UPDATED: WTO Government Procurement Agreement

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Exclusion of government procurement from multilateral trade agreements: Government procurement is excluded from the national treatment obligations in both the General Agreement on Tariffs and Trade (GATT), which covers goods, and the WTO General Agreement on Trade in Services, which covers services. That means that parties to these multilateral agreements can favor their domestic suppliers, goods and services and discriminate against their foreign counterparts when they purchase goods and services.

Plurilateral Government Procurement Agreements: Beginning in 1981, a growing number of countries have opened their government procurement to foreign suppliers under plurilateral agreements, which are agreements that only apply to the countries or economies that join them.

GATT Code on Government Procurement: The first plurilateral procurement agreement to open government procurement was the 1981 GATT Code on Government Procurement (GATT Code), negotiated during the Tokyo Round of Multilateral Trade Negotiations. The GATT Code provided special rules that applied to the procurement of the 28 GATT Members that signed on to it, not to all GATT Members.  Its scope was limited to the procurement of goods by the central government entities specified by each party. The Code was amended once, in 1988.

1994 WTO Government Procurement Agreement (1994 GPA): The GATT Code was replaced with another plurilateral agreement that resulted from negotiations, conducted in parallel with the Uruguay Round of Multinational Trade Negotiations. On April 15, 1994, the Agreement on Government Procurement (GPA) was signed in Marrakesh, Morocco, at the same time the Agreement Establishing the World Trade Organization (WTO Agreement) was signed.  (The GPA is one of the plurilateral agreements listed in Annex 4 to the WTO Agreement.)

The GPA entered into force on January 1, 1996 for the European Union (EU) (and its member states), Israel, Japan, Norway, Switzerland and the United States and on January 1, 1997 for the Republic of Korea, which had not been a party to the GATT Code. Subsequently, four more GATT Parties joined the GPA through accession: the Netherlands with respect to Aruba in 1996; and Hong Kong China, Liechtenstein and Singapore in 1997.

The procurement covered by the GPA was significantly broader than the procurement subject to the GATT Code.  The GPA covered the procurement of goods, services and construction services by three categories of entities: central government entities, sub-central government entities and other entities, including utilities and government enterprises.

The GPA has two parts. One is its text, which requires the Parties to follow basic principles and procedures when they undertake procurement covered by the GPA. The provisions are intended to ensure that the Parties conduct procurement in a manner that is transparent, fair, non-discriminatory and predictable. A cornerstone of the GPA is the obligation to provide national treatment to the goods, services and suppliers of the other Parties. That means that Parties cannot favor their domestic goods, services or suppliers in procurement covered under the GPA.

In the second part of the GPA, each Party specifies the procurement that it covers under the Agreement in annexes or coverage schedules. This covered procurement is the result of negotiations among the Parties.

Revised GPA: Based on a mandate in the 1994 GPA, in 1997, the GPA Parties launched negotiations aimed at improving the Agreement and extending its coverage on the basis of mutual reciprocity. In December 2011, after more than a decade of negotiations, the Parties reached agreement on a revised GPA. In March 2012, they approved the results of the negotiations and sent the revised Agreement for ratification by the Parties in accordance with their respective domestic procedures.  Ratification by two-thirds of the 15 Parties was required for implementation of the revised GPA. (Parties indicate their ratification by depositing instruments of acceptance with the WTO Director-General.)

Entry into Force of Revised GPA:  In April 2014, the revised GPA entered into force. It now applies to the 12 Parties that have ratified it: Canada, European Union (and its member states), Hong Kong China, Iceland, Israel, Japan, Liechtenstein, Netherlands with respect to Aruba, Norway, Singapore, Chinese Taipei (Taiwan) and the United States. Three Parties (Armenia, Republic of Korea and Switzerland) have not yet ratified it. As a consequence, the 1994 GPA is still in force and all Parties must continue to provide those three Parties with access to their procurement based on the 1994 Agreement. Until those Parties ratify the revised GPA, they will not be given access to the new procurement in the revised Agreement.

Improvements in Revised GPA Text: The GPA revision includes a complete rewrite of the text to incorporate current procurement practices, in particular the use of electronic procurement, and to make it easier to use. Its use has been facilitated by clarifying obligations, removing ambiguities and redundancies and adopting a structure that reflects the procurement process. However, the revision changes neither the fundamental obligations nor the rights of the Parties under the Agreement. The Revised GPA may be found at: Revised Agreement on Government Procurement.

Expansion of Covered Procurement in Revised GPA: A second major element of the revision was expansion of the procurement covered by the United States and the other GPA Parties. According to estimates by the WTO Secretariat, the revised GPA expands the procurement covered under the Agreement by approximately $80 billion to $100 billion annually. The procurement covered under the revised GPA may be found at Coverage Schedules under the Revised GPA.

Current GPA Membership: The GPA has 15 Parties, comprising 43 WTO Members: Armenia, Canada, the European Union and its 28 member states (Austria, Belgium, Bulgaria, Croatia, Czech Republic, Cyprus, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovak Republic, Slovenia, Spain, Sweden, and the United Kingdom), Hong Kong China, Iceland, Israel, Japan, the Republic of Korea, Liechtenstein, the Netherlands with respect to Aruba, Norway, Singapore, Switzerland, Chinese Taipei (Taiwan) and the United States.

In October 2014, Montenegro and New Zealand were approved for membership in the GPA. Each will become a GPA Party 30 days after it submits its instrument of accession with the WTO Director-General. For an up-to-date list of GPA Parties, see GPA parties.

Jean Heilman Grier

November 10, 2014

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