Canada: Post AIT: CFTA And NWPTA Impacts On Municipalities

Last Updated: April 24 2018
Article by Lindsay Parcells

The Canadian Free Trade Agreement ("CFTA") is an intergovernmental agreement between the federal government and the each of the provincial and territorial governments of Canada to promote more liberalized trade in goods, services, labour, investment and procurement within Canada. CFTA came into force on July 1, 2017. CFTA replaces the former Agreement on Internal Trade ("AIT") and it is generally acknowledged that CFTA is a superior free trade agreement in terms of scope and coverage, detailed rules and enforcement mechanisms. Notably, CFTA does not replace the New West Partnership Trade Agreement between Alberta, British Columbia and Saskatchewan ("NWPTA") and local governments in those provinces remain bound by the terms of NWPTA as well as CFTA. The stated objective of CFTA is set out in Article 101 "to reduce and eliminate, to the extent possible, barriers to the free movement of persons, goods, services, and investments within Canada and to establish an open, efficient, and stable domestic market." Local governments are brought within the requirements of CFTA by Article 103 which provides that each provincial or territorial government is responsible for compliance by its "regional, local, district, and other forms of municipal government".

Overview of CFTA

CFTA is a 345 page document that is divided into seven parts with each part divided into chapters and articles. In addition to the objectives of CFTA stated above, Part I confirms that the agreement applies to trade, investment, and labour mobility within Canada and that the parties are guided by, among other things, the need to eliminate and avoid barriers to trade, investment, and labour mobility within Canada and by the need to ensure non-discriminatory treatment of persons, goods, services, and investments, irrespective of where they originate in Canada. Part II sets out general rules of trade that apply to all parties including to ensure non-discrimination and transparency in all measures related to trade while Part III of CFTA prescribes more specific free trade requirements including those with respect to goods, services and investment (Chapter Three), government procurement (Chapter Five) and labour mobility (Chapter Seven). Part IV provides exceptions to the general rules found in Parts II and III while the remainder of CFTA consists of administrative provisions, including dispute resolution (Chapter Ten) in Part V, definitions in Part VI and the specific exceptions to the free trade rules for each government in Part VII.

Rules Governing Procurement

In general terms, the most important provisions of CFTA for local governments are in respect of the rules governing procurement which are set out in Chapter Five of Part III. Under Article 502, each party is required to provide open, transparent, and non-discriminatory access to covered procurement by its procuring entities. Procuring entities include local governments. Further, each party is required to accord to the goods and services of any other party, including goods and services included in construction contracts, treatment that is no less favourable than the best treatment the party accords to its own goods and services. The same requirement of most favourable treatment also applies to the suppliers of goods and services of any other party, including those goods and services included in construction contracts.

There are a number of words and phrases in Article 502 that merit further attention. The phrase "open, transparent and non-discriminatory access" is not defined in CFTA but widely understood in its everyday meaning. As well, CFTA provides specific examples of what does and what does not constitute open, transparent and non-discriminatory access in the specific rules set out in Articles 503, 506 through 517. For instance, in paragraph 5 of Article 503, the following are examples of procurement practices that would breach CFTA:

  • according a preference for local goods, services, or suppliers;
  • scheduling events in the tendering process in order to prevent suppliers from submitting tenders;
  • specifying quantities of, or delivery schedules for, the goods or services to be supplied in order to prevent suppliers from meeting the requirements of the procurement;
  • using price discounts or preferential margins in order to favour particular suppliers;
  • limiting participation in a procurement only to suppliers that have previously been awarded one or more contracts by a procuring entity;
  • requiring prior experience if not essential to meet the requirements of the procurement;
  • providing information to one supplier in order to give that supplier an advantage over other suppliers; and
  • adopting or applying any registration system or qualification procedure with the purpose or the effect of creating unnecessary obstacles to the participation of suppliers of any other Party in its procurement.

Additional rules governing how procurements must be conducted are set out in Articles 506 through 517. Under Article 506, rules are prescribed for the publication and contents of tender notices. Article 507 provides that a local government must limit its restrictions on participation in a procurement to only those that are essential to ensure that a supplier has the legal and financial capacities, and the commercial and technical abilities, to undertake the relevant procurement. Article 508 permits a local government to limit tenders to prequalified suppliers provided that the prequalification process is consistent with Chapter Five and it is not done in a way so as to circumvent the rules for an open, transparent and non-discriminatory process. Similarly, Article 509 permits a local government to prepare, adopt, and apply any technical specification for the procurement, provided they are not done so for the purpose of creating unnecessary obstacles to trade. Under Article 510, a procuring entity is required to make available to all suppliers any new information or clarification of the original information set out in the tender documentation provided in response to questions from one or more suppliers, in an open, fair, and timely manner. Article 511 requires a procuring entity to establish reasonable time periods for suppliers to prepare and submit responsive tenders.

Article 512 permits procuring entities to conduct negotiations with suppliers, provided the procuring entity has indicated its intent to conduct negotiations in the tender notice or it appears from the evaluation that no tender is obviously the most advantageous in terms of the specific evaluation criteria set out in the tender documentation. As well, Article 513 permits limited tendering in the circumstances described in paragraph 1 provided the limited tendering is not used for the purpose of avoiding competition among suppliers or in a manner that discriminates against, or protects, certain suppliers. Article 514 also permits local governments to conduct a procurement by using an electronic auction, provided the rules in Article 514 are followed.

Articles 515 through 517 round out the specific rules for procurement. Under Article 515, a local government must receive, open, and treat all tenders under procedures that guarantee the fairness and impartiality of the procurement process, and the confidentiality of tenders. Article 516 requires a local government to promptly inform participating suppliers of its contract award decisions, and, on the request of a supplier, do so in writing. Subject to Article 517, a local government must also, on request, provide an unsuccessful supplier with an explanation of the reasons why the procuring entity did not select its tender. The exceptions in Article 517 include any supplier information that might prejudice fair competition or any disclosure of information that would: impede law enforcement; prejudice the legitimate commercial interests of third persons, including the protection of intellectual property; be contrary to the public interest; or that would be exempt from, or contravene, the Freedom of Information and Protection of Privacy Act, or other applicable enactments.

"Covered Procurements" and Threshold Amounts

Article 502 also provides that only a "covered procurement" is subject to the procurement rules under CFTA. To determine what constitutes "covered procurement", reference must be had to Article 504 which prescribes the rules concerning scope and coverage of CFTA in respect of procurement. Under paragraph 2 of Article 504, "covered procurement" is defined as

"procurement for governmental purposes by a procuring entity of a good, service, or any combination thereof, by any contractual means, including purchase, lease, and rental, with or without an option to buy.

Also, to be a "covered procurement", the value of the procurement must equal or exceed the relevant thresholds set out in paragraph 3 of Article 504. The thresholds in paragraph 3 of Article 504 for local governments are $100,000 or greater for goods or services, excluding construction and $250,000 or greater for construction. These thresholds are greater than those found in NWPTA (which are $75,000 for goods and services and $200,000 for construction) and so compliance with the thresholds in NWPTA will also mean compliance with CFTA. The CFTA thresholds will also be adjusted for inflation under paragraph 4 of Article 504 and so they will gradually increase over time.

The rules for valuation of a procurement for threshold purposes are set out in Article 505. Under paragraph 1 of Article 505, a local government must estimate what the value of the procurement would be as of the date the tender notice will be published the estimate must include the estimated maximum total value of the procurement over its entire duration, whether awarded to one or more suppliers, taking into account all forms of remuneration under the procurement contracts. If the procurement is for construction, the procuring entity must include in its valuation the value of all goods and services to be supplied by the supplier in connection with the construction.

Exceptions to the Procurement Rules

A covered procurement having a value that equals or exceeds the thresholds under Chapter Five may nevertheless be exempt from the normal procurement rules. Article 520 provides that a covered procurement is subject to the exceptions set out in a party's Schedule to Annex 520.1. The federal government and each province and territory has its own schedule with various exceptions to the general procurement rules listed. British Columbia's Schedule limits its procurement rules exceptions to circumstances where another government or province has imposed procurement exceptions under their respective schedules and then only to the extent of the exception provided for by the other party. It remains to be seen if the developing trade war between Alberta and British Columbia arising from the Kinder Morgan Pipeline controversy may lead to procurement exceptions being imposed against Alberta suppliers. Other limited exceptions are also permitted in the circumstances detailed in paragraphs 2 through 4 of Article 520.

Dispute Resolution

Chapter Ten of CFTA sets out the rules for dispute resolution in cases where a party has, or is alleged to have, breached the agreement. Dispute resolution may consist of government to government dispute resolution between the provinces, territories or federal government under Part A of Chapter Ten or dispute resolution between a private party and a government under Part B. Under Article 1000, parties undertake to resolve disputes in a "conciliatory, cooperative, and harmonious manner"; however, if governments are unable to do so, Part A of Chapter Ten provides for monetary penalties or the imposition of tariff costs. Dispute resolution under Part A is prescribed for the federal, provincial and territorial governments and so a local government breach of CFTA would be resolved by the province assuming responsibility for the matter on behalf of the local government. Crucially for local governments, under Article 1001, private party –government disputes do not apply to local governments; however, it remains to be seen whether a private party could launch a civil action against a local government outside the dispute resolution process provided by CFTA for breaching its CFTA obligations.

Best Practices for Local Governments

Local governments should ensure that their procurement policies align with the requirements of CFTA, provided that thresholds for public procurements should be set at the more stringent levels prescribed by NWFTA ($75,000 for goods and services and $200,000 for construction) to ensure compliance with both NWPTA and CFTA. CFTA provides detailed requirements that if followed, will enable local governments to provide free, open and transparent procurements and help ensure that citizens receive good value for the goods and services their local governments provide.

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.

In association with
Related Topics
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