On August 17, 2023, an updated version of the Canadian Free Trade Agreement (CFTA) was published.¹ This update combines the text of the original CFTA with all Protocols of Amendment that have been adopted since its publication in 2017, and illustrates the evolving landscape of interprovincial trade in the face of inflation surges, rising interest rates and international developments such as the introduction of the Canada-US-Mexico Free Trade Agreement (CUSMA) in 2020. For the Alberta government, the changes to the CFTA procurement framework aim to liberalize trade by limiting the ability of government entities to “buy local” when procuring goods and services that surpass certain values.

Non-governmental entities are not bound by interprovincial trade agreements. Rather, in the context of procurement, these trade agreements apply to procurement processes for governmental purposes and by government entities and public agencies. These “government entities” include:

• The federal and provincial Crown;
• Crown corporations, which include entities owned or controlled by the federal or provincial Crown;
• Governmental ministries; and
• Corporations that are owned or controlled by a municipality, a publicly funded academic/health/social service entity or a school board.²

Even post-secondary institutions such as the University of Alberta, Grant MacEwan University and the Northern Alberta Institute of Technology are bound by the procurement chapters of interprovincial trade agreements as government agencies.³

When the estimated value of a procurement passes a certain monetary threshold, a procuring entity in Alberta must embark upon a non-discriminatory process to ensure that businesses in other provinces have the same chance of obtaining that contract as those in Alberta. However, federal, provincial, and territorial governments can maintain a list of exceptions in which the CFTA and the New West Partnership Trade Agreement (NWPTA) procurement frameworks will not apply. For example, the CFTA specifically excludes the procurement of health services from falling under its purview, and in this situation permits the procuring entity to “buy local.”⁴ Government entities must therefore be aware of the evolving changes to the CFTA and NWPTA because they may now be required to follow a non-discriminatory competitive procurement process where they previously were not required to do so.

1. Removal of province-specific procurement exceptions

In 2019, the Alberta government began removing its province-specific procurement exceptions under the CFTA.⁵ The 2023 consolidated CFTA reflects an amendment that permits a province/territory to remove its province/territory-specific exceptions without requiring other signatories’ consent. As the CFTA now stands, Alberta no longer contains any province-specific exceptions to the procurement framework.⁶

In addition to the CFTA, the Alberta government has also signed the NWPTA, along with British Columbia, Saskatchewan and Manitoba. The CFTA and NWPTA are substantially similar when it comes to the non-discriminatory procurement practices, but if they conflict, the provision that is more conducive to trade liberalization prevails.

All thirteen provinces and territories are signatories to the CFTA, whereas the NWPTA only has four signatories. The NWPTA aims to liberalize trade among its four provincial signatories to an even larger extent than the CFTA by decreasing the monetary thresholds for procurements that must follow a non-discriminatory process, and by not including any province-specific exceptions. The elimination of Alberta-specific exceptions for procurement in the CFTA thus further liberalized interprovincial procurement to an extent comparable to that which already existed under the NWPTA.

While Alberta no longer has province-specific procurement exceptions in the CFTA, both Article 504 of the CFTA and Part V of the NWPTA contain general exceptions that government entities should evaluate before embarking on a procurement process. If the good or service being procured falls under one of these general exceptions, the government entity does not need to follow the prescribed procurement rules.

2. Upcoming changes to the CFTA thresholds

The CFTA monetary procurement thresholds are adjusted every two years to account for inflation, and an update to these thresholds is expected in January 2024.⁷ The current thresholds were introduced in January 2022.⁸ The NWPTA also has its own procurement thresholds, though they tend to be lower than those set out in the CFTA and do not change with inflation.

Not every government entity follows the same thresholds. Procurements by post-secondary institutions, as government agencies, have lower triggering thresholds under both the CFTA and NWPTA than for Crown corporations. As a result, there are situations where neither the NWPTA or CFTA apply, where only the NWPTA applies, or where both the NWPTA and CFTA apply to a procurement process.

The NWPTA thresholds are as follows:

The CFTA thresholds are as follows:

The triggering thresholds for both agreements tend to be lower for government agencies than for Crown corporations. Additionally, the thresholds for Crown corporations under the CFTA are significantly higher than the NWPTA. Thus, while both types of procuring entity should be aware of these threshold values for relatively modest procurements, this is particularly important for government agencies.

Takeaways

The interprovincial trade agreements that impact government procurement are continuously evolving, as seen through regular updates to the CFTA. We can also expect to see further change in this area with the updated CFTA thresholds expected in 2024. For government entities such as Crown corporations and post-secondary institutions alike, it is important that the CFTA and NWPTA frameworks are never far from mind when embarking upon a procurement process.

A special thank you to Christina Basler (articling student) for her assistance with this article.

1. Canadian Free Trade Agreement, Consolidated Version (August 17, 2023)↩
2. “Contract opportunities with the Government of Alberta,” Government of Alberta↩
3. “About Public Agencies,” Government of Alberta↩
4. CFTA, supra note 1, Art 504.11(ii)-(iv)↩
5. “CORRECTION*: Alberta takes bold step to increase free trade in Canada,” Government of Alberta↩
6. CFTA, supra note 1, Annex 519.1.↩
7. Ibid , Art 504.4.↩
8. “Effective January 1, 2022 to December 31, 2023: Article 504, Scope and Coverage,”Canadian Free Trade Agreement↩