1. In the interest of expanding mutually beneficial trade opportunities in government procurement based on the principles of non-discrimination and fair and open competition for the supply of goods and services, the Parties shall actively strive to achieve, as quickly as possible, the multilateral liberalization of international government procurement policies to provide balanced and equitable opportunities.

2. As a further step toward multilateral liberalization and improvement of the GATT Agreement on Government Procurement, which includes the annexes thereto (the Code), the Parties shall undertake the obligations of this Chapter.

The Parties reaffirm their rights and obligations under the provisions of the Code.

1. For procurements covered by this Chapter, the Code, as modified or supplemented by this Chapter, is incorporated into and made a part of this Chapter.

2. Any modifications to the Code shall automatically be incor-porated into, and made a part of, this Chapter on the date that these modifications take effect for the Parties unless the Parties otherwise agree.

3. In the event of any inconsistency between the provisions of the Code and the obligations of this Chapter, the obligations of this Chapter shall prevail to the extent of the inconsistency.

1. The obligations of this Chapter shall apply only to procurements specified in Code Annex I, including the general notes thereto, for the United States of America and Canada respectively, that are above a threshold of twenty-five thousand US dollars and the equivalent in Canadian dollars, as the case may be, and below the Code threshold.

2. Canada will calculate, and convert the value of the threshold of (US)$25,000 into its own national currency and notify the value to the United States of America, it being understood that these calculations will be based on the official conversion rates of the Bank of Canada. The conversion rates, for purposes of this Chapter, will be the average of the weekly values of the Canadian dollar in terms of the US dollar over the two-year period preceding October 1, with effect from January 1. The threshold in Canadian currency will be fixed for January 1, 1989, on the basis of calculations for the preceding one-year period, and thereafter it will be fixed for two-year periods, on the basis of calculations for the preceding two-year period.

3. Code Annex I is incorporated into and made a part of this Chapter and is reproduced in Annex 1304.3. Any further modifications to Annex I shall automatically be incorporated into and made a part of Annex 1304.3 on the date that such modifications take effect for the Parties unless the Parties otherwise agree.

1. With respect to all measures regarding government procurement covered by this Chapter, each Party shall accord to eligible goods treatment no less favourable than the most favourable treatment accorded to its own goods.

2. Each Party shall, for its procurements covered by this Chapter:

3. Each Party shall introduce and maintain, in accordance with the principles contained in Annex 1305.3, equitable, timely, transparent and effective bid challenge procedures for potential suppliers of eligible goods.

4. In implementing its procedural obligations under this Chapter, each Party shall provide sufficient transparency in the procurement process to ensure that the bid challenge system operates effectively. Accordingly, each Party shall ensure that complete documentation and records, including a written record of all communications sub-stantially affecting each procurement, are maintained in order to allow verification that the procurement process was carried out in accordance with the obligations of this Chapter.

5. Potential suppliers of either Party shall have reasonable access to information substantially affecting the procurement, subject to laws and regulations of either Party relating to confidentiality.

6. Each Party shall take all necessary steps to ensure the efficient administration of the obligations under this Chapter.

7. Each Party shall use the publications it has specified in the Code, or other publications as mutually agreed, to comply with the publication requirements of this Chapter.

1. The Parties shall cooperate in monitoring the implementation, administration and enforcement of the obligations of this Chapter.

2. In addition to the information requirements of the Code, the Parties shall collect and exchange annual statistics on the procurements covered by this Chapter. Statistics and other information shall be reported on the basis of the eligible goods. Such reports shall identify the country of origin of the goods covered under this Chapter and contain the following information with respect to contracts awarded:

3. Each Party shall give sympathetic consideration to a request from the other Party for the exchange of additional information on a reciprocal basis.

The Parties shall undertake bilateral negotiations with a view to improving and expanding the provisions of this Chapter, not later than one year after the conclusion of the existing multilateral renegotiations pursuant to Article IX:6(b) of the Code, taking into account the results of these renegotiations.

Notwithstanding Article 2003 (National Security), for purposes of this Chapter the provisions of Article VIII of the Code shall apply.

For purposes of this Chapter:

eligible goods means unmanufactured materials mined or produced in the territory of either Party and manufactured materials manufactured in the territory of either Party if the cost of the goods originating outside the territories of the Parties and used in such materials is less than 50 percent of the cost of all the goods used in such materials; and

territory of a Party means

1. Department of Agriculture

2. Department of Consumer and Corporate Affairs

3. Department of Energy, Mines and Resources including:

Atomic Energy Control Board

Energy Supplies Allocation Board

National Energy Board

4. Department of Employment and Immigration including: Immigration Appeal Board

Canada Employment and Immigration Commission

5. Department of External Affairs

6. Department of Finance including:

Department of Insurance

Anti-Dumping Tribunal

Municipal Development and Loan Board

Tariff Board

7. Department of the Environment

8. Department of Indian Affairs and Northern Development

9. Department of Regional Industrial Expansion including: Machinery Equipment Advisory Board

l0. Department of Justice including:

Canadian Human Rights Commission

Statute Revision Commission

Supreme Court of Canada

11. Department of Labour including:

Canada Labour Relations Board

12. Department of National Defence* including:

Defence Construction (1951) Limited

13. Department of National Health and Welfare including:

Medical Research Council

Office of the Coordinator, Status of Women

14. Department of National Revenue

15. Department of Post Office

16. Department of Public Works

17. Department of Secretary of State of Canada including:

National Library

National Museums of Canada

Public Archives

Public Service Commission

18. Department of Solicitor General including:

Royal Canadian Mounted Police*

Correctional Service of Canada

National Parole Board

19. Department of Supply and Services (on its own account) including:

Canadian General Standards Board

Statistics Canada

20. Department of Veterans Affairs including:

Veterans Land Administration

21. Auditor General of Canada

22. National Research Council

23. Privy Council Office including:

Canada Intergovernmental Conference Secretariat

Commissioner of Official Languages

Economic Council

Public Service Staff Relations Board

Federal Provincial Relations Office

Office of the Governor General's Secretary

24. National Capital Commission

25. Ministry of State for Science and Technology including: Science Council

26. National Battlefields Commission

27. Office of the Chief Electoral Officer

28. Treasury Board

29. Canadian International Development Agency (on its own account)

30. Natural Sciences and Engineering Research Council

31. Social Sciences and Humanities Research Council

32. Fisheries Price Support Board

* The following products purchased by the Department of National Defence and the RCMP are included in the coverage of this Agreement, subject to the application of paragraph 1 of Article VIII.

(Numbers refer to the Federal Supply Classification Code)

22. Railway equipment

23. Motor vehicles, trailers and cycles (except buses in 2310, military trucks and trailers in 2320 and 2330 and tracked combat, assault and tactical vehicles in 2350)

24. Tractors

25. Vehicular equipment components

26. Tyres and tubes

29. Engine accessories

30. Mechanical power transmission equipment

32. Woodworking machinery and equipment

34. Metal working machinery

35. Service and trade equipment

36. Special industry machinery

37. Agricultural machinery and equipment

38. Construction, mining, excavating and highway maintenance equipment

39. Materials handling equipment

40. Rope, cable, chain and fittings

41. Refrigeration and air conditioning equipment

42. Fire fighting, rescue and safety equipment

(except 4220 Marine life-saving and diving equipment

4230 Decontaminating and impregnating equipment)

43. Pumps and compressors

44. Furnace, steam plant, drying equipment and nuclear reactors

45. Plumbing, heating and sanitation equipment

46. Water purification and sewage treatment equipment

47. Pipe, tubing, hose and fittings

48. Valves

49. Maintenance and repair shop equipment

52. Measuring tools

53. Hardware and abrasives

54. Prefabricated structures and scaffolding

55. Lumber, millwork, plywood and veneer

56. Construction and building materials

61. Electric wire and power and distribution equipment

62. Lighting fixtures and lamps

63. Alarm and signal systems

65. Medical, dental and veterinary equipment and supplies

66. Instruments and laboratory equipment

except (6615: Automatic pilot mechanisms and airborne gyro components

6665: Hazard-detecting instruments and apparatus)

67. Photographic equipment

68. Chemicals and chemical products

69. Training aids and devices

70. General purpose automatic data processing equipment, software, supplies and support equipment (except 7010 ADPE configurations)

71. Furniture

72. Household and commercial furnishings and appliances

73. Food preparation and serving equipment

74. Office machines, visible record equipment and automatic data processing equipment

75. Office supplies and devices

76. Books, maps and other publications

(except 7650: Drawings and specifications)

77. Musical instruments, phonographs and home-type radios

78. Recreational and athletic equipment

79. Cleaning equipment and supplies

80. Brushes, paints, sealers and adhesives

81. Containers, packaging and packing supplies

85. Toiletries

87. Agricultural supplies

88. Live animals

91. Fuels, lubricants, oils and waxes

93. Non-metallic fabricated materials

94. Non-metallic crude materials

96. Ores, minerals and their primary products

99. Miscellaneous

General Note:

Notwithstanding the above, this Agreement does not apply to contracts set aside for small businesses.

2. Department of Commerce

3. Department of Education

4. Department of Health and Human Services

5. Department of Housing and Urban Development

6. Department of Interior (excluding the Bureau of Reclamation)

7. Department of Justice

8. Department of Labour

9. Department of State

10. United States International Development Co-operation Agency

11. Department of the Treasury

12. General Services Administration (Purchases by the

Tools Commodity Center are not included; purchases

by the Regional 9 Office of San Francisco, California are not included)

13. National Aeronautics and Space Administration (NASA)

14. Veterans Administration

15. Environmental Protection Agency

16. United States Information Agency

17. National Science Foundation

18. Panama Canal Company and Canal Zone Government

19. Executive Office of the President

20. Farm Credit Administration

21. National Credit Union Administration

22. Merit Systems Protection Board

23. ACTION

24. United States Arms Control and Disarmament Agency

25. Civil Aeronautics Board

26. Federal Home Loan Bank Board

27. National Labour Relations Board

28. National Mediation Board

29. Railroad Retirement Board

30. American Battle Monuments Commission

31. Federal Communications Commission

32. Federal Trade Commission

33. Inter-State Commerce Commission

34. Securities and Exchange Commission

35. Office of Personnel Management

36. United States International Trade Commission

37. Export-Import Bank of the United States

38. Federal Mediation and Conciliation Service

39. Selective Service System

40. Smithsonian Institution

41. Federal Deposit Insurance Corporation

42. Consumer Product Safety Commission

43. Equal Employment Opportunity Commission

44. Federal Maritime Commission

45. National Transportation Safety Board

46. Nuclear Regulatory Commission

47. Overseas Private Investment Corporation

48. Administrative Conference of the United States

49. Board for International Broadcasting

50. Commission on Civil Rights

51. Commodity Futures Trading Commission

52. The Maritime Administration of the Department of Transportation

53. The Peace Corps

54. Department of Defense (excluding Corps of Engineers)

This Agreement will not apply to the following purchases of the DOD:

(a) Federal Supply Classification (FSC) 83 - all elements of this classification other than pins, needles, sewing kits, flagstaffs, flagpoles, and flagstaff trucks;

(b) FSC 84 - all elements other than sub-class 8460 (luggage);

(c) FSC 89 - all elements other than sub-class 8975

(tobacco products);

(d) FSC 2310 - (buses only);

(e) Specialty metals, defined as steels melted in steel manufacturing facilities located in the United States or its possessions, where the maximum alloy content exceeds one or more of the following limits, must be used in products purchased by DOD: (1) manganese, 1.65 per cent; silicon, 0.60 per cent; or copper, 0.06 per cent; or which contains more than 0.25 per cent of any of the following elements: aluminium, chromium, cobalt, columbium, molybdenum, nickel, titanium, tungsten, or vanadium; (2) metal alloys consisting of nickel, iron- nickel and cobalt base alloys containing a total of other alloying metals (except iron) in excess of l0 per cent; (3) titanium and titanium alloys; or, (4) zirconium base alloys;

(f) FSC 19 and 20 - that part of these classifications defined as naval vessels or major components of the hull or superstructure thereof;

(g) FSC 51;

(h) Following FSC categories are not generally covered due to application of Article VIII, paragraph 1:

10, 12, 13, 14, 15, 16, 17, 19, 20, 28, 31, 58, 59, 95

This Agreement will generally apply to purchases of the following FSC categories subject to United States Government determinations under the provisions of Article VIII, paragraph 1 .

22. Railway Equipment

23. Motor Vehicles, Trailers, and Cycles (except buses in 2310)

24. Tractors

25. Vehicular Equipment Components

26. Tyres and Tubes

29. Engine Accessories

30. Mechanical Power Transmission Equipment

32. Woodworking Machinery and Equipment

34. Metalworking Machinery

35. Service and Trade Equipment

36. Special Industry Machinery

37. Agricultural Machinery and Equipment

38. Construction, Mining, Excavating, and Highway Maintenance Equipment

39. Materials Handling Equipment

40. Rope, Cable, Chain and Fittings

41. Refrigeration and Air Conditioning Equipment

42. Fire Fighting, Rescue and Safety Equipment

43. Pumps and Compressors

44. Furnace, Steam Plant, Drying Equipment and Nuclear Reactors

45. Plumbing, Heating and Sanitation Equipment

46. Water Purification and Sewage Treatment Equipment

47. Pipe, Tubing, Hose and Fittings

48. Valves

49. Maintenance and Repair Shop Equipment

52. Measuring Tools

53. Hardware and Abrasives

54. Prefabricated Structures and Scaffolding

55. Lumber, Millwork, Plywood and Veneer

56. Construction and Building Materials

61. Electric Wire, and Power and Distribution Equipment

62. Lighting Fixtures and Lamps

63. Alarm and Signal Systems

65. Medical, Dental, and Veterinary Equipment and Supplies

66. Instruments and Laboratory Equipment

67. Photographic Equipment

68. Chemicals and Chemical Products

69. Training Aids and Devices

70. General Purpose ADPE, Software, Supplies and Support Equipment

71. Furniture

72. Household and Commercial Furnishings and Appliances

73. Food Preparation and Serving Equipment

74. Office Machines, Visible Record Equipment and ADP Equipment

75. Office Supplies and Devices

76. Books, Maps and Other Publications

77. Musical Instruments, Phonographs, and Home Type Radios

78. Recreational and Athletic Equipment

79. Cleaning Equipment and Supplies

80. Brushes, Paints, Sealers and Adhesives

81. Containers, Packaging and Packing Supplies

85. Toiletries

87. Agricultural Supplies

88. Live Animals

91. Fuels, Lubricants, Oils and Waxes

93. Non-metallic Fabricated Materials

94. Non-metallic Crude Materials

96. Ores, Minerals and their Primary Products

99. Miscellaneous

General Notes

1. Notwithstanding the above, this Agreement will not apply to set asides on behalf of small and minority businesses.

2. Pursuant to Article I, paragraph 1(a), transportation is not included in services incidental to procurement contracts.

In order to promote fair, open and impartial procurement procedures, the Parties shall maintain bid challenge procedures for procurements covered by this Chapter in accordance with the principles that follow.