Today, the United States and Canada announced the successful
negotiation of an agreement intended to resolve concerns over the
use of "Buy America" clauses in U.S. government spending
bills and open up provincial and territorial government procurement
to U.S. suppliers.1 It is currently anticipated that the
text of the agreement will be released by February 10.
Canadian and U.S. Commitments under the Agreement
There are two important components to the deal that will have a
significant impact on the Canadian and U.S. business
First, the agreement provides for reciprocal guarantees of
access on a temporary basis. Canada has agreed to provide U.S.
companies with access, through September 2011, to a range of
construction contracts across Canada's provinces and
territories, including a number of municipalities.
In return, the United States has agreed to provide Canadian
suppliers with access to state and local public works projects in a
range of programs funded by the American Recovery and
Reinvestment Act of 2009. These include programs of the U.S.
Department of Energy, the U.S. Department of Housing and Urban
Development, and the Environmental Protection Agency. At this time,
it is not clear how much of the stimulus package spending has
already occurred, so immediate benefits to Canadian companies could
be somewhat limited. Nonetheless, the exemption of Canada from
these discriminatory measures sets an important precedent for
future U.S. government spending measures, and at the very least is
a significant symbolic victory for Canada.
Second, and more importantly for the longer term, under
today's deal Canada and the United States have agreed to make
permanent commitments under the World Trade Organization (WTO)
Government Procurement Agreement (GPA) such that suppliers in each
country will be able to access state, provincial and territorial
government procurement on a non-discriminatory basis and in
accordance with standards established under the GPA.
Obligations Under the WTO Agreement on Government
At the present time, federal government procurement in both
countries is covered under the GPA. However, the procurement of
goods and services by Canada's provinces and municipalities is
not. The United States has made such commitments for 37 of its
states, but those benefits have not been extended to Canadian
business given Canada's refusal until now to include its
provincial procurement under the GPA.
Government entities and enterprises subject to the WTO's GPA
must comply with extensive requirements as to how they conduct
their procurement of goods and services.
First and foremost, government purchasers are prohibited from
discriminating against foreign suppliers, goods or services. The
GPA also includes obligations regarding the use of technical
specifications, establishing tendering procedures, how suppliers
are qualified, in what circumstances and how suppliers may be
invited to bid, selection procedures, time limits for tendering and
delivery of tenders, the tender documentation, the opening of
tenders and awarding of contracts, measures to enhance
transparency, and procedures enabling suppliers to challenge tender
Opportunities for Canadian and U.S. Companies
Just as the agreement presents Canadian companies with new
opportunities in U.S. procurement markets, U.S. suppliers of goods
and services (and possibly suppliers from other jurisdictions) will
see significant benefits from having access to provincial
government procurement subject to the disciplines of the WTO's
GPA, including new mechanisms for challenging provincial tender
As always in these situations, "the devil is in the
details," and the business community should be carefully
monitoring further developments, in particular the details in the
text, once released, of Canada's listing in its Appendix to the
GPA of provincial entities to be covered.
The Canada-U.S. deal may also bode well for ongoing negotiations
between Canada and the European Union towards a Comprehensive
Economic Trade Agreement, paving the way for sub-federal
procurement commitments to be negotiated in that forum as well.
Members of McCarthy Tétrault's International Trade
and Investment Law Group will continue to monitor developments
closely and are available to advise on these and other
international trade and investment law matters.
While that agreement mandated export measures on Canadian softwood lumber exports destined for the United States, it also protected those lumber exports from the potential imposition of onerous import measures by the U.S.
On September 29, 2016, the Supreme Court of Canada issued its first tariff classification decision since Canada signed the International Convention on the Harmonized Commodity Description and Coding System in 1998.
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