The World Economic Forum published a white paper that examines government interventions in economies. These occur through subsidies, state ownership and control, government procurement policies that favor domestic players, the use of trade remedies, and investment-screening regimes. The paper, “Industrial Policy and International Competition: Trade and Investment Perspectives", published in February 2022, outlines existing international rules, key issues, and priorities for reform in each of the industrial policy areas. This post focuses on its treatment of government procurement.
For government procurement, the paper addressed the ongoing debate over the use of buy-local and domestic content requirements, taking special note of President Biden’s “Made in America” order. It also pointed out that China has offered only 20 state-owned enterprises (SOEs) in its negotiations to join the WTO Government Procurement Agreement (GPA). That is only a tiny slice of its more than 150,000 SOEs. The paper pointed out that China's negotiating position “highlights the weaknesses in the WTO framework for regulating SOEs” (detailed in the paper).
The World Economic Forum paper recommended that focusing on transparency could be a means of expanding international rules on government procurement that would attract and apply to all WTO members. The 48 WTO members that are subject to the GPA comprise less than a third of the WTO membership. Common transparency requirements in procurement across countries could facilitate participation by suppliers “without the need for market access commitments”.
During the Doha Round of multilateral trade negotiations, efforts were undertaken to develop an agreement on transparency in government procurement. However, lacking a consensus, they were abandoned in 2003. In the ensuring 20 years, countries have developed new e-procurement tools and gained more experience with transparency. As a consequence, pursuit of common rules on transparency in procurement may find greater receptivity among the WTO membership.
Jean Heilman Grier
February 10, 2022