Revised GPA as Model for TPP Procurement Rules

The TPP should base its procurement rules on the revised WTO Government Procurement Agreement to ensure the most up-to-date provisions and contribute to the expansion of international procurement standards in Asia.

Government procurement will be an integral element of the Trans-Pacific Partnership (TPP), which is currently being negotiated by the United States and 11 other countries (Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam).  The TPP’s negotiators should base the agreement’s procurement rules on the recently revised WTO Government Procurement Agreement (GPA), as the revised GPA represents the latest work on international procurement rules.  At the same time, the TPP parties should add to, or tailor, the GPA provisions, as appropriate, to ensure that the TPP procurement rules contribute to the TPP’s development as a 21st century agreement.

Using the revised GPA as the base for the TPP’s procurement rules will ensure that the new regional agreement has up-to-date procurement provisions and that the TPP rules are in harmony with those of the most important international procurement agreement.   Moreover, the revised GPA is a natural model for the TPP procurement chapter because seven of the 12 TPP partners are GPA parties, are in negotiations to join the GPA or are parties to free trade agreements (FTAs) with procurement rules that are generally aligned with the revised GPA.  The United States, Canada, Japan and Singapore are GPA parties.  In addition, New Zealand is in negotiations to join the GPA.  With regard to FTAs, the US FTAs with Australia, Chile and Peru reflect the overall structure of the revised GPA and incorporate many of its procedural rules.  Where the FTAs diverge from the revised GPA rules, they follow a more flexible approach.

In addition, four of the TPP countries (Brunei, Chile, New Zealand and Singapore) are parties to the Trans-Pacific Strategic Economic Partnership Agreement (P4), the pre-cursor of the TPP.  The P4’s procurement provisions are broadly patterned after the revised GPA, even though they are even more flexible than the US-initiated FTAs.  Only two TPP parties – Malaysia and Vietnam – do not have any procurement obligations with other countries.

While the TPP’s procurement provisions should be modeled after the revised GPA, they should also build on improvements that have been incorporated in other FTAs.  Those improvements include ensuring the coverage of procurement of digital products, as well as build-operate-transfer (BOT) contracts or public works concessions.  At the same time, the TPP should not take on board provisions from FTAs that would narrow opportunities for TPP suppliers.

One such instance is the selective tendering provisions in the U.S.-Australia FTA (AUSFTA).  Selective tendering is a procurement method whereby only suppliers that have met qualification requirements are invited to submit a bid.  This is in contrast to open tendering where all interested suppliers may submit tenders.

The AUSFTA allows certain restrictions on the use of selective tendering that are not found in the GPA or other FTAs.  The AUSFTA allows a procuring entity to limit suppliers that may submit bids to those that have been granted a license or that comply with specific legal requirements not related to the procurement.  It would not be appropriate to incorporate that provision in the TPP.  Since it reflects an existing practice in Australia, its use in the AUSFTA is predictable.  However, it could become a loophole if used by other – current or future – TPP parties.

In its comprehensive procurement provisions, the TPP will be distinguished from Asian-based FTAs that generally do not include procurement provisions or include only procurement-lite provisions, such as only providing for “cooperation” or future substantive negotiations.  Of the 43 WTO members that are covered by the GPA, only four are from Asia (Japan, Korea, Singapore and Hong Kong China).  As a consequence, the TPP provides an opportunity to expand the influence of the revised GPA and international procurement standards in Asia.

Jean Heilman Grier

January 23, 2014

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