3.3: Canada’s Trade Agreements

Government procurement is an important element of economic activity in many countries. Trade agreements represent Canada’s cooperation in multinational trade pacts and play a large role in the development of the Canadian economy. Canada’s trade GDP of roughly 68% is achieved mainly by trading with countries that are part of free-trade agreements with Canada — primarily the United States through the Canada–United States–Mexico Agreement (CUSMA) and its predecessor, the North American Free Trade Agreement (NAFTA). Binding international agreements relating to government procurement helps promote growth and development.

International Trade Agreements with Canada

International trade agreements can help governments procure the best internationally available goods at the optimal price. The benefits of increased trade liberalization through established trade agreements spread into the private sector, encouraging economic growth, transparency and procedural fairness.

Canada currently has 15 Free Trade Agreements with 51 different countries. Some of Canada’s free trade agreements, foreign investment promotion and protection agreements, plurilateral agreements and World Trade Organization agreements are discussed here.

Canada-Chile Free Trade Agreement (CCFTA)

The agreement between Canada and Chile was signed to remove the tariffs on bilateral trade. Its first objective was to foster a more open and inclusive business environment. Canada-Chile Free Trade Agreement (CCFTA) provides an accelerated avenue toward the so-called “CCFTA Work Permit.”  The agreement allows citizens of Chile to work in Canada without a Labour Market Impact Assessment (LMIA).

Canada-Colombia Free Trade Agreement (CCoFTA)

This Agreement aims to promote the expansion of reciprocal trade and economic development between the two countries. Protecting workers’ rights, enhancing environmental regulations and providing fair conditions of competition with trade are key objectives. The Agreement also protects international investors through reciprocal commitments and assures access to international arbitration.

Canada-Honduras Free Trade Agreement (CHFTA)

The Agreement was signed in 2014, recognizing the importance of promoting efficient trade facilitation. The objectives are to promote conditions of fair competition, enhanced cross-border trade services, investment and government procurement. Eliminating these tariffs will create more opportunities for importing and exporting, along with building bonds with both countries.

Canada-Korea Free Trade Agreement (CKFTA)

The CKFTA will secure Canada’s position in the Korean market and build a mutually supportive trade relationship. The Agreement provides Canadian suppliers of products and services preferential access to procurement opportunities with South Korean central government entities. The Agreement will provide new opportunities in various sectors, from aerospace, agriculture, wine, seafood and forestry to wood products.

Canada-Panama Free Trade Agreement (CPFTA)

Panama is Canada’s third-largest trading partner in Central America. Canadian goods exported to Panama include energy products, consumer goods and industrial equipment. Imports from Panama mainly consist of minerals, farm fishing, and consumer goods. The tariffs on Canadian goods exported to Panama have been eliminated, and access for Canadian service providers has improved.

Canada-Peru Free Trade Agreement (CPFTA)

The Canada-Peru Free Trade Agreement (CPFTA), signed in 2009, allowed both countries to develop international mobility program (IMP) conditions that were advantageous to Canada.  It allows companies to attract workers with a level of development that promotes quality education and, therefore, a qualified and equipped workforce.

Canada-Ukraine Free Trade Agreement (CUFTA)

CUFTA has been in force since 2017. It was modernized in 2023 by including new chapters on cross-border trade, temporary entry for business people, digital trade, financial services and regulatory practices. The agreement aims to provide increased opportunities for investors and service providers. Its chapter on government procurement was also modernized with new articles, including an article on the exchange of best practices in areas like sustainable procurement practices and streamlined procurement processes.

Canada-United States-Mexico Agreement (CUSMA)

This agreement came into force on July 1, 2020. It preserves the key elements of the North American Free Trade Agreement (NAFTA). NAFTA, created in 1994, established the largest free-trade region in the world. The new Canada-United States-Mexico Agreement reinforces Canada’s strong economic ties with the United States and Mexico.

Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is a free trade agreement between Canada and ten other countries in the Asia-Pacific: Australia, Brunei, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam.

Canada-United Kingdom Trade Continuity Agreement

The Canada-United Kingdom Trade Continuity Agreement (Canada-UK TCA) came into force on April 1, 2021, and provides continuity, predictability, and stability for trade between Canada and the United Kingdom (UK). This agreement preserves the main benefits of CETA.

Canada-European Union Comprehensive Economic and Trade Agreement (CETA)

The Canada-European Union Comprehensive Economic and Trade Agreement (CETA) is a bilateral agreement between Canada and the EU. The agreement covers virtually all sectors and aspects of Canada-EU trade and aims to eliminate or reduce barriers.

World Trade Organization Agreements

The World Trade Organization (WTO) is an international forum that establishes international trade rules and allows members to address trade issues. WTO members negotiate and accept WTO agreements to help producers of goods and services, exporters, and importers operate effectively in the international trading system.

Regional Trade Agreements (RTAs)

Regional Trade Agreements (RTA) are binding between members, not in the global environment. These trade agreements provide ways in which government purchasing can benefit from each regional purchasing system. RTAs also include the potential for consolidating the spending between regional systems.  RTAs can strengthen important procedural rights and transparency in procurement practices. The support of RTAs in the public sector has resulted in improved bidding procedures and negotiation strategies. Regional Trade Agreements align national and local firms and strengthen production and supply chain networks.

RTAs within Canada

The Canadian Free Trade Agreement (CFTA)

The Canadian Free Trade Agreement is an intergovernmental trade agreement representing the federal government and all provinces and territories. The agreement provides better access to government procurement opportunities and aligns regulatory requirements nationwide. The CFTA preserves the ability of provincial, territorial and federal governments to adopt and apply their laws and regulations for economic activity in the public interest to achieve public policy objectives. This includes protecting public health, social services, safety, consumer protection, promoting and protecting cultural diversity and workers’ rights.

The Ontario-Quebec Trade and Cooperation Agreement (OQTCA)

This bilateral trade agreement between Ontario and Quebec aligns with the CFTA. The open competitive bid thresholds under the OQTCA for goods, services and construction are the same as those stipulated by the Broader Public Sector Procurement Directive.

Worldwide RTAs

Other regional trading agreements that are in place throughout the world include:

• The European Union (EU): This single market allows citizens to live or work in an EU country, move their money, sell goods without restrictions and provide services on the same basis.  (European Union, n.d.)
• ASEAN includes 10 Southeast Asian countries (Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam) that have made significant progress in lowering intra-regional tariffs. (Association of Southeast Asian Nations, n.d.)
• MERCOSUR is a regional integration process composed of Argentina, Brazil, Paraguay, Uruguay, Venezuela, and Bolivia.  It has agreements with countries or groups of countries to promote free trade.
• The Andean Community is a free trade area. Its goal is to create a trade block composed of a free trade area with a common external tariff. It is comprised of Bolivia, Colombia, Ecuador, and Peru. (Andean Community, 2021.)
• China Trade Agreements:  China has 16 Free Trade Agreements and is working on eight more Free Trade Agreements.  Currently, China has FTA agreements with ASEAN, Singapore, Pakistan, New Zealand, Chile, Peru, Costa Rica, Iceland, Switzerland, Maldives, Mauritius, Georgia, Korea, Australia, Hong Kong, and Macao. (International Trade Administration, 2021.)

Attributions

Parts of “3.3: Canada’s Trade Agreements” have been adapted from “Chapter 7: Global Procurement” from Procurement in the Supply Chain World copyright © 2022 by Angela Reid-Regier and Bryan Snage, licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License, except where otherwise noted.

The multiple choice questions in the Checkpoint boxes were created using the output from the Arizona State University Question Generator tool and are shared under the Creative Commons – CC0 1.0 Universal License.