Casual Legal: Trade agreements

By Sean Ward
Reynolds Mirth Richards Farmer LLP
Alberta Municipalities Casual Legal Service Provider

Municipalities have had to follow the requirements set out in the Canadian Free Trade Agreement (CFTA) since 2017, when it replaced the Agreement on Internal Trade.

The CFTA is intended to reduce barriers to trade between provinces by requiring public bodies in Canada, including municipalities, to engage in open competitive procurement processes for purchases that exceed certain threshold values. It also adds to the requirements applicable to municipalities in Alberta under the New West Partnership Trade Agreement (NWPTA).

Like the NWPTA, the CFTA includes exceptions to the obligation to engage in competitive procurement processes in certain specific situations. However, the list of exceptions in the CFTA is far more detailed. In some cases, those exceptions mirror those in the NWPTA such as “unforeseeable situations of urgency,” or “acquisitions of a confidential or privileged nature” with similar or even identical wording in both agreements. In other cases, there are additional exceptions in the CFTA not specifically articulated in the NWPTA, such as the right to sole source from a supplier to “ensure compatibility with existing goods”; where a change in the supplier of goods or services cannot be made “for economic or technical reasons such as requirements of interchangeability”; or for purchases which are “made under exceptionally advantageous conditions” arising in the very short term such as those arising from liquidation or bankruptcy.

However, it is important to keep in mind that for municipalities in Alberta, an exception is only helpful to the extent it applies under both the CFTA and the NWPTA. Municipalities in the four western provinces must comply with both trade agreements. If an exception applies under the CFTA, but not the NWPTA, then sole sourcing based on the CFTA alone would still put a municipality in breach of its obligations under the NWPTA.

In the examples listed above, under the NWPTA you would have to argue that the purchase fits within the broad exception of demonstrating “that only one supplier is able to meet the requirements of a procurement.” That is a different and potentially harder standard to meet. As a result, it is important to remember when reviewing the trade agreements to consider whether a municipality is entitled to sole source a particular purchase, you must find an exception under both the CFTA and the NWPTA. An exception under one alone will not be sufficient to relieve of a municipality of its obligations to engage in a competitive procurement process under the other.

To access Alberta Municipalities Casual Legal Helpline, Alberta Municipalities members can call toll-free to 1-800-661-7673 or send an casuallegal [at] abmunis.ca (email) to reach the municipal legal experts at Reynolds Mirth Richards and Farmer LLP. For more information on the Casual Legal Service, please call 310-MUNI (6864) or send an riskcontrol [at] abmunis.ca (email) to speak to Alberta Municipalities Risk Management staff. Any Regular or Associate member of Alberta Municipalities can access the Casual Legal Service.

DISCLAIMER: This article is meant to provide information only and is not intended to provide legal advice. You should seek the advice of legal counsel to address your specific set of circumstances. Although every effort has been made to provide current and accurate information, changes to the law may cause the information in this article to be outdated.