FAQs

  1. What does AIT stand for?
  2. What is the purpose of the Agreement on Internal Trade?
  3. Who are the signatories to the Agreement on Internal Trade?
  4. When did the Agreement on Internal Trade come into force?
  5. What is the purpose of Chapter 5 of the Agreement on Internal Trade?
  6. What entities are covered under Chapter 5 of the Agreement on Internal Trade?
  7. Are all types of procurements undertaken by covered entities subject to the provisions of Chapter 5 of the Agreement on Internal Trade?
  8. Does Chapter 5 of the Agreement on Internal Trade specify required values of covered procurement?
  9. Are buying groups permissible under Chapter 5 of the Agreement on Internal Trade?
  10. Does Chapter 5 of the Agreement on Internal Trade address preferential purchasing policies?
  11. Are there exceptions to any requirements under Chapter 5 of the Agreement on Internal Trade?
  12. What are the procedures for procurement activity under Chapter 5 of the Agreement on Internal Trade?
  13. What happens if an objection is raised against an entity’s procurement practice?
  14. Where can I receive additional information on the Agreement on Internal Trade?

What does AIT stand for?

AIT is the acronym used to refer to the Agreement on Internal Trade.


What is the purpose of the Agreement on Internal Trade?

The purpose of the Agreement is to promote an open, efficient, and stable domestic market for long-term job creation, economic growth and stability.

The Agreement provides:

  • six general rules which prevent governments from erecting new trade barriers and which require the reduction of existing rules in areas covered under the Agreement;
  • sectoral chapters outlining specific obligations in 10 economic sectors, such as government purchasing, labour mobility and investment;
  • institutional provisions to establish the structure for the effective operation of the Agreement;
  • dispute resolution procedures that are accessible to individuals and businesses as well as governments; and
  • a commitment to further liberalize trade through continuing negotiations and specified work programs.

Who are the signatories to the Agreement on Internal Trade?

The Agreement was signed by the Government of Canada, all provinces and the Yukon and Northwest Territories in the fall of 1994. Nunavut is currently an observer.


When did the Agreement on Internal Trade come into force?

The Agreement came into force on July 1, 1995.


What is the purpose of Chapter 5 of the Agreement on Internal Trade?

Chapter 5 (also known as the Procurement Chapter) provides a set of requirements that public sector entities must comply with during the tendering processes for the purchase of goods, services and construction.

These requirements are based on the following principles:

  • Non-Discrimination: All Canadian suppliers are to be treated equally.  This means that preferential or discriminatory treatment of goods, services or suppliers is prohibited.
  • Transparency: All covered procurements are to be made available to the supplier community by way of a public notice.
  • Fair and Open Procurement Practices: Solicitation documents must clearly state requirements of a procurement, reveal how the bids will be evaluated and provide all relevant information to help businesses complete and submit bids.

What entities are covered under Chapter 5 of the Agreement on Internal Trade?

In 1995 Chapter 5 came into effect for government entities (e.g. federal departments, provincial departments and ministries).

In 1999 Chapter 5 was expanded to cover the MASH Sector, which includes municipalities, municipal organizations, school boards and publicly funded academic institutions and health entities.

In 2003 Chapter 5 was expanded again to cover crown corporations.

For a complete list of all covered entities refer to Annex 502.1A, Annex502.2A and Appendix A of Annex 502.3.


Are all types of procurements undertaken by covered entities subject to the provisions of Chapter 5 of the Agreement on Internal Trade?

Under Chapter 5, procurement is defined as a means the acquisition by any means, including by purchase, rental, lease or conditional sale, of goods, services or construction, but does not include:

  1. any form of governmental assistance such as grants, loans, equity infusion, guarantees or fiscal incentives;
  2. governmental provision of goods and services to persons or other government organizations; or
  3. employer-employee

Does Chapter 5 of the Agreement on Internal Trade specify required values of covered procurement?

Only procurements valued at or above the specified thresholds are subject to the provisions of Chapter 5.

For Government Entities the thresholds are:

  • $25,000 or greater for goods
  • $100,000 or greater for services
  • $100,000 or greater for construction

For MASH Sector Entities:

  • $100,000 or greater for goods and services
  • $250,000 or greater for construction

For Crown Corporations:

  • $500,000 or greater for goods and services
  • $5,000,000 or greater for construction

In determining whether procurement is above or below the specified thresholds the total final financial cost of the procurement is employed which would include all forms of remuneration such as premiums, fees and commissions.

Under Chapter 5 splitting procurement into smaller pieces with the intent to circumvent the Agreement is considered a discriminatory practice.


Are buying groups permissible under Chapter 5 of the Agreement on Internal Trade?

Buying groups (two or more entities joined to create achieve efficiencies and economies of scale by combining purchasing requirements) is allowed under Chapter 5, provided that the practices used are consistent with the requirements of the Agreement.


Does Chapter 5 of the Agreement on Internal Trade address preferential purchasing policies?

Under the Agreement, preferential treatment provided to specific vendors is prohibited, which includes municipal or provincial local preference policies.


Are there exceptions to any requirements under Chapter 5 of the Agreement on Internal Trade?

In some circumstances, covered entities have the ability to sole source contracts, such as in the case of an unforeseeable situation of urgency.

More details on the procurement exceptions can be found at: Articles 506.11 and 506.12, Article 507, Article 508, Annex 502.1B.


What are the procedures for procurement activity under Chapter 5 of the Agreement on Internal Trade?

The procurement provisions under Chapter 5 are based on the idea that competition is the norm.

When a procurement is at or above the threshold, an open, transparent and competitive procurement process must be followed.

Under section 506 of Chapter 5 the precise procedures for procurement are outlined.  Under these requirements a call for tender is required which contains:

  1. brief description of the procurement contemplated;
  2. the place where a person may obtain information and tender documents;
  3. the conditions for obtaining the tender documents;
  4. the place where the tenders are to be sent;
  5. the date and time limit for submitting tenders;
  6. the time and place of the opening of the tenders in the event of a public opening; and
  7. a statement that the procurement is subject to the Agreement.

What happens if an objection is raised against an entity’s procurement practice?

Under the Agreement, dispute resolution is addressed under Article 513, 514 and Chapter 17 and follows a three-step process:

  1. Dispute Avoidance
  2. Consultation
  3. Resolution through and impartial panel (if the other two steps are not successful)

If you are a supplier and you believe that you have a legitimate complaint concerning a procurement practice by a covered entity, please feel free to contact your provincial contact point.


Where can I receive additional information on the Agreement on Internal Trade?

Additional information on the Agreement can be found by contacting the Internal Trade Secretariat:

Suite 850, 444 St. Mary Avenue
Winnipeg MB  R3C 3T1
Phone: (204) 987-8094
Fax: (204) 942-8460
Website: www.ait-aci.ca

The Secretariat was established to provide administrative and operational support to the functioning of the Agreement and MARCAN website.