On July 14, 2025, the Canadian government began implementing a reciprocal procurement policy that will exclude suppliers from countries that do not open their procurement markets to Canada. With this new policy, Canada is replacing its long-standing open-by-default government procurement system in which foreign suppliers offering foreign goods and services were able to compete in federal procurement. Canada began exploring a shift in that policy in 2022 in response to ‘Buy America’ policies, especially the broad domestic preference in the US Infrastructure Investment and Jobs Act. This post examines the new policy, its development, implications for US suppliers, and the increasing demands for reciprocity in government procurement.
Under its new Interim Policy on Reciprocal Procurement, the Canadian government aims to address the concern that Canadian suppliers, goods, and services often do not receive the same access to foreign procurement markets as foreign suppliers have to its open procurement system. Federal agencies can now exclude suppliers from countries that limit Canadian access to their own government procurement from bidding on non-defense contracts, valued at ot above $10,000, unless an exception applies (no capacity or availability, unreasonable pricing, or public interest).
A foreign supplier’s eligibility to compete or be awarded a contract will depend on whether the procurement is covered by a trade agreement between Canada and the supplier's jurisdiction. Suppliers from a jurisdiction that does not have government procurement obligations with Canada under a trade agreement will not be eligible to compete or be awarded the contract.
The reciprocity policy, which applies to all federal departments and agencies, will be implemented in two phases. In the first phrase that began on July 14, 2025, the policy will be applied on the basis of the location of suppliers. In the second phase (to be introduced at a later date), supplier eligibility will be determined by the origin of goods and services being offered. Labelling the new policy as “Interim” suggests that a broader permanent policy may be planned, perhaps a reciprocal policy that extends to provinces and local governments.
Canada has been developing this policy for the past three years. It began exploring reciprocal procurement restrictions in 2022, primarily in response to ‘Buy America’ restrictions, especially the broad ‘Buy America’ requirement that applies to iron, steel, manufactured products, and construction materials used in any federally funded infrastructure project, as mandated by the Infrastructure Investment and Jobs Act of 2021. At that time, Canada sought public input on several potential reciprocal procurement policies: the federal reciprocal procurement policy (now being implemented), placing conditions on federal financial assistance for infrastructure projects (such as those in the US); and a set-aside program for small businesses.
Canada announced plans to implement a new policy in the spring of 2025 in its 2024 Fall Economic Statement, stating it would limit access to its federal procurement market to Canadians and trading partners that provide access to Canadian businesses under international agreements. It also indicated it would explore placing domestic content conditions on foreign suppliers’ participation in federally funded infrastructure projects and creating a program to prioritize doing business with small Canadian businesses.
When the United States imposed steel and aluminum tariffs on Canada in March 2025, the Canadian government indicated it would prioritize funding of projects that use predominantly Canadian steel and aluminum and was exploring additional ways to maximize the use of Canadian steel and aluminum in government-funded projects. (The province of Ontario imposed a procurement ban against US suppliers in response to the tariffs in March.)
On June 19, Canada announced a series of measures to protect Canadian steel and aluminum producers and workers. In addition to counter-tariffs on steel and aluminum products, they included reciprocal procurement policies to “limit access to federal procurements to suppliers from Canada and from our reliable trading partners that provide reciprocal access.”
For US suppliers, the new policy will not apply to the federal procurement that Canada covers under the WTO Government Procurement Agreement (GPA), as long as the US is a party to that agreement. However, if the Trump administration carries out its threat to withdraw from the GPA (unless it is reformed), US suppliers would not have any rights to participate in Canadian procurement because Canada did not undertake any procurement obligations under the US-Mexico-Canada Agreement.
The European Union recently took even more aggressive action based on the lack of reciprocity when it banned procurement of medicial devices from China because China refused to provide reciprocal access to its own medical device procurement. Beginning June 30, 2025, Chinese suppliers of medical devices are excluded from all EU procurement exceeding an estimated value of €5 million. It provides exceptions where no alternative suppliers exist and allows no more than 50% of inputs from China in successful bids. The action was the EU’s first use of its International Procurement Instrument.
In response to the EU procurement ban, China has retaliated by restricting its own government purchases of medical devices from the EU that exceed 45 million yuan ($6.3 million) in value. Its restrictions also apply to imports of medical devices from other countries that contain EU-made components worth more than 50% of the contract value.
In addition, the European Court of Justice recently ruled that suppliers from third countries without reciprocal trade agreements with the EU have limited rights to participate in the EU’s public procurement market.
Both Canada’s new policy and the EU’s application of its reciprocity instrument raise the question of whether other GPA parties will forgo their open procurement markets and restrict the participation of countries that do not provide reciprocal access to their own procurement.
Jean Heilman Grier
July 16, 2025
Related Posts
Canada: Developing Reciprocal Procurement Measures
Canada Considers Procurement Restrictions
Ontario Retaliates Against Tariffs with US Procurement Ban
EU Bans Procurement of Chinese Medical Devices
EU Adopts Procurement Reciprocity Regulation
America First Trade Policy Report: Modify WTO Procurement Agreement or Withdraw