Canada-EU Comprehensive Economic and Trade Agreement: the Government Procurement Chapter

FCM/DFATD Webinar 18 June 2015

IB: 6664131

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Background • Canada and the European Union (EU) announced conclusion of the negotiations for the Comprehensive Economic and Trade Agreement (CETA) on August 5, 2014 • CETA is Canada’s most ambitious FTA since NAFTA and the EU’s most comprehensive FTA ever • CETA is comprehensive: – 31 chapters covering a range of subject areas: goods, cross-border trade in services, temporary entry, investment, monopolies and state enterprises, intellectual property, government procurement, sustainable development, environment, etc.

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A Balanced Outcome • Government Procurement commitments an integral part of an overall balanced agreement • Benefits go beyond the GP Chapter: CETA will help create more opportunities, jobs and prosperity through increased trade and investment in Canada and the EU • In GP, opportunities for Canadian suppliers: preferential access to the EU’s $3.3-trillion procurement market, building upon WTO-GPA • New commitments in Canada: most comprehensive procurement commitments ever made by Canada at federal, provincial/territorial and municipal levels 3

Importance of GP to CETA • EU request: full coverage of government procurement – “…substantially improved access to public procurement markets aiming to achieve full coverage of central and sub-central government procurement in all sectors…” Source: Canada-European Union Joint Report: Towards a Comprehensive Economic Agreement

• Federal and Provincial/Territorial (P/T) governments recognized that successful outcome in the Agreement as a whole would require comprehensive procurement commitments

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Evolution in GP Commitments • Global trends in public procurement: – Domestic reforms to enhance competitiveness, transparency, impartiality and accountability Source: OCED Principles for Integrity in Public Procurement (2009)

• Canadian openness to international trade and investment: – Trade and investment as driver of the Canadian economy – Trade equivalent to more than 60% of Canada’s GDP

• Numerous precedents for GP commitments for P/Ts: – – – – –

Agreement on Internal Trade (AIT) (1995) Atlantic Procurement Agreement (NB, NL, NS and PEI) (1996) New West Partnership Agreement (AB, BC and SK) (2010) Canada-US Procurement Agreement (2010) WTO Agreement on Government Procurement (revised) (2014) 5

GP: General Principles • Four key principles: 1. Non-discrimination – “national treatment” (Article IV) – Prohibition on offsets (Article IV(8)) 2. Transparency – Government/Procuring Entities obligated to make certain information public • Laws, regulations, policies (Article V (1)) • Individual procurement transactions (e.g. notices, tender documentation) (Article VI) • Award Information (Article XV) • Responses to inquiries about specific procurements (Article XVI(1)) • Single Point of Electronic Access for procurement notices for all 6 covered procurement (Article VI (1))

GP: General Principles 3. Impartiality – Rules designed to enhance fairness of process • • • • • • • •

Conditions for Participation (Article VII) Qualification of Suppliers (Article VIII) Technical Specifications and Tender Documentation (Article IX) Time Periods (Article X) Negotiations (Article XI) Limited Tendering (Article XII) Electronic Auctions (Articles XIII) Treatment of Tenders and Awarding of Contracts (Article XIV)

4. Accountability – Domestic Review Procedures (Article XVII)

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Application • CETA GP Chapter applies to – contractual transactions to acquire goods or services for the direct benefit or use of the government – …by certain identified government entities – …of certain identified goods and services – …when contract values exceed identified thresholds – …subject to certain exceptions and exclusions

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Government Entities • Government entities are specifically listed in Annexes to the GP Chapter – Annex X-01: Federal Government Entities • Almost all federal departments and agencies • Exclusions: security/intelligence agencies, Parliament and agents of Parliament

– Annex X-02: Sub-central Entities – Annex X-03: Other entities

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Government Entities (2) • Sub central Government Entities (Annex X-02) – Each P/T defined their scope of coverage – Most P/Ts adopted a “definitional” approach, with certain identified exclusions

• Example of coverage (i) departments, ministries, boards, councils, committees, commissions and similar agencies of government; (ii) regional, local, district or other forms of municipal government; and (iii) school boards and publicly – funded academic, health and social service entities (the “MASH” sector)

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Government Entities (3) Other entities (Annex X-03): 2 sub-categories • Section A: Government Corporations – Federal, provincial and territorial Crown corporations

• Section B: Public Utilities – Special rules for public utilities operating in: • • • • • •

Airports and terminals Urban transit Port facilities Drinking water and sewage infrastructure Electricity generation/distribution Gas/heat generation/distribution

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Goods and Services • Annex X-04: generally all goods, subject to certain exceptions – Procurement by military and law enforcement • Only certain designated goods

– Specific rules applicable to procurement of urban transit vehicles in Ontario and Quebec – Specific exclusions for PEI, Quebec and Manitoba

• Annex X-05: only designated services (identified by UN CPC) – Includes: Engineering, Architecture, IT, Consulting, Environment – Specific exclusions for Quebec (procurement from non-profits for urban planning; Hydro-Québec) – Specific exclusion for Manitoba (services for Manitoba Hydro Electric Board) 12

Construction Services • Annex X-06: all services in UN CPC Division 51, subject to: – Only limited rules apply to Public Private Partnerships (P3s) (nondiscrimination, transparency) – All construction P3s are covered except for public utilities – Specific rules for Federal dredging contracts – Quebec: right to favour local suppliers for Hydro-Québec – Manitoba: exclusion for Manitoba Hydro-Electric Board

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CETA GP Thresholds • GP Chapter applies only to procurement where estimated value is above prescribed thresholds • CETA GP thresholds generally consistent with the WTO GPA and international practice • CETA GP thresholds significantly higher than in the AIT (which range from $25,000 for goods, $100,000 for services to $250,000 for construction services) • GP Chapter does not apply to procurement where estimated value is below thresholds

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CETA GP Thresholds Entities

Goods

Services

Construction

130,000 SDR* 130,000 SDR 5M SDR Annex X-01 (Central Government Entities)

($200,900)

($200,900)

200,000 SDR

200,000 SDR 5M SDR

($309,100)

($309,100)

Annex X-03 (Other Government Entities)

355,000 SDR

355,000 SDR 5M SDR

Section A (Arms-Length Entities and Crown Corporations)

($548,700)

($548,700)

400,000 SDR

400,000 SDR 5M SDR

($618,200)

($618,200)

Annex X-02 (Sub-Central Government Entities) Including MASH

Section B (Utilities)

($7.7M)

($7.7M)

($7.7M)

($7.7M)

*Special Drawing Rights: an international type of monetary reserve currency, created by the International Monetary Fund (IMF) 15

Exceptions • General Exceptions (applicable to both parties): – National security (Article III (1)) – Human, animal or plant health (e.g. environment); public morals, order and safety; intellectual property (Article III (2))

• Canada – Specific Exceptions and Exclusions (Annex X-07): – – – – –

Shipbuilding and repair Broadcasting material Quebec: works of art and cultural industries Preferences for Aboriginal people Regional economic development, subject to certain limitations

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Common Questions • Does CETA cover…? • • • •

Public Private Partnerships (P3s) Buying Groups Local Food Programs Water

• Does CETA allow…? – Quality-based selection – Measures to protect the environment – Local preferences

• Will CETA increase administrative costs of covered procurement? 17

How To Prepare? • Review: – The CETA GP Chapter available on DFATD’s Website – Relevant provincial procurement legislation and regulations

• Focus on the text (rules), the entities listed by your jurisdiction (Annexes X-02 and X-03), the description of goods and services covered (Annexes X-04, X-05, and X-06) and the General notes (Annex X-07) • DFATD and the FCM are working together to update the Summary Guide on International Trade Agreements for Canadian Municipalities (http://www.international.gc.ca/trade-agreementsaccords-commerciaux/ressources/fcm/summary-guidesommaire.aspx?lang=eng) 18

Questions?

IB: 6050147

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