Buy Canadian Preference in Federal Purchasing

Summary#

This bill requires federal departments to give preference to Canadian-made products and Canadian-provided services when buying goods and services, as long as doing so does not conflict with Canada’s international trade agreements. It applies across federal purchasing, including defence, and creates a small annual transfer to each province to support similar preferences in provincial purchasing. The bill defines what counts as a “Canadian product” and a “Canadian service.”

• Sets a 50% Canadian-value threshold for products to qualify as “Canadian” (Department of Public Works and Government Services Act s.2).
• Requires preference for Canadian products and services in federal purchasing, except where trade agreements block it (Department of Public Works and Government Services Act s.7(1.1)).
• Extends the same preference rule to defence procurement (Defence Production Act s.16(2)).
• Creates an annual CAD $100,000 transfer to each province to support buy-Canadian preferences, starting after March 31, 2023 (Federal-Provincial Fiscal Arrangements Act, new Part V.2; s.25.93).
• Does not mandate buying Canadian in all cases; it is a preference subject to trade obligations (s.7(1.1), s.16(2)).

What it means for you#

• Households
  • No direct change to taxes or benefits stated. Any price or service impacts would come indirectly through how governments buy goods and services. Data unavailable.
• Workers and suppliers in Canada
  • If your company’s product has more than 50% of its value made or assembled in Canada (final assembly in Canada is required for assembled goods), you may have an edge in eligible federal tenders (Department of Public Works and Government Services Act s.2, s.7(1.1)).
  • If you provide services and meet the bill’s “Canadian service” test (e.g., Canadian citizen or permanent resident provider; Canadian corporation; certain public or non-profit entities), you may see greater consideration in federal and defence contracts that are not constrained by trade agreements (s.2; Defence Production Act s.16(2)).
• Businesses (Canadian and foreign)
  • Canadian suppliers that meet the 50% content rule could gain a bidding advantage in eligible procurements. Firms near the 50% threshold may need to document value-added in Canada to qualify (s.2).
  • Foreign suppliers, or Canadian firms with less than 50% Canadian content, may be less competitive in procurements not covered by international agreements. Where agreements apply, the preference does not operate (s.7(1.1), s.16(2)).
• Federal departments and agencies
  • Must apply a buy-Canadian preference in purchasing, except when it would conflict with international agreements. This includes defence procurement (s.7(1.1); s.16(2)).
  • Will need processes to verify whether products and services meet the bill’s “Canadian” definitions. Data unavailable on administrative costs.
• Provinces
  • Each province receives CAD $100,000 per fiscal year, for years starting after March 31, 2023, to support giving preference to Canadian products and services (Federal-Provincial Fiscal Arrangements Act, new Part V.2; s.25.93).
  • Territories are not included in this transfer (s.25.93 refers to “each province”).
• Timing
  • The transfer applies to fiscal years beginning after March 31, 2023 (s.25.93). The bill does not state other specific coming-into-force dates; standard coming-into-force would follow Royal Assent. Data unavailable on exact implementation timeline.

Expenses#

Estimated net cost: CAD $1,000,000/year (from FY2023–ongoing), plus unknown administrative costs.

• Key figures from the bill text:
  • CAD $100,000 per province per fiscal year, for fiscal years beginning after March 31, 2023 (Federal-Provincial Fiscal Arrangements Act, new Part V.2; s.25.93).
  • 10 provinces implies a total annual transfer of $1,000,000.
  • No other appropriations or savings are specified. Administrative and compliance costs: Data unavailable.

Proponents' View#

• Clarifies a buy-Canadian preference while respecting trade deals, reducing legal risk compared to blanket mandates (Department of Public Works and Government Services Act s.7(1.1); Defence Production Act s.16(2)).
• Sets a clear 50% Canadian-content rule, which can guide suppliers on how to qualify and encourage more domestic value-add and final assembly in Canada (s.2).
• Extends the preference to defence purchasing, supporting domestic industrial capacity relevant to national security (Defence Production Act s.16(2)).
• Provides predictable, ongoing funding to provinces to adopt similar preferences, with $100,000 per province each year (FPFAA Part V.2; s.25.93).
• Could increase opportunities for Canadian small and medium enterprises in eligible procurements by giving them preference where allowed. Data unavailable on expected contract volumes.

Opponents' View#

• May raise procurement costs if preferences reduce competition, especially in markets with few Canadian suppliers; the bill provides no cost estimate. Assumption flagged; Data unavailable.
• Verification of the 50% Canadian-content and service-eligibility tests could add administrative burden and slow purchasing; no resources are earmarked for this work in the bill (Department of Public Works and Government Services Act s.2; s.7(1.1)).
• The provincial transfer ($100,000 per province per year) is small relative to provincial procurement volumes, so its practical effect may be limited (FPFAA Part V.2; s.25.93).
• Risk of confusion about when trade agreements apply. If misapplied, procurements could face challenges or delays, even though the bill conditions the preference on trade obligations (s.7(1.1); s.16(2)).