With the Canada-U.S. trade war continuing to develop, Prince George city council is set to discuss how its procurement processes work and how they can be adjusted in response.
City staff were directed to prepare a report during January’s budget talks after councillors wondered how U.S. President Donald Trump’s tariffs might affect Prince George’s bottom line.
That report, prepared by director of finance and IT services Kris Dalio, outlines Prince George’s procurement rules and responsibilities under Canadian trade agreements.
Dalio wrote that Prince George is subject to agreements like the Comprehensive Economic and Trade Agreement (CETA), the Canada-UK Trade Continuity Agreement (CUKTCA), the Canadian Free Trade Agreement (CFTA) and the New West Partnership Trade Agreement (NWPTA).
“All of these agreements hold the same basic principles of open and non-discriminatory procurement,” Dalio wrote. “Trade agreements do not permit preferential treatment of local supplies.”
The NWPTA, which is between BC, Alberta, Saskatchewan and Manitoba, comes into effect when the city is looking to purchase goods and services worth $75,000 or more or construction worth $200,000 or more.
The CFTA, which applies across Canada, comes into effect for goods and services worth $133,800 or more or construction worth $344,400 or more.
CETA and CUKTCA apply to dealings with the European Union and the United Kingdom, respectively and have the same thresholds. Those thresholds are $353,300 or more for goods and services and $8.8 million or more for construction.
Basically, if the threshold under one of those agreements for a project is met, the city is required to consider bids from organizations in those jurisdictions.
For the Canada-US-Mexico Agreement (CUSMA), signed during the first Trump Administration, Dalio writes that “it is agree that the World Trade Organization rules apply to procurement for CUSMA and municipalities are not covered by that agreement.
“This means that municipalities could restrict U.S. proponents and likely not break any trade agreement rules. However, administration would not recommend doing this without careful consideration,” Dalio wrote.
“Broadly speaking, restrictive bidding practices lead to higher prices and poorer quality goods being procured. Specifically, consideration should be given to U.S. goods that the municipality heavily relies on and would have extremely large cost and/or efficiency consequences to change, such as Microsoft products for our technology needs and U.S. suppliers for our mobile and other equipment needs.”
Dalio warns against projects being split up into multiple solicitations to get around these thresholds, warning that it would be seen as the city trying to skirt the rules of the trade agreements.
Unless the city’s bylaws, managers can directly award solicitations worth up to $10,000. For solicitations worth $10,001 to $50,000, a manager can still deal with them directly but three quotes must be received before proceeding.
All solicitations worth more than $50,000 are formal and are handled by the city’s procurement division.
At the Feb. 3 council meeting, a piece of correspondence from the Independent Contractors and Businesses Association discourages the use of community benefit agreements in municipal procurement practices.
In principle, these agreements require developers to meet certain social outcomes while carrying out their projects.
However, Dalio noted in his report that the city has never used these agreements and there are no planned procurements that use them.
The report concludes by addressing perhaps the biggest elephant in the room — the potential impact of the U.S.-Canada trade war and the tariffs that both countries are levying.
“As the tariffs discussion between the U.S. and Canada is an evolving situation with unknown timing impacts, administration is unable to quantify the impacts to council at this time,” Dalio wrote. “As budgets potentially become constrained due to increased costs, Administration will recommend to council courses of action at that time.”
Calling it “an evolving situation” might be an understatement.
Since Trump became president again in January, he declared 25 per cent tariffs on Canadian and Mexican goods would come into effect in early February before putting those plans on hold for a month.
The tariffs went into effect Tuesday, March 4 as threatened though Canadian energy received a lower, 10 per cent tariff. Canada responded with counter-tariffs on $30 billion worth of American goods and threatened to escalate that amount by another $125 billion if the U.S. didn’t back down within 21 days.
Just two days later, on Thursday, March 6, Trump changed course again, pausing tariffs affecting goods directly related to auto manufacturing and those covered by CUSMA until April 2. He also reduced the tariff on Canadian potash, an important component in fertilizers, to 10 per cent.
Though Canada didn’t eliminate its first round of tariffs, The Associated Press reported that Finance Minister Dominic LeBlanc said this country would put its second round of tariffs on pause until April 2.
Here in BC, Premier David Eby announced his government would introduce legislation that would allow it to put a toll on U.S. commercial vehicles travelling to Alaska through British Columbia.
That’s on top of other measures like ordering the BC Liquor Distribution Branch to stop buying “red state” American liquor and stop carrying it on government-owned liquor store shelves as well as ordering both government departments and Crown corporations to prioritize Canadian vendors of good and services.
