GAO Compares Procurement Agreements

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 On September 27, the U.S. Government Accountability Office (GAO) released a report, “Government Procurement Agreements Contain Similar Provisions, but Market Access Commitments Vary”, in response to a congressional request. Two Senators (Jeff Merkley, Banking, Housing and Urban Affairs Committee, and Tammy Baldwin, Homeland Security and Government Affairs Committee) had sought “information on U.S. participation in international procurement agreements”. In an earlier response to their request, GAO issued a 2015 report on the size of procurement markets, finding that the U.S. and the 60 countries subject to U.S. trade agreements spent approximately $4.4 trillion on procurement, not all of which is covered by trade agreements. This post highlights the findings of the latest GAO report.

GAO examined the procurement provisions and market access schedules of the WTO Government Procurement Agreement (GPA) (both the 1994 GPA and the 2014 revision), the North American Free Trade Agreement (NAFTA) and free trade agreements (FTAs) with Australia, Colombia and South Korea. Within the GPA, the GAO examined the coverage commitments of the five largest parties (outside of the U.S.): Canada, European Union, Japan, Norway and South Korea.

In the report, GAO identified nine elements that were common to the agreements: provisions that relate to transparency, nondiscrimination, defining scope and coverage, exceptions, procurement procedures, criteria for procurement decisions, supplier challenges, ethical standards, and changes and further improvements. It found similarities among the provisions, suggesting the overlap in the negotiations played a role. For example, the negotiations of the FTAs with Australia, Colombia and Korea were started and completed during the decade-plus negotiation of the revised GPA.

With respect to the procurement covered under the agreements, GAO observed that the revised GPA generally covers more procurement than the FTAs. It particularly noted NAFTA covers far fewer federal entities than the GPA and the other FTAs. GAO also pointed out that with respect to state procurement, the GPA covers the most states of the surveyed agreements, and that neither NAFTA nor the Korea FTA cover any states.

In contrast to many of its reports, the GAO did not make any recommendations in the procurement report.

Jean Heilman Grier

October 4, 2016

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    Book: The International Procurement System Government procurement required 40 years and substantial efforts to become part of the international trade regime, even though it comprises a significant part of the global economy. The international system requires governments to balance protectionist forces favoring local suppliers against the pressures of liberalization, which expand procurement markets and lower prices.