Policy: Trade Agreements

Trade agreements are used to reduce barriers for trade between two or more regions.

Canada has signed several agreements that have implications for the procurement of goods and services. However, only two of them place limitations on the ability of the Broader Public Sector (BPS) to show preference for local food. They are the Agreement on Internal Trade (AIT), an intergovernmental agreement between the federal government and the provinces and territories to reduce and eliminate barriers to free movement of people, goods, services, and investments within Canada, and the Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union. CETA is only signed in principle as the specific terms are still being negotiated.

More specifically, the Ontario Ministry of Finance helps enforce the rules of the AIT through the BPS Procurement Directive. The Procurement Directive applies to all BPS institutions and any organization that procures food on their behalf, including foodservice companies and group purchasing organizations. It includes several non-discrimination rules, one of which has implications for local food procurement. This rule states:

“Organizations must not differentiate between suppliers, or goods or services on the basis of geographic location in Canada. Organizations must not adopt or maintain any forms of discrimination based on the province of origin of goods, services, construction materials or the suppliers of such goods, services or construction materials in their procurement practices.”

This language in the Procurement Directive technically prohibits the BPS from giving preference to local foods in their contracts because that would count as geographic discrimination. Despite this barrier, many organizations have found ways to support local food procurement without breaking any trade rules.

Progress Being Made

• The healthcare group purchasing organization, MEALsource, received an increase in demand for local food from their members but found the Procurement Directive prevented them from explicitly showing a preference for local food. MEALsource revised their request for proposal process so that vendors were allowed to identify local food. While this information was not used to award points in the RFP process, it could be used to break ties if two quotes are otherwise equal. It also helps MEALsource’s members understand how much local food they are buying.
• The rules in the Procurement Directive that have implications on local food procurement only apply to contracts or purchases with a value of $100,000 or greater. Many organizations have elected to either focus on un-contracted foods, such as fresh produce, or to opt-out of contracts for individual food categories to avoid these restrictions. In such situations, BPS facilities must demonstrate that a competitive process was used to source food (such as a three quote process), but are free to give preference to someone who includes local food.
• The Procurement Directive includes several “legitimate objectives” that allow public institutions to deviate from the rules. Most of the legitimate objectives relate to public health and safety, but environmental protection is also included. Local Food Plus worked with the City of Markham to implement a buy-local policy focused on local and sustainable food. By focusing on both local and sustainable attributes, the municipality can argue that the policy has the legitimate objective of protecting the human health and the environment.

Some Solutions

In addition to the examples mentioned above, the following tips may help you avoid getting caught up in trade regulations.

• Make sure that the regulations apply.
  • Before getting worried about trade regulations, make sure they apply to your situation. The rules of the Procurement Directive do not apply to smaller BPS facilities such as individual schools and daycares because they do not purchase large amounts of food.
• Focus on categories where local options are more prominent.
  • It is not worth worrying about trade regulations when deciding what fish sticks to buy, because there are not likely to be many options to choose from. Instead, look at the categories where you want to have more local options, and then determine what barriers exist and examine the options for overcoming them.
• Be creative with your policy language.
  • While you cannot always ask for local food in plain terms, you can use other language to help find what you are looking for. For example, some BPS institutions have created policies that focus on seasonal food rather than local food. A focus on fresh, un-processed food may also help.
• Procurement rules do not apply to smaller purchases and contracts.
  • In 2013, the province of Ontario launched a new local food procurement policy that asks ministries and provincial agencies to consider local food when making food purchases under $25,000. BPS facilities can also follow this policy for small foodservice and catering contracts.

Conclusions

Trade regulations may present some challenges for BPS institutions purchasing local food, but are not as significant a barrier as they are perceived to be. As this paper has detailed, there are some ways to work within trade agreements and procurement policy while still supporting local food. There are now multiple examples to follow, and new approaches are always being developed.

Keep your eyes open for our next Local Food Solution Paper where we will be talking about How Food is Purchased in the BPS. Follow @ontariofresh on Twitter to join the conversation.

This series is written with contributions from: Kathy Macpherson, Franco Naccarato, and Brendan Wylie-Toal.