The international procurement system made modest gains in 2013 with promises for more progress in 2014.
For the United States, the primary developments in international procurement centered on the negotiations of two major regional trade agreements. The negotiations of a Pacific Rim agreement neared conclusion, while the negotiations of an agreement with the European Union were launched.
In the WTO, the Parties to the Government Procurement Agreement were unable to fulfill their aim of implementing the revision of the GPA by the end of 2013; and they set a new goal for the first quarter of 2014. The GPA added one new WTO member to its roster, bringing to 43 the WTO Members covered by it. The accessions of several other WTO members to the GPA advanced. However, one disappointment was the lack of a new offer from China in its accession to the GPA.
In terms of expansion of procurement commitments, perhaps the most significant advancement of the year was the completion of a trade agreement between Canada and the European Union. In that agreement, the two partners will exchange greater access to their procurement markets than either provides to the United States.
WTO Government Procurement Agreement
Implementation of Revised GPA Set for First Quarter of 2014: When the Parties to the WTO Government Procurement Agreement (GPA) were unable to implement the revision of the GPA by the WTO Ministerial Conference in Bali, Indonesia in December 2013, they set a deadline of March 31, 2014 for its implementation. Two-thirds of the 15 Parties must ratify it before it can enter into force. However, to date, only seven Parties have ratified it: Canada, the European Union, Hong Kong China, Liechtenstein, Norway, Chinese Taipei and the United States. The eight GPA Parties that have yet to do so are: Armenia, Iceland, Israel, Japan, the Republic of Korea, the Netherlands with respect to Aruba, Singapore and Switzerland.
Croatia Added to GPA Roster: Croatia became the 43rd WTO member to participate in the GPA when it joined the European Union on July 1, 2013. In order to fulfill the U.S. obligation to treat Croatian goods, services and suppliers the same as U.S. goods, services and suppliers when it conducts procurement covered by the GPA, the United States issued two measures. One measure waived the application of discriminatory purchasing requirements, including the Buy American Act, to Croatian goods, services and suppliers. The second measure amended the Federal Acquisition Regulation (FAR) to add the Republic of Croatia as a designated country under the list of WTO GPA countries.
Accessions to GPA: There were no accessions to the GPA in 2013. However, New Zealand’s accession advanced when it submitted an improved coverage offer. Also, Montenegro commenced accession negotiations with the submission of its application in October. In addition, work continued in the WTO Committee on Government Procurement on the pending accessions of Ukraine, which had submitted its initial offer at the end of 2012, and Moldova. The most anticipated GPA accession – that of China — did not move forward. China did not table a new revised offer in 2013, despite a commitment to do so in the U.S.-China Strategic and Economic Dialogue.** However, China made a new commitment in meetings of the U.S.-China Joint Commission on Commerce and Trade in December to accelerate its accession and to submit a new revised offer in 2014 that would be “on the whole commensurate with the coverage of GPA parties.” In a setback for accessions, Panama withdrew its application to accede to the GPA.
TPP Negotiations Move Closer to Conclusion
Negotiations of the Trans-Pacific Partnership (TPP) advanced in 2013, as they completed their fourth year. However, the TPP parties missed their goal of concluding the negotiations by the end of 2013. They are aiming for completion of the negotiations early in 2014. With the addition of Japan in July, 12 countries are now participating in the TPP negotiations: Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam and the United States. The TPP provides an opportunity for the United States to gain access to procurement opportunities in four countries where it does not yet have agreements that open procurement: Brunei, Malaysia, New Zealand and Vietnam.
TTIP Negotiations Launched
In July 2013, the United States and the European Union commenced negotiations of a Transatlantic Trade and Investment Partnership (TTIP). The EU has cited expansion of access to U.S. procurement, especially at the sub-federal level, as one of its major objectives in the TTIP negotiations. The two parties conducted the 3rd round of TTIP negotiations in December 2013 and are expected to hold the next round in the first quarter of 2014.
U.S. Procurement Thresholds for 2014-2015
U.S. obligations under the GPA and FTAs apply to procurement covered by the United States under those agreements that is valued at or above specified U.S. dollar thresholds. The thresholds are adjusted every two years. In December 2013, the United States Trade Representative determined the procurement thresholds that will apply from January 1, 2014 through December 31, 2015. The adjusted thresholds were published in the Federal Register on December 28, 2013.
Canada-European Union Agreement
In October 2013, Canada and the EU reached agreement on a Comprehensive Economic and Trade Agreement (CETA). Canada has agreed to an unprecedented opening of its sub-federal procurement, providing the EU with access to the procurement of its municipalities, academia, school boards and hospitals (MASH). In addition, Canada will be able to participate in the procurement of thousands of EU regional and local government entities.
Under CETA, Canada will provide the EU with access to “75-80 percent of procurement by major energy entities across Canada,” and mass transit procurement in its provinces and territories, subject to certain restrictions. For its part, the EU is giving Canada access to a broad array of European entities in the utilities sector. As a consequence of the agreement, Canada and the EU will exchange access to procurement that neither partner provides to the United States.
Jean Heilman Grier
December 30, 2013
** 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.