In reaction to the imposition by the US government of “reciprocal tariffs,” the Government of Canada has introduced a new Interim Policy on Reciprocal Procurement (the Policy). The Policy aims to (i) ensure that countries that do not provide Canadian Suppliers (as defined below) with a similar level of market access do not unfairly benefit from access to Canada’s Federal procurement market, and (ii) promote procurement opportunities for Canadian Suppliers in foreign procurement markets. These developments occur as Canada undertakes to negotiate a new economic and security partnership with the US.
The introduction of the Policy follows the Government of Ontario’s introduction earlier this year of its Procurement Restriction Policy1 (the “Ontario Policy”) which, as of March 4, 2025, began to restrict US businesses from participating in Ontario’s public sector procurements. Further information on the Ontario Policy can be found in our earlier comment, “As US-Canada Trade Tensions Persist Ontario Continues to Restrict US Businesses from Provincial Government Contracts.”
Application of the Policy
The Policy applies to the posting of non-defence2 procurements over $10,000 (subject to certain exceptions) where such procurements are published publicly to potential suppliers after July 14, 2025. Contracts and solicitations posted prior to July 14, 2025 are not impacted.3
Implementation of the Policy
Under the Policy,4 Canadian Suppliers5 will continue to be eligible to compete for all Federal procurement opportunities. However, a foreign supplier’s eligibility to compete for a Federal government contract will depend on whether the procurement is subject to a trade agreement between Canada and the supplier’s jurisdiction. The Policy details the application of the new eligibility rules as follows:
- “Supplier from a non-trading partner”: If a foreign supplier is from a country that has no procurement obligations under a trade agreement with Canada, the supplier will no longer have access to Canada’s Federal procurement market. Foreign suppliers from ineligible jurisdictions such as China and India will be unable to participate unless an exception applies.
- “Supplier from an applicable trading partner”: If a foreign supplier is from a country that has a trade agreement with Canada that includes government procurement obligations,6 the supplier will continue to have access to Canada’s Federal procurement market — but only to the extent allowed by the specific terms of procurement obligations in the applicable trade agreement. US suppliers will continue to have access but only to the extent of Canada’s commitments under the WTO Agreement on Government Procurement.
Changes to Canada’s Bid Review Mechanism
Eligible suppliers (including Canadian Suppliers and eligible foreign suppliers) may make complaints to the Canadian International Trade Tribunal (the “Tribunal”) with respect to Federal contracts for the procurement of goods or services awarded or proposed to be awarded on the grounds that violate applicable trade agreement requirements. This process is set out in Primer on Federal Government Contracting.
The Canadian International Trade Tribunal Procurement Inquiry Regulations (the “Regulations”) govern how suppliers access the procurement inquiry and complaint system for Federal government procurements.
Consistent with the terms of the Policy, the Regulations have been amended to clarify that only Canadian Suppliers, foreign suppliers from a non-trading partner where an exception applies, or foreign suppliers from an applicable trading partner, are eligible to bring a procurement complaint to the Tribunal.
Key Takeaway
Suppliers are cautioned to raise questions as soon as possible in the procurement process to confirm whether they are eligible to compete in a Canadian Federal procurement process.
The International Trade team at Cassels has the experience required to assist suppliers in navigating the issues ahead and will continue to monitor the implementation of the Policy.
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1 See Supply Manual: Section 3.129 Interim Policy on Reciprocal Procurement.
2 “A “Defence Good” means a good indicated in Appendix A of the Policy that is procured by or on behalf of the Department of National Defence (DND), the Royal Canadian Mounted Police (RCMP), or the Canadian Coast Guard (CCG). A “Defence Service” means service related to a Defence Good.
3 Contracts and solicitations posted prior to July 14, 2025, will not be impacted.
4 Supply Manual Section 3.129 Interim Policy on Reciprocal Procurement.
5 A Canadian Supplier which means: (i) a supplier that has a place of business in Canada where it conducts activities on a permanent basis that is clearly identified by name and accessible during normal business hours; or (ii) a joint venture where each member of the joint venture has a place of business in Canada where it conducts activities on a permanent basis that is clearly identified by name and accessible during normal business hours.
6 Trade Agreements with procurement obligations include the WTO Agreement on Government Procurement, the Canada-European Union Comprehensive Economic and Trade Agreement (CETA) and The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).’