Implementation of the revised WTO Government Procurement Agreement has been delayed until the first quarter of 2014.
Even though the WTO’s 9th Ministerial Conference in Bali, Indonesia (Dec. 2-7, 2013) was able to conclude a successful agreement on a package of issues, the Parties to the plurilateral WTO Government Procurement Agreement (GPA) were unable to implement the revision of the GPA. The GPA Parties had hoped to bring the revised GPA into effect by the Bali Ministerial; but, they lacked the necessary approval of two-thirds of the Parties. Only seven of the 15 Parties had submitted their instruments of ratification to the WTO by the time the GPA Parties held their ministerial-level meeting in Bali. The GPA Parties must meet their new implementation deadline of March 31, 2014 in order to reap the benefits of the revision and continue the momentum of the Agreement, as well as encourage other WTO Members to become GPA Parties.
At the ministerial-level GPA meeting on December 3, 2013, the WTO Director-General Roberto Azevêdo recognized the important role of government procurement in overall economic activity, noting that it represents 15% to 20% of gross domestic product (GDP) worldwide. He also cited the contributions of the GPA and related bilateral and regional procurement agreements to the increasing significance of government procurement in international trade.
The GPA Parties approved the revision of the GPA in March 2012 – after more than a decade of negotiations, but cannot implement it until it is ratified by the Parties. That revision significantly improves the GPA text and expands the procurement that it covers. The WTO Secretariat has estimated that the new market access opportunities resulting from the revision will be approximately $80 billion to $100 billion. In addition, implementation of the GPA will trigger initiation of several work programs. Those work programs will address issues that were not resolved during the GPA negotiations, as well as take up new issues.
Timely implementation of the GPA is also important to encourage other WTO Members to join the GPA. Although there are only 15 Parties to the GPA, it covers the procurement of 43 WTO Members (the 28 Member States of the European Union are covered by virtue of their membership in the EU). The total GPA membership represents just over one-quarter of the 159 WTO members. However, GPA membership is slowly advancing, with the Republic of Croatia becoming the latest WTO member to be added to the GPA roster when it joined the EU earlier in 2013. In the Declaration issued by the GPA Parties in Bali, the GPA ministers noted the efforts of New Zealand, Montenegro and China to accede to the GPA on “mutually satisfactory terms.”
The seven GPA Parties that have ratified the revision are: Canada, Chinese Taipei, the European Union, Hong Kong, China, Liechtenstein, Norway and the United States. The GPA Parties that have not yet ratified it are: Armenia, Iceland, Israel, Japan, the Republic of Korea, the Netherlands with respect to Aruba, Singapore and Switzerland. At the Bali ministerial meeting, several of the Parties indicated that they would submit their ratifications in the coming weeks.
Each Party has its own domestic approval procedures that must be respected. However, continued delay in implementation of the Agreement weakens the prospects for the GPA. All Parties would be best served by implementing the Agreement in the first quarter of 2014.
Jean Heilman Grier
December 9, 2013