Security and General Exceptions

Security and General Exceptions is a provision in the government-procurement chapters of international trade agreements. It permits a party to take measures, or withhold information, that it considers necessary to protect its essential security interests in procurement involving arms, ammunition, war materials, national security or national defence. It also preserves measures needed to protect public morals, public order or safety, human, animal or plant life or health, and intellectual property.

The exact wording differs from one agreement to the next. In the Canada-European Union Comprehensive Economic and Trade Agreement (CETA), the provision is Article 19.3, titled "Security and general exceptions". Other Canadian agreements carry equivalent or closely related provisions, and the effect is the same: a covered procurement can be taken outside some or all of the agreement's obligations.

What the security exceptions cover

The security half of the provision protects three kinds of procurement. The first is procurement of arms, ammunition or war material. The second is procurement indispensable for national security. The third is procurement for national-defence purposes. When one of these applies, the buying party is not bound by the agreement's rules in the way it would be for an ordinary covered purchase.

What the general exceptions cover

The general half preserves a party's ability to adopt or enforce measures necessary to protect public morals, public order or public safety. It extends to the protection of human, animal or plant life or health and to the protection of intellectual property. It also reaches certain goods or services connected with persons with disabilities, philanthropic institutions or prison labour. The Canada-Panama free trade agreement contains a closely related provision, as do the Canada-Ukraine, Colombia and Peru agreements.

The National Security Exception at DND and the CAF

A related Canadian term is the National Security Exception (NSE). The Department of National Defence describes it as a provision in most Canadian domestic and international trade agreements that allows Canada to exclude a procurement from some or all trade-agreement obligations when necessary to protect Canada's essential security interests.

Under DAOD 3016-0, DND and the Canadian Armed Forces can invoke the NSE only when compliance with a trade agreement could be expected to pose a risk to Canada's essential security interests. Invoking it does not remove the obligation to comply with the Government Contracts Regulations, including the requirements for sole-source justifications and other sourcing-strategy matters.

How federal buyers apply the exceptions

CanadaBuys directs contracting officials to review the exclusions in Canada's Market Access Schedule when they assess trade-agreement applicability. Officials also decide whether an exception, such as the national security exception or the general exception for human life and safety, will be invoked. Invoking an exception can exempt some or all aspects of a procurement from specified trade-agreement obligations.

The practice extends beyond departments. The Canadian Air Transport Security Authority identifies CETA Article 19.3 among the provisions that can exempt or exclude a procurement from CETA and Canada-UK Trade Continuity Agreement obligations, in its trade-agreement covered procurements procedure.

What it means for a supplier

A procurement that falls under one of these exceptions can sit outside some trade-agreement obligations. It can be run through restricted-access, limited-competition or non-competitive procedures. Read each solicitation for its stated eligibility, security, competition and information-handling requirements, because the exception itself does not set a single supplier procedure that applies in every case. Check the trade-agreement section of the tender notice to see whether an exception has been invoked.