As discussed in a recent post, the United States, the European Union and other parties to the WTO Government Procurement Agreement (GPA) questioned Saudi Arabia in its WTO Trade Policy Review (TPR) regarding its plans to fulfill its WTO commitment to seek GPA membership. Saudi Arabia has responded that its commitment applied to “a previous version” of the GPA, with the implication that it no longer considers its commitment relevant. This post looks at the Saudi response and its implications for expansion of the GPA.
Saudi Arabia joined the WTO in 2005 with a commitment to commerce GPA negotiations by tabling a market access offer. It has taken no steps to fulfill that promise and had been silent on its plans despite enquires by the WTO procurement committee. Finally, in written responses to questions raised in the TPR, Saudi Arabia stated that its WTO commitment to seek GPA membership “pertains and was specific to a previous version of the Agreement,” implying that its commitment only applied to the 1994 GPA, which was in effect when it joined the WTO, and does not apply to the revision of the Agreement. That of course does not explain why it did not fulfill its WTO commitment under the 1994 GPA before the revised GPA entered into force in 2014.
The Saudi position that its commitment related to a “previous version” of the GPA is hardly persuasive or tenable. First, the revised GPA is an amendment of the Agreement adopted in 1994, not a new agreement. Second, the Saudi response suggests that the revised GPA differs in substance from the 1994 GPA when in fact the revision did not alter the fundamental obligations or rights of the parties under the Agreement. Rather, it modernized the text to reflect current procurement practices, in particular the use of electronic procurement. It also made it more user friendly by clarifying obligations, removing ambiguities and redundancies and adopting a more coherent structure that reflects the conduct of procurement. The Saudi attempt to step away from its WTO commitment may be the result of its implementation in 2019 of a government procurement law that would not be compatible with the GPA.
The parties should challenge the Saudi position as it could affect other WTO members that made similar commitments when they joined the WTO. Those members are currently the major source of prospective GPA parties. Two-thirds (24) of the countries that have acceded to the WTO since its establishment have committed to seek GPA membership as part of their protocols of accession. Nine have become GPA parties: five through accession (Armenia, Moldova, Montenegro, Chinese Taipei and Ukraine); and four as a result of EU enlargement: Croatia, Estonia, Latvia and Lithuania.
Of the 15 members that have yet to fulfill their WTO commitments, six are actively engaged in GPA accession negotiations: China, Kazakhstan, North Macedonia, Kyrgyz Republic, Russian Federation and Tajikistan.
All but three of the WTO members with GPA commitments (Afghanistan, Kazakhstan and the Seychelles) entered the WTO before the revised GPA entered into force. If all adopted the Saudi position and walked away from their commitments, expansion of the GPA would be threatened as it relies heavily on those countries.
Since 1996, only eight countries have acceded to the GPA without such a commitment and includes the United Kingdom, which became an independent party following Brexit. Moreover, Brazil is the only country in GPA negotiations that has elected to join the GPA without a commitment.
Jean Heilman Grier
May 12, 2021
UPDATE (May 13, 2021): A clarification was added that the revised GPA was an amendment of the Agreement adopted in 1994 and is not a new agreement.