opportunities offered by this gold standard agreement. We are confident that CETA will be signed in 2016 and enter into force in 2017.”


The monetary thresholds under CETA are expressed in special drawing rights [SDRs] described at the Government of Canada website as follows:

“The Agreement applies only to high-value procurement contracts in order to ensure that governments can continue to use procurement to support local development, especially small and medium-sized enterprises. The threshold-value for procurement contracts in CETA will range from 130,000 to five million special drawing rights (an international value of the International Monetary Fund for which the corresponding range is $203,372 to $7.8 million for 2013).”

Teeth behind CETA – the ISDS provisions (applicable only for Section C and Section D of Chapter 8 [Investment])

Chapter 8 [Investment] of CETA contains a controversial provision that gives investors the right to seek compensation from states through international tribunals if government policies damage their business interests. Much has been written about the associated Investor-State Dispute Settlement (ISDS) process.Reports emerged in late 2014 that EU objections to these provisions threatened the deal. An agreement was reached at the end of February 2016 that switched the method of selection of the dispute resolution tribunal to a roster selection regime, with an appeal process, from the originally proposed ad hoc forum where three arbitrators sat on the tribunal, one of whom was appointed by the complaining Party, another by the responding Party and a third by the chairperson or by agreement of the disputing parties. The new regime is modelled to a large degree on the World Trade Organization appellate body. While the tribunal under the new method will still be composed of three arbitrators, the arbitrators will be chosen from a roster of 15 people nominated by Canada and the EU. It will have five members who are Canadian nationals, five from the EU and five who are neither. The member from the third country will chair the tribunal.

It is important to recognize the limited scope of application of this remedy, as described at the European Commission website:



Investment dispute settlement under CETA is strictly limited to breaches of the few investment protection provisions which enshrine fundamental principles such as nondiscrimination, expropriation only for a public purpose and against adequate compensation and fair and equitable treatment (see explanations above) and which has caused damage to a specific investor. But a claim cannot be brought to investment dispute settlement simply because an action has an impact on investors’ profits. Also it cannot be used by an investor to claim a breach of another part of the CETA agreement. For example, it cannot be used to obtain market access by investors. This is an important clarification.

Relevant CETA provisions: Article 8.18 Scope

So, for example, if a Canadian entity established a new plant or mine in an EU member state, and the new plant or mine was nationalized or expropriated, the investor would have direct recourse (including a claim for monetary compensation and restitution of property, under Article 8.39) against the EU or member state.1 But this remedy would not extend to a complaint by a disgruntled bidder under a procurement or bidding process (for which Chapter 19 [Government Procurement] would apply).

More teeth - Domestic Review Procedures

Chapter 19 [Government Procurement] contains provisions for openness, transparency and non-discrimination designed to ensure free market access. Article 19.17 sets out detailed provisions stipulating that each Party shall provide a timely, effective, transparent and non-discriminatory administrative or judicial review procedure through which a supplier may challenge a breach of Chapter 19 [Government Procurement]. In the event of a complaint by a supplier, the Party (referring to the Parties to the Agreement) of the procuring entity conducting the procurement shall encourage the procuring entity and the supplier to seek resolution of the complaint through consultations. Each Party shall establish or designate at least one impartial administrative or judicial authority that is independent of its procuring entities to receive and review a challenge by a supplier arising in the context of a covered procurement. The participants to the proceedings shall have the right to be heard prior to a decision of the review body being made on the challenge. The review body shall make its decisions or recommendations in a timely fashion, in writing, and shall include an explanation of the basis for each decision or recommendation. Each Party shall adopt or maintain procedures that provide for: (a) rapid interim measures to preserve the supplier’s opportunity to participate in the procurement. Such interim measures may result in suspension of the procurement process. The procedures may provide that overriding adverse consequences for the interests concerned, including the public interest, may be taken into account when deciding whether such measures should be applied. Just cause for not acting shall be provided in writing; and (b) corrective action or compensation for the loss or damages suffered, which may be limited to either the costs for the preparation of the tender or the costs relating to the challenge, or both, if a review body determines that there has been a breach or a failure.2

The key here is "rapid interim measures" and "corrective action or compensation".

It remains to be seen whether tribunals will be much inclined to make awards beyond “costs for the preparation of the tender or the costs relating to the challenge”. I expect they will.

Section 8 of Article 19.17 provides that within ten years after the entry into force of this Agreement, the Parties will take up negotiations to further develop the quality of remedies, including a possible commitment to introduce or maintain pre-contractual remedies.

Prescribed requirements

Since the last version of the CETA text, there has been some relaxation and clarification of the prescribed requirements under Chapter 19 [Government Procurement]. For example:

  1. Sections 3 and 4 of Article 19.10 [Time-Periods] stipulate a requirement of at least 40 days for submission of tenders, but this is reduced to 13 days for commercial goods or services where the procuring entity publishes by electronic means (and reduced to 10 days where the procuring entity accepts tenders by electronic means).
  2. Public opening is not mandatory. Announcement of prices is not mandatory.
  3. Section 4 of Article 19.14 [Treatment of Tenders and Awarding of Contracts] stipulates that:

    ”4. To be considered for an award, a tender shall be submitted in writing and shall, at the time of opening, comply with the essential requirements set out in the notices and tender documentation and be from a supplier that satisfies the conditions for participation.” [emphasis added] As I have advocated for many years, an astute procuring entity should be wary of identifying anything as an essential requirement, and reserve the right to waive any non-compliance, regardless of severity, so as to preserve its ability to accept bids that are most advantageous.

  4. Section 9 of Article 19.14 [Technical Specifications and Tender Documentation] stipulates that:

    “9. The evaluation criteria set out in the notice of intended procurement or tender documentation may include, among others, price and other cost factors, quality, technical merit, environmental characteristics and terms of delivery.” [emphasis added]

Are the Provinces and Territories and the MASH sector covered in the Agreement?

The Canadian Government Procurement Market Access Offer includes, for British Columbia:

under Annex X-02 [Sub-Central Government Entities]:

British Columbia
This Annex covers all:

  1. ministries, agencies, boards, councils, committees, commissions and similar agencies of government;
  2. regional, local, district or other forms of municipal government; and
  3. school boards and publicly-funded academic, health and social service entities.

and under Annex X-03 [Other Entities]:

British Columbia
This Annex covers all:

  1. Crown corporations, government-owned commercial enterprises, and other entities that are owned by the Government of British Columbia through ownership interest; and
  2. corporations or entities owned or controlled by one or more municipal governments.

From the above it is clear that subject to ratification CETA purports to cover the Provinces and Territories and the MASH sector.

The European Commission website proclaims:

“Besides the improved conditions on investment protection, CETA will offer EU firms better business opportunities in Canada and support jobs, by making business between the EU and Canada easier. The deal will remove 99% of customs duties, leading to tariff savings for EU exporters of around 470 million euro a year for industrial goods. It will end limitations in access to public procurement, making it possible for EU firms to bid for public contracts - at the federal level as well as in Canada's provinces, regions and cities.”

Do the Provinces and Territories have to agree?

Can the Government of Canada do this on its own? The Provinces and Territories are parties to the Agreement on Internal Trade [AIT], for example, but are not parties to CETA. There is a constitutional division of powers between the federal government and the Provinces and Territories.3 Will any reluctant Provinces or Territories be cajoled into complying? The federal government has gone a long way down the road on this and made specific promises about the Market Access Offer of the Provinces or Territories. They seem confident that the Provinces and Territories will follow suit.4

What about municipalities, universities, colleges and hospitals?

MASH sector entities, such as municipalities, universities, colleges and hospitals, are not on the same footing as Provincial ministries. They have varying degrees of autonomy. As noted above, CETA purports to extend to these MASH sector entities, even though they are not parties to CETA. How will they be made to comply?

In British Columbia, funding by the Province for universities and other institutions is linked with a "letter of expectations". For example in the past the Province has used this to co-opt compliance with the AIT and also the NWPTA5. Your operating grant and availability of Provincial funds for capital projects may be re-considered if you're not respecting the spirit of the Province's procurement mandates. The same might be used for CETA.

Side observations

By the by I will offer a couple of observations.

First, in my experience, it has not been the direct objective of the trade agreements (such as CETA, the AIT, and the NWPTA) that causes challenges to the procuring entity, but rather the indirect measures prescribed for that purpose. I will elaborate:

direct objective: that there be no preferential treatment for Canadian versus non-Canadian bidders, or for bidders of one Province over another.

indirect measures prescribed: transparency (all good); public opening (okay, when warranted); and empirical application of objective criteria / elimination of subjective or business judgement, whether or not well grounded (impractical or overly constraining, in many cases, in my opinion).

Where a procuring entity has no intention of giving preference to Canadian versus non-Canadian bidders or for bidders of one Province over another, then the direct objective of the trade agreement is fulfilled (or at least is not transgressed). With few exceptions I can think over more than 35 years of experience, I have not encountered procuring entities applying this kind of preference (after explaining the exposure and liability that would govern based on the Chinook Aggregates line of cases). But even where the procuring entity conscientiously respects and observes the direct objective, the procuring entity can run afoul of the indirect measures prescribed, and be exposed to liability as a result.

The other observation I will offer is that for many years it has struck me as incongruent and curious that in practice bidders from outside jurisdictions (that is, bidders from jurisdictions outside of the jurisdictions of the parties to the trade agreements) ride the coattails of those agreements to enjoy the same benefits. Do you ever see a tender or RFP that says “we won’t discriminate against EU entities or AIT, NAFTA and NWPTA entities, but we reserve the right to discriminate against others”. I haven’t. So in practice (leaving aside federal procurements, for which further considerations apply) a bidder from Russia, Japan or North Korea benefits from the “level playing field” and “duty to treat fairly” principles embodied in the tender or RFP documents in the same way as a bidder from a jurisdiction that is party to these trade agreements. CETA is an improvement in that it will give remedies (with teeth) that will benefit the intended parties and not be available to non-parties.

How is this going to affect tenders and RFPs for organizations covered by the agreement?

The April 2016 issue of Lexpert Magazine quoted a Toronto lawyer [Judy Wilson, a partner at Blake, Cassels & Graydon LLP] as saying: “The trade agreements all mimic one another in how they regulate procurement ... If you're an organization that has good competitive procurement processes, which most Canadian public-sector organizations do, it's not going to affect fundamentally how you do your business. It's going to affect you from a trade perspective, e.g., can you give extra points for local content? And if you can, how does it work and what sectors are excluded? But it's not going to affect the fundamentals of your procurement - a fair, open, transparent process. Frankly, if you're compliant with the Agreement on Internal Trade (AIT) in how you do your procurement, the odds are you're going to be compliant across the board." I agree. I would add that:

  1. you will, however, want to be attentive to a number of specific prescribed requirements, set out in Chapter 19 [Government Procurement], described above;
  2. you are going to have to be alert to the fact that if faced with a complaint, you may be drawn into a challenge process under Chapter 19 [Government Procurement];
  3. due to Sections 3 and 4 of Article 19.10, you will be encouraged to publish opportunities and accept tenders by electronic means (if you do not already do so); and
  4. if your tender or RFP conditions include a limitation of liability (such as “the liability of [procuring entity] shall be limited to $X, regardless”), as many do, then I suggest it would be advisable to qualify the limitation of liability by stipulating that to the extent that [procuring entity] in fact extended a preference to a local supplier contrary to Sections 1 and 2 under the heading Non-Discrimination of Article 19.4 [General principles] of CETA or corresponding provisions of any other trade agreements binding upon [procuring entity], the limitation of liability does not apply; but otherwise the limitation of liability shall apply in all cases despite any non-compliance or discrepancy in regard to the notice requirements or other technical or process requirements prescribed by CETA or other trade agreements. {I will leave to a later day an explanation of the rationale for doing so.}

Concluding comments

Trade agreements take a long time to work their way through to implementation. The Government of Canada has done a good job of reporting on the progress of CETA and its expected content and timing. It’s been a while already, and the confident prediction, referred to above, that CETA will be in force in 2017 might be optimistic.

For high-value procurement contracts, CETA will loom large in the background. For procurements of lesser value, of course CETA will not apply if the amount is under the prescribed thresholds, and regardless existing practices probably already address the mandates of openness, transparency and non-discrimination. Be aware that under CETA a disgruntled bidder might take a run at challenging your decisions and the manner in which the process is being run, with recourse to "rapid interim measures" and "corrective action or compensation".

Useful links

The final CETA text can be found at the Government of Canada website here.

The European Commission website also provides helpful resources here.


1 A recent example of investor-state arbitration under another treaty: on April 4, 2016, the Canadian gold-mining company Crystallex International Corporation secured an arbitral award against The Bolivian Republic Of Venezuela of US$1.202 billion for unfair and inequitable treatment and the unlawful expropriation of its investment in the Las Cristinas mining project.

2 In contrast, new bid protest mechanisms under the NWPTA that took effect July 1, 2015 are less robust. They allow an arbiter to report on findings of fact, make a determination on whether the procurement was consistent with the agreement, and make recommendations as to how the government entity can bring itself into compliance. The arbiter may also issue a costs award (e.g., fees, expenses, legal representation) not exceeding $50,000, as well as a recoupment award (i.e., the cost of preparing the bid or tender response) of up to $50,000.

3 Although the federal government has sole authority to negotiate, sign and ratify international treaties, implementation and compliance are an area of federal, provincial and territorial responsibility. In the 1937 Labour Conventions Case the Privy Council held that the federal government cannot use the need to comply with international treaties as justification for encroaching on areas of provincial jurisdiction.

4 The federal government is fully responsible to the international community for compliance with the treaties that it signs. Her Majesty is indivisible. In order to limit Canada's liability where a treaty concerns an area of provincial legislative jurisdiction, some treaties contain a "federal state clause" qualifying its liability to performing only those international obligations that come within federal jurisdiction (and perhaps to make best efforts to get provincial compliance). Article 1.8 of CETA seems to reflect that the federal government will be fully responsible, stating: "[Extent of obligations] 1. Each Party is fully responsible for the observance of all provisions of this Agreement. 2. Each Party shall ensure that all necessary measures are taken in order to give effect to the provisions of this Agreement, including their observance at all levels of government."

5 New West Partnership Trade Agreement among Alberta, British Columbia and Saskatchewan.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Roy Nieuwenburg
Similar Articles
Relevancy Powered by MondaqAI
Lidstone & Company Law Corporation
Norton Rose Fulbright Canada LLP
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Lidstone & Company Law Corporation
Norton Rose Fulbright Canada LLP
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions