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On June 4, 2005, the Government of Canada officially launched the web-based International Trade Agreements and Local Government: A Guide for Canadian Municipalities (the "Guide"). The Guide was developed by International Trade Canada in collaboration with the Federation of Canadian Municipalities ("FCM") as a tool to assist municipalities in understanding how they can purchase goods and services and otherwise carry on business consistent with their contracting obligations.

Part I of the Guide identifies and explains the specific provisions of trade agreements that are most likely to be relevant to municipalities, with particular emphasis on:

• the General Agreement on Trade in Services ("GATS") of the World Trade Organization ("WTO"); and
• the North American Free Trade Agreement ("NAFTA").

As background, an Annex to Part I provides a general history and overview of Canada's trade agreements and current trade negotiations, including:

• key WTO Agreements of interest and ongoing negotiations in the WTO;
• key Chapters in the NAFTA;
• bilateral trade agreements and negotiations;
• regional trade negotiations - the Free Trade Area of the Americas ("FTAA"); and
• Foreign Investment Protection Agreements and other trade and investment initiatives.

Crucially, Part II of the Guide provides guidance as to how provisions of Canada's trade agreements apply to the programs and activities of municipal governments. It sets out a series of questions designed to assist municipalities in determining whether certain types of measures commonly taken at the municipal level could be subject to provisions in Canada's international trade agreements. For this purpose, a checklist is provided to help a municipality assess the permissibility of a proposed municipal measure, along with illustrative examples. The questions and examples focus on the following areas of municipal activity:

• Financial assistance;
• Government procurement;
• Public-private partnerships; and
• Regulation (e.g., zoning and environmental regulation).

The questions and examples focus on the WTO Agreements and NAFTA since these are the agreements most likely to be relevant to municipalities.[1] However, many of the questions offer a municipality certain options in its response and are subject to a subjective assessment by the municipality. Consequently, the checklist in the Guide, while not providing conclusive answers, forms a good starting point for establishing that procurement of goods and services and other business activities by a municipality are in conformity with Canada's trade obligations. Municipal measures must be assessed against Canada's trade obligations on a case-by-case basis, and as such, legal advice should be sought by a municipality as to the application of contracting rules to specific purchases.

The purpose of this document is to provide information as to developments in the law. It does not contain a full analysis of the law nor does it constitute an opinion of Ogilvy Renault or any member of the firm on the points of law discussed.

[1]. It should be noted, however, that Canada also has similar commitments under the Canada-Israel, Canada-Chile and Canada-Costa Rica Free Trade Agreements and numerous bilateral Foreign Investment Protection Agreements.

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