Policy 'will help leverage our purchasing power to support Canadian businesses and workers impacted by unjustified American tariffs'
The federal government has introduced a new Interim Policy on Reciprocal Procurement, a move aimed at shielding Canadian businesses and workers from unfair trade practices as Canada negotiates a new economic and security partnership with the United States.
Under the new policy, suppliers from countries that limit Canadian access to their own government contracts can be restricted from bidding on Canadian federal contracts—prioritising suppliers from Canada and from trading partners that provide reciprocal access to Canadian suppliers through trade agreements.
“The Government of Canada is committed to protecting and defending the interests of all Canadians, and will not compromise when it comes to ensuring fair market access for Canadian industry,” said Joël Lightbound, minister of government transformation, public works and procurement. “The Policy on Reciprocal Procurement will help leverage our purchasing power to support Canadian businesses and workers impacted by unjustified American tariffs.”
Previously, Ottawa announced it will remove all remaining federal exceptions from the Canadian Free Trade Agreement (CFTA), eliminating all 53 that have existed since the Agreement’s introduction in 2017.
Phased implementation of interim policy
The new Interim Policy on Reciprocal Procurement will apply to all new non-defence procurements over $10,000 for the Government of Canada. It applies to all federal departments and agencies and will be implemented in two phases:
- Phase 1, the interim policy, will focus on applying the policy based on the location of suppliers, starting with the roll-out of training and tools on June 30, 2025, to support implementation. The interim policy is effective as of July 14, 2025.
- Phase 2, the complete policy, will determine supplier eligibility based on the origin of goods and services being offered, and will be introduced at a later date.
Contracts and solicitations posted prior to July 14, 2025, will not be impacted.
Suppliers from non-trading-partner countries will not have access to Government of Canada procurements, unless there is a valid exception under the policy.
Exceptions under Interim Policy on Reciprocal Procurement
Meanwhile, there are still exceptions under the Interim Policy on Reciprocal Procurement. Experts from law firm Fasken noted that these include:
- low dollar value procurements (less than $10,000)
- missions abroad
- procurements limited to Indigenous businesses
- delivery of goods or services outside of Canada
“Defence procurements have a broader exception,” said firm partners Marcia Mills and Daniel Fabiano, and summer student Mia Trinh.
“The Policy does not apply if at least 51% of the estimated value of a contract is for ‘Defence Goods’ or ‘Defence Services,’ or a combination of Defence Goods and Services, for the Department of National Defence (DND), the Canadian Coast Guard (CCG), or the Royal Canadian Mounted Police (RCMP),” they said.
They added that contracting authorities may exclude a procurement from the Policy on a case-by-case basis where ‘strictly necessary’ if:
- “the good or service cannot be obtained from a Canadian supplier or a supplier of an applicable trading partner for reasons of non-availability, insufficient quantity, or quality; or
- limiting competition will impact a best value pricing outcome; or
- it is not in the public interest to apply the Policy.”
“Before bidding for opportunities, Canadian and foreign suppliers, including defence suppliers, will need to assess whether they are able to participate in the procurement if the Policy is applied, and whether any restrictions on their participation (alone or in a joint venture) may breach Canada’s trade agreement obligations,” the Fasken experts said. “This same assessment will need to be applied to the Supply Arrangements or Standing Offers the supplier holds. Suppliers should be contacting the Supply Arrangement/Standing Offer authority to determine if the Policy will be applied or is applicable to their procurement vehicle.”
U.S. President Donald Trump imposed tariffs on Canada back in March, and Canada has responded with its own tariffs on the US.
In June, however, the office of Prime Minister Mark Carney said that the Canadian leader and Trump are working on a deal that would put an end to the ongoing trade war between the two nations.
