Australia Prepares to Join the GPA

Australia has already undertaken significant procurement reform and commitments that should facilitate its GPA negotiations.

On November 14, Australia’s Trade and Investment Minister, Andrew Robb, announced Australia’s commitment to work towards joining the WTO Government Procurement Agreement (GPA). This is welcome news. Australia has long been an observer to the WTO GPA Committee – since 1996, but until now has shied away from initiating negotiations.

Joining the GPA should not be a difficult step for Australia as it has already largely aligned its procurement system with GPA-type measures as a result of its bilateral free trade agreement (FTA) with the United States. The 2005 Australia-U.S. Free Trade Agreement (AUSFTA) incorporates procurement obligations that largely conform to the recently implemented revised GPA. To comply with the procurement rules in the AUSFTA, Australia transformed its procurement system from a principles-based system to a rules-based system.

One important area in which the AUSFTA does not conform to the revised GPA relates to the use of selective tendering. Selective tendering is a procurement method where only suppliers that have met qualification requirements are invited to submit a tender (in contrast to open tendering where all interested suppliers may submit a tender). A supplier expresses its interest in a procurement using selective tendering by submitting a request to participate in a procurement. The procuring entity determines which of the suppliers expressing an interest are qualified and invites those qualified suppliers to submit a tender.

Under the GPA, procuring entities must allow all suppliers to request participation in the procurement. In contrast, the AUSFTA allows for limits on participation. A procuring entity may restrict its invitation to tender to suppliers that have been granted a license or that an appropriate authority has determined comply with specific legal requirements not related to the procurement. This provision was included in the FTA to accommodate Australia’s use of selective tendering. As this restricted use of selective tendering would not conform with the GPA, Australia would need to change it before it could accede to the GPA.

But, it is likely that Australia will also need to revise its use of selective tendering in the negotiations of the Trans-Pacific Partnership (TPP), in which it is one of 12 parties. The procurement rules in the TPP are expected to be based on the revised GPA since two-thirds of the TPP partners are, or soon will be, parties to either the GPA or an FTA that is closely aligned with the GPA.

The procurement that Australia covers under the bilateral agreement with the United States will provide a solid foundation for its GPA market access negotiations. Under the AUSFTA, it covers a significant number of federal entities, all of its states and territories and a number of other entities. Moreover, it has very broad coverage of services, excluding only two (plasma fractionation services and government advertising services). It also covers all construction services. One coverage issue that may raise questions in the GPA is its exclusion of preferences for small and medium enterprises, which corresponds to the U.S. exclusion of set-asides for its small and minority businesses in both the AUSFTA and the GPA. However, the GPA parties are seeking to restrain the use of such measures, as indicated by a work program on small and medium-sized enterprises, which the GPA Committee is undertaking.

The recent GPA accession negotiations of Montenegro and New Zealand illustrate that such negotiations can be completely quickly. It took only one year for Montenegro and two years for New Zealand to complete their negotiations. If Australia moves quickly on its GPA accession, it may be able to weigh in on China’s negotiations to join the GPA – now in their 7th year, or to at least gain access to China’s procurement market along with the other GPA Parties.

Adding Australia to the GPA roster will expand the influence of the GPA in the Asia-Pacific region. Currently, one-third of the 15 GPA Parties (or five of the 43 WTO members covered by the GPA) are from that region (Hong Kong China, Japan, Korea, Singapore and Chinese Taipei).  They will soon be joined by New Zealand, which along with Montenegro, was given the green light by the GPA Committee to become GPA parties as soon as they submit their instruments of accession.

Jean Heilman Grier

November 17, 2014

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