The WTO Government Procurement Agreement (GPA) opens the government procurement of 43 WTO members, slightly more than one-quarter of the 160 WTO members. Its application is limited to the WTO members that join it and its benefits accrue only to those members. But, the GPA is not the only WTO agreement that could cover government procurement of WTO members. The WTO General Agreement on Trade in Services (GATS) calls for negotiations on government procurement, which would involve all WTO members. To date, those negotiations have made little progress, as there does not appear to be much interest among WTO members in opening their procurement of services.
The GATS is “the first and only set of multilateral rules governing international trade in services.” Under GATS, WTO members open various sectors of services to participation by suppliers from other WTO members. The WTO services agreement was negotiated during the Uruguay Round, at the same time as services were added to the GPA.
The GATS exempts government procurement from its market access provisions. That means that if a WTO member opens a particular services sector to participation by foreign suppliers, it does not have to open its government procurement in that sector. WTO members have no obligation to allow foreign suppliers to participate in their procurement of services, unless they are parties to the GPA. However, the GATS aspires to cover the procurement of services. It includes a mandate that negotiations on procurement of services commence “within two years” after the GATS entered into force in 1995.
To that end, the WTO Council on Trade in Services, which oversees the GATS, established a Working Party on GATS Rules (WPGR) in 1995 to undertake the GATS mandate relating to government procurement, as well as its mandates relating to emergency safeguard measures and subsidies. There has been little progress in the procurement negotiations.
Since its establishment nearly 20 years ago, the WPGR has done little more than gather information and study issues related to the procurement of services. For example, it reported that, in 2010-11, it engaged in “discussions on the broader economic and developmental importance of government procurement in services, based on a proposal by the European Union.” In 2013 and early 2014, the WPGR considered a WTO Staff Working Paper on the scope of government-procurement-related commitments in regional trade agreements among WTO members. The WPGR also received information from the WTO Secretariat on the main features of the revision of the GPA, which entered into force in April 2014, and its significance for the procurement of services.
In the revision of the GPA, several parties broadened their coverage of services. All the GPA parties, except the United States, use a positive list to specify the services that they open under the GPA. That means that if a party does not list a service, its procurement of that service remains closed. In addition, several parties tie their coverage of services under the GPA to the services that they open under the GATS. (The U.S. uses a negative list, covering all services, except those that it lists.)
In contrast to its approach to services, the GPA provides more extensive coverage of goods. All goods are covered under the GPA except those that are explicitly excluded. The only exception to this basic rule is procurement by defense and security entities. For those entities, the parties generally use positive lists, listing only the goods that they open under the GPA. The U.S. uses both negative and positive lists for coverage of its Department of Defense.
The more extensive coverage of goods under the GPA reflects the sensitivity of parties in opening up their procurement of services to foreign suppliers. That sensitivity is even greater for the WTO members that have not even opened their procurement of goods to foreign suppliers. As a consequence, the prospects for a WTO-wide agreement on procurement of services are not bright — at least in the nearer term.
Jean Heilman Grier
June 16, 2014