In 2014, China should fulfill its WTO commitment to join the Government Procurement Agreement.
At the 24th U.S.-China Joint Commission on Commerce and Trade (JCCT) in December, China committed to “accelerate” its negotiations to accede to the WTO Government Procurement Agreement (GPA) and to submit a new revised offer in 2014. China indicated that the offer would be “on the whole commensurate with the coverage of GPA parties.” If China can fulfill the requests and expectations of the GPA Parties with its next offer, its accession to the GPA could be within sight. But, there is cause for skepticism. China has disappointed the GPA parties many times over the past dozen years. It has raised expectations that it did not meet when it finally delivered its offers to the WTO. Even its promise of a new offer in 2013 was not met.**
When China joined the WTO 12 years ago, in December 2001, it declared its intention to become a party to the GPA and to table an offer of the procurement that it would cover under the GPA (coverage offer) “as soon as possible”. For China, “as soon as possible” meant in six years. Despite urging by the United States for quicker action, China did not submit its application for accession to the GPA and initial coverage offer until December 2007. While the United States and other GPA Parties welcomed China’s initiation of the accession process, they were critical of the limited scope of the offer, noting that it would need substantial improvements to bring China’s coverage to the level of the GPA Parties.
Over the next six years, China submitted three revised coverage offers (July 2010, November 2011 and November 2012). Each offer was made in response to China’s commitments in the JCCT or the U.S.-China Strategic and Economic Dialogue (S&ED), where the United States continually pressed China for broader coverage and acceleration of its accession. While each offer moved China’s accession ahead by a few paces, the offers fell far short of the requests and expectations of the United States, the European Union and other GPA Parties. The Parties continued to seek expansion of the procurement that China would bring under the agreement, with their own level of coverage as the measure of the adequacy of China’s offer.
China’s latest commitment to submit a new offer in 2014 is reminiscent of its May 2012 commitment in the S&ED to submit “a new comprehensive revised offer that responds to the requests of the GPA parties”. When China submitted that promised offer in November 2012, the United States and other Parties found it “highly disappointing.” It only responded to a few of the Parties’ earlier requests for improvements in China’s coverage and fell “well short of the coverage provided by the United States and other GPA Parties.”
To bring its coverage to a level comparable to the coverage of the United States and the other Parties, the United States has urged “China to cover state-owned enterprises, add more sub-central entities and services, reduce its thresholds for the size of covered contracts, and remove other broad exclusions.” Under the Trade Agreements Act of 1979, the United States can open U.S. federal procurement to China only if China provides reciprocal competitive opportunities to U.S. goods, services and suppliers in its procurement.
Reaching agreement on the procurement that China will bring under the GPA — as difficult as it is — is not the only issue that must be addressed in China’s accession. China must also bring its procurement laws, regulations and procedures into conformity with the revised GPA.
The WTO Committee on Government Procurement’s examination of China’s procurement laws and regulations began with China’s submission in 2008 of its Replies to the Checklist of Issues for Provision of Information Relating to Accession to the GPA. The Committee will approve China’s accession only when it is able to confirm that China’s procurement regime is in conformity with the GPA, and agrees on the other terms for its accession. That means China will need to revise its laws and other measures to remove, inter alia, domestic preferences for procurement covered under the GPA, before its accession can be approved.
Twelve years after China declared its intention to become a GPA Party, it is time for China to take the steps necessary to make that a reality. It should not delay any longer in fulfilling its WTO commitment.
Jean Heilman Grier
January 3, 2014
** China submitted a new revised offer on Dec. 31, 2013. For an assessment of the offer, please see: Modest Improvements in China’s 2013 GPA Offer, Obstacles Remain.