North American Free Trade Agreement (NAFTA)

The North American Free Trade Agreement (NAFTA) was a free-trade agreement among Canada, the United States and Mexico. It entered into force in 1994. Its government-procurement rules sat in Chapter 10, which set out market-access, national-treatment, non-discrimination and transparency commitments for covered public purchases. The full text of that chapter is published by the Government of Canada as Part Four: Government Procurement.

NAFTA was replaced by the Canada-United States-Mexico Agreement (CUSMA) on July 1, 2020. It is not a NATO standard or a NATO procurement regime. Today it matters mainly for procurements that began before the replacement date, as the Treasury Board of Canada Secretariat explains in its contracting policy notice on the replacement of NAFTA by CUSMA.

What Chapter 10 required of covered buyers

Chapter 10 applied only to procurements that met the agreement's coverage rules, including the applicable monetary thresholds. For covered procurements, it provided national treatment and non-discrimination for eligible goods, suppliers and service suppliers from Canada, the United States and Mexico. The Canadian International Trade Tribunal describes these commitments in its Procurement Review Process publication. The chapter also carried transparency obligations, including published notices of intended procurement.

How NAFTA applied to federal departments, DND and the RCMP

NAFTA covered procurements by Canadian federal departments and agencies when the thresholds and coverage conditions were met. Tender notices for procurements subject to federal trade agreements had to be published through the federal electronic tendering service. Crown corporations had separate coverage and thresholds under the same federal framework, which Contracting Policy Notice 2019-4 sets out.

The procurement annexes expressly identified specified goods purchased by the Department of National Defence and the Royal Canadian Mounted Police. That coverage was subject to the agreement's conditions and exceptions.

Defence exclusions and provincial limits

NAFTA's coverage was not universal. The agreement contained exclusions and exceptions for certain national-security and defence procurements, so a federal buyer alone did not make a purchase subject to NAFTA.

The Canadian sources do not establish a general Chapter 10 obligation for provincial or local buyers in Canada. On the U.S. side, the Trade Commissioner Service states that NAFTA government-procurement coverage was limited to the federal level. State and local buyers were not generally required by NAFTA to provide equal treatment to Canadian suppliers. See its page on state and local government opportunities.

The July 1, 2020 replacement and transition rules

NAFTA did not apply to Canadian procurements commencing on or after July 1, 2020. Canada is not a party to CUSMA's government-procurement chapter. Current federal procurement commitments with the United States and Mexico arise principally through other agreements, which CanadaBuys lists on its list of trade agreements.

A procurement could still fall under NAFTA if solicitation documentation leading to an awarded instrument was published before July 1, 2020. In that case NAFTA could continue to apply until the procurement was complete. A request for information alone did not make a later procurement subject to NAFTA.

What NAFTA means for a supplier bidding on Canadian public contracts

For new solicitations, NAFTA is not the governing agreement. Suppliers should check the trade agreements listed in the solicitation itself rather than assume NAFTA rights.

• Confirm whether a solicitation is covered and which agreements apply.
• For older contracts, check whether the solicitation documentation was published before July 1, 2020.
• Meet the origin and qualification requirements stated in the solicitation.
• Expect technical, security, financial and delivery requirements to apply in full, because NAFTA never removed them.