Agreement on Internal Trade

The Agreement on Internal Trade (AIT) came into force in 1995 and is an agreement between Canada and the provinces and territories (other than Nunavut). It has been amended and developed over the years. The provisions on procurement apply to the provinces and territories, and to identified Crown corporations. There are specific provisions that apply to the MASH sector.

As with the NWTPA, the basic aim of the AIT is to avoid discrimination between suppliers from different parts of Canada. The AIT provides specific examples of measures that would be inconsistent with the duty not to discriminate between suppliers. These include:

  • biasing technical specifications in favour of, or against, particular goods or services
  • timing events in the procurement process so as to prevent suppliers from submitting
  • specifying quantities and delivery schedules of a scale and frequency that may reasonably be judged as deliberately designed to prevent suppliers from meeting the requirements

While these examples are specific to the AIT, they provide a useful checklist for ensuring compliance with the other trade agreements.

The financial thresholds that apply under the AIT are larger than in the NWTPA - $25,000 for goods, $100,000 for services and $100,000 for construction. The thresholds are higher again for the MASH sector.

There are a number of exemptions to the procurement rules, including:

  • where an unforeseeable situation of emergency exists and the goods, services or construction could not be obtained in time by means of open procurement procedures
  • where the acquisition is of a confidential or privileged nature and disclosure could reasonably be expected to compromise government confidentiality, cause economic disruption or be contrary to the public interest
  • where compliance with the open procurement provisions would interfere with a party’s ability to maintain security or to protect human, animal or plant life or health
  • the absence of receipt of any bids in response to a call for tenders
  • where only one supplier is able to meet the requirements of a procurement, but only in the specific circumstances, including:
    • to ensure compatibility with existing products, to recognize exclusive rights or to maintain specialized products
    • where there is an absence of competition for technical reasons
    • real property

Although many of the exceptions are similar to those under the NWPTA, there are differences, both in the particular wording and in the overall scope of the exceptions. As always, the devil is in the details. If a government entity wishes to take advantage of one of the exceptions, care must be taken to review the exact wording and to apply the relevant facts. Care must always be taken to ensure that the exception is not being used as a reason to avoid competition - there must be a legitimate reason underlying the use of the exception.

The AIT has a similar dispute resolution process to the NWPTA, although complaints must be made within 90 days after the complainant acquired, or should have acquired, knowledge of the facts that gave rise to the complaint. Complaints against the federal government must be brought in the CITT, with the strict time deadlines that apply there - see previous blog posts.

Government entities should have a formal complaint process in force to allow suppliers who consider that there has been a breach of the AIT’s procurement rules.

Next we will look at the international trade agreements to which Canada is a party.