The annual
West Government Contracts Year in Review Conference in mid-February provided an opportunity for taking stock of advancements and setbacks in international procurement. The assessment pointed to modest improvements in the international procurement arena over the past year, including the addition of Moldova and Ukraine to the roster of the WTO Government Procurement Agreement (GPA). Setbacks included the withdrawal of the United States from the Pacific Rim trade agreement and the stalled negotiations of a transatlantic trade pact with the European Union. Looking ahead, unknowns include Trump's approach to procurement restrictions and Brexit.
The current GPA participants number 47, slightly less than 30% of the WTO membership. That number is set to expand when Australia, China, the Kyrgyz Republic and Tajikistan complete their negotiations to join the GPA. In addition, Russia may start negotiations, following its application last August to join the plurilateral Agreement. For all of these countries, except Australia, GPA accession would fulfill a commitment made as part of its terms for becoming a WTO member.
The negotiations of three of the WTO members advanced in 2016, and could be completed within 2017. Over the past year, they submitted new market access offers detailing the procurement that they would open under the GPA:
- Australia submitted a revised offer.
- The Kyrgyz Republic presented a revised initial offer, 14 years after it had initially tabled its first offer (in 2002).
- Tajikistan tabled three revised offers in 2016, and a fourth offer earlier this month.
China, however, has not tabled a new offer since 2014, after submitting six offers following initiation of its GPA accession in 2007. However, that may change this year. According to the
Washington Trade Daily (Feb. 27), China told the GPA parties at a recent meeting in Geneva that it would submit revised market access offers “that will include qualitatively enhanced openings in sub-central government structures and disciplines on activities of its state-owned enterprises [SOEs] in particular sectors”.
Those are two sectors in which the GPA parties have sought greater commitments.
China's 2014 statistics show the significance of local government procurement. The sub-central entities account for 95% of China’s procurement, with only 5% conducted at the central government level. China's meager coverage of SOEs in its earlier offers has been a stumbling block to completion of its accession negotiations.
With respect to bilateral and regional trade agreements, the most significant development has been the soon-to-be implemented, albeit on a provisional basis, of the
Comprehensive Economic and Trade Agreement (CETA) between Canada and the EU. Under CETA, Canada agreed to open the procurement for the first time of its provincial utilities and MASH sector, comprised of municipalities, school boards and publicly funded academic, health and social service entities. With this Agreement, the EU gains unprecedented access to Canadian procurement, access that is not available to U.S. suppliers.
A major setback for international procurement was President Trump’s
withdrawal of the U.S. from the Trans-Pacific Partnership Agreement (TPP). That Agreement would have brought Malaysia and Vietnam’s government procurement under international rules and guaranteed U.S. suppliers opportunities to participate in those markets. However, the EU through a bilateral trade agreement with Vietnam will gain rights to participate in that country's procurement once the agreement is implemented.
The negotiations of the Transatlantic Trade and Investment Partnership (TTIP) between the U.S. and the EU may be facing a fate similar to the TPP's. After more than four years of negotiations, the future of TTIP hangs in a balance. It awaits a determination by the Trump Administration of whether to restart the negotiations or take a different approach to EU trade issues. TTIP’s future may also be affected by the outcome of 2017 national elections in France, Germany and the Netherlands.
Other procurement challenges that may lie ahead include the Trump Administration's implementation of its
“Buy America” commitment, in particular in the major Infrastructure spending promised during the presidential campaign. A first step in that direction was the
presidential order for a study on requiring American-made steel to be used in pipelines. Another unknown is how Brexit, Britain’s departure from the EU, will unfold and its effects on procurement.
The 2016 assessment is available at
Converging Procurement Systems: Developments in 2016.
Jean Heilman Grier
February 28, 2017
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The annual West Government Contracts Year in Review Conference in mid-February provided an opportunity for taking stock of advancements and setbacks in international procurement. The assessment pointed to modest improvements in the international procurement arena over the past year, including the addition of Moldova and Ukraine to the roster of the WTO Government Procurement Agreement (GPA). Setbacks included the withdrawal of the United States from the Pacific Rim trade agreement and the stalled negotiations of a transatlantic trade pact with the European Union. Looking ahead, unknowns include Trump's approach to procurement restrictions and Brexit.
The current GPA participants number 47, slightly less than 30% of the WTO membership. That number is set to expand when Australia, China, the Kyrgyz Republic and Tajikistan complete their negotiations to join the GPA. In addition, Russia may start negotiations, following its application last August to join the plurilateral Agreement. For all of these countries, except Australia, GPA accession would fulfill a commitment made as part of its terms for becoming a WTO member.
The negotiations of three of the WTO members advanced in 2016, and could be completed within 2017. Over the past year, they submitted new market access offers detailing the procurement that they would open under the GPA: