Prospects for Expansion of WTO Procurement Pact

Since the WTO Agreement on Government Procurement (GPA) entered into force in January 1996, its membership has more than doubled, growing from 21 to 47 WTO members. It now constitutes slightly less than one-third of the total WTO membership. Three factors underlie that 26-member expansion: the European Union’s (EU) enlargement added 13 member states; five countries sought GPA membership to comply with commitments made as part of their WTO accession; and seven countries joined on their own initiative, all but two within the first two years of the GPA’s implementation. This post examines the role of these factors in the expansion of the GPA and points out the current paucity of WTO members negotiating to join the GPA on their own volition. It is based on a paper that will be presented at a conference in the United Kingdom next week.

The most important factor in the growth of GPA membership has been the addition of new countries to the EU. Between 2004-2013, the EU added 13 member states: Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia in 2004; Bulgaria and Romania in 2006; and Croatia in 2013. When the EU brings new countries into its fold, it adds them to its GPA commitments on the same terms and conditions as the existing member states.

A second factor behind the expansion of GPA membership is commitments made by countries joining the WTO. This is growing in importance. Since the WTO’s establishment in 1995, 36 countries or economies have acceded to that multilateral institution, and two-thirds (24) of those countries have agreed to seek GPA membership as part of their terms for becoming WTO members. Here is the status of the fulfillment of those commitments:

  • Nine of those members have fulfilled their commitments. Five entered the GPA through the accession process: Armenia (2011), Chinese Taipei (2009), Moldova (2016), Montenegro (2015) and Ukraine (2016); and four were added to the GPA when they became EU member states: Croatia, Estonia, Latvia and Lithuania.
  • Three of the 15 WTO members with unfilled commitments are actively engaged in negotiations on the terms of their accession: China: Kyrgyz Republic and Tajikistan.
  • Two recently applied for accession: Russian Federation (2016) and Former Yugoslav Republic of Macedonia (2017).
  • Four members applied for GPA membership, but their accession negotiations have languished for several years: Albania, Jordan, Georgia and Oman.
  • Five members have not yet initiated accession: Afghanistan, Georgia, Kazakhstan Mongolia, Saudi Arabia and the Seychelles.
  • Panama applied for accession, but in 2013 withdrew from the negotiations.

The 12 countries that acceded to the WTO but did not make a commitment to seek GPA membership are: Bulgaria, Cambodia, Cape Verde, Ecuador, Laos, Liberia, Nepal, Samoa, Tonga, Vanuatu, Vietnam and Yemen. However, Bulgaria was brought under the GPA when it joined the EU.

The third route to GPA membership is based on the initiative of the WTO member, without any commitment to do so. Since the GPA entered into force in January 1996, seven WTO members joined the procurement pact on their own initiative, five within the first two years of implementation of the GPA: the Netherlands with respect to Aruba in November 1996, and other four in 1997 (Hong Kong, China; Republic of Korea; Liechtenstein; and Singapore). In the past two decades, only two countries have joined the GPA without a prior WTO commitment: Ireland (2001) and New Zealand (2015). Moreover, Australia is currently the only WTO member negotiating its accession to GPA on its own decision.

A paper that explores the expansion of the GPA, in particular the commitments of WTO members to join the Agreement and the status of those commitments, will be presented at the Public Procurement: Global Procurement Revolution VIII conference at the University of Nottingham in Nottingham, United Kingdom on June 12-13.

The paper also considers the use of transitional measures in bilateral and regional trade agreements, which are intended to facilitate the opening of procurement markets by developing countries. To date, only two GPA parties have been permitted to apply transitional measures. Israel has been allowed to maintain offsets since it became a GPA party, but agreed in the revision of the GPA to reduce and finally eliminate them for GPA-covered procurement in 2030. Moldova was authorized to apply transitional thresholds for two years after it became a GPA party.

Because of the limited use of such measures in GPA accessions, the conference paper examines the transitional measures allowed in free trade agreements (FTAs) negotiated by the United States, the Trans-Pacific Partnership and the EU-Vietnam trade agreement. Those agreements provide for more extensive transitional measures.

The GPA’s current prospects for growth appear largely dependent on countries fulfilling commitments to pursue GPA membership as part of their WTO accession terms. Permitting a greater and more flexible use of transitional measures by developing countries might make GPA accession more attractive and accessible to a broader range of developing countries.

Jean Heilman Grier

June 7, 2017

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