Canada and the EU are exchanging greater access to their respective government procurement markets than either has given to the United States.
On October 18, 2013, Canadian Prime Minister Stephen Harper and European Commission President Jose Manuel Barroso announced that Canada and the European Union (EU) had concluded negotiations of a Comprehensive Economic and Trade Agreement (CETA). Canada described the agreement as its “most ambitious trade initiative, broader in scope and deeper in ambition” than the North American Free Trade Agreement (NAFTA). Under CETA, Canada has committed to a greater opening of its procurement market to the EU than it has ever provided under any agreement with the United States. Similarly, the EU will give Canada access to procurement that it has denied the United States under the WTO Government Procurement Agreement (GPA) — the only agreement that governs U.S. access to European procurement markets,
Canada did not cover any sub-central entities under the GPA until 2010 when it exchanged sub-central coverage with the United States under the United States-Canada Agreement on Government Procurement. In that agreement, Canada gave the United States permanent access to the procurement of its provinces and territories, but only temporary access to procurement of construction services by its major municipalities. Subsequently, in the recent revision of the GPA, Canada extended the same rights to the procurement of its provinces and territories to the EU.
Under CETA’s government procurement commitments, Canada is opening “its sub-federal level to European bidders to an extent never done before.” Canada, also, is permitting the EU to participate in the procurement of its municipalities, academia, school boards and hospitals (MASH). In exchange, the EU is giving Canada access to the procurement of “thousands of regional and local government entities,” which it had denied Canada under the revised GPA. The EU withholds services procured by its sub-central entities from its commitments to the United States under the GPA.
Canada does not cover any utilities under the GPA or NAFTA, the trade agreements that, in addition to the 2010 bilateral agreement, determine the U.S. access to the procurement of its northern neighbor. In response, the United States withholds coverage of its electric utilities, including the Tennessee Valley Authority and Bonneville Power Administration, from Canada. In NAFTA, the United States stated that it would provide such coverage to Canada when it permitted the United States to participate in the procurement of Canada’s provincial hydro utilities.
Under CETA, Canada is providing the EU with access to “75-80 percent of procurement by major energy entities across Canada, with commitments by all provinces and territories with major energy-production and distribution capacity.” Canada is also covering mass transit in all provinces and territories, with certain restrictions. Quebec and Ontario are retaining the right to require a 25 percent Canadian value for their procurement of public-transit vehicles (rolling stock). In addition, Quebec will be able, within its 25 percent, to require final assembly in Canada. Canada excluded all major ports and airports from the agreement.
In the GPA, the EU covers a broad range of utilities in sectors that include drinking water, electricity, airports, maritime or inland ports and transportation (railways, urban railways, automated systems, tramway, trolley bus, bus and cable). Under the GPA, the EU denied Canada access to all of its utilities since Canada did not cover those sectors in the revised GPA. The EU gives the United States access only to procurement in its electricity sector.
Under CETA, Canada has gained access to “a large array of [European] entities operating in the utilities sector.” While the precise coverage is not known because the CETA text has not yet been made public, the EU appears to have opened all of its utilities to Canada, except for ports and airports.
The agreement in principle will need to be ratified by both the Canadian and EU parliaments, which may take 18 months to two years.
Under CETA, Canada and the EU are according one another with far more favorable treatment in procurement of sub-central entities and utilities than either provides to the United States. The U.S. negotiations with Canada in the Trans-Pacific Partnership (TPP) and the EU in the Transatlantic Trade and Investment Partnership (TTIP) may provide an opportunity for the United States to narrow the disparity in coverage.
Jean Heilman Grier
November 1, 2013
Government of Canada, Canada-European Union, Comprehensive Economic and Trade Agreement (CETA), Agreement Overview, last accessed Oct. 31, 2013
Government of Canada, Canada-European Comprehensive Economic and Trade Agreement, Technical Summary, last accessed on Oct. 31, 2013