Trade Agreement Impacts on Municipal Procurement Processes
IT IS THEREFORE RESOLVED THAT Alberta Municipalities advocate for the provincial government to abolish the NWPTA, as it would permit greater opportunities for local sourcing.
WHEREAS the New West Partnership Trade Agreement (“NWPTA”) is an accord between the Governments of British Columbia, Alberta, Saskatchewan and Manitoba (“Western Provinces”) to create a barrier-free, interprovincial market;
WHEREAS the NWPTA is restrictive as it relates to the procurement process and limits the opportunities or options for local sourcing by municipalities in the western provinces to the posting thresholds, which are less than the posting thresholds in the Canadian Free Trade Agreement (“CFTA”);
WHEREAS that discrepancy in the thresholds creates an advantage for public bodies and contractors outside of the western provinces to be detriment of municipalities and contracts within the western provinces; and
WHEREAS local sourcing could be beneficial for a number of municipalities in Alberta as they would be supporting their own local economy.
Municipalities in Alberta would benefit from a shift to procurement processes that allow for local businesses to be given priority. Domestic trade agreements, such as the CFTA and the NWPTA, which are negotiated at the federal and provincial levels of government, do not currently allow for such provisions.
One option for Alberta Municipalities is to lobby on behalf of all its member municipalities with a focus on dissolving one of the domestic trade agreements, being the NWPTA, which applies only to western provinces. While it is true that the NWPTA served a valuable purpose in promoting trade liberalization in the western provinces prior to the introduction of the CFTA in 2017, the NWPTA applies only to the western provinces, whereas the CFTA applies to the federal government and all provinces in Canada. Considering the introduction of the CFTA, a case can be made that the NWPTA continues to exist in a way that disadvantages the western provinces.
For example, the thresholds in the CFTA are tied to inflation and increase over time, while the thresholds in the NWPTA do not. Further, the CFTA has higher thresholds than the NWPTA, meaning the threshold for single-source or sole source procurements is higher for non-western provinces. Under the NWPTA, western provinces are restricted to a threshold of $75,000 for goods and services and $200,000 for construction, while other provinces can take advantage of the higher thresholds in the CFTA of $121,200 for goods and services and $302,900 for construction. This ultimately allows non-western provinces local preference policies for procurements up to $121,200 for goods and services and $302,900 for construction, while western provinces are limited to $75,000 for goods and services and $200,000 for construction.
Additionally, while the foundational concepts contained in the CFTA and NWPTA are similar, the agreements do contain some different exceptions for when single-sourcing or soles sourcing is permitted. This results in more opportunities for non-western provinces to engage in single-source or sole-source procurements than there are for western provinces.
When non-western provinces extend more sole sourcing opportunities to their own local contractors, contractors from the western provinces bidding on work in other regions of Canada may have fewer opportunities than are afforded to contractors from these other regions of bidding on work within the western provinces, which are bound by the more restrictive terms of the NWPTA.
As the NWPTA is negotiated at the provincial government level, Alberta Municipalities, which represents numerous Alberta municipalities, is a natural conduit to lobby the provincial government for support in this initiative.
The Minister of Jobs, Innovation and Trade indicated the New West Partnership Trade Agreement (NWPTA) is designed to open more trade between the four parties than can be achieved nationally, under agreements such as the Canada Free Trade Agreement (CFTA). Alberta’s government continues to encourage other provinces to join the NWPTA as the most comprehensive trade agreement in Canada. The province will raise the possibility of adjusting thresholds with other NWPTA parties; however, all decisions to amend the agreement require consent of all four signatories.