Beginning in 2022, the United Arab Emirates (UAE) implemented trade agreements with India, Israel, Indonesia, and Türkiye. In these agreements, the UAE has not insisted on uniform government procurement commitments. Rather, it has agreed to a broad range of procurement provisions—ranging from the comprehensive to the minimal. Those provisions draw substantially from the WTO Government Procurement Agreement (GPA) even though the UAE is not a party—nor even an observer—to the plurilateral agreement. This post highlights the varied procurement provisions in the UAE agreements.
The UAE, comprised of seven emirates (Abu Dhabi, Dubai, Sharjah, Ajman, Umm Al Quwain, Ras Al Khaimah, and Fujairah) has negotiated and implemented four Comprehensive Economic Partnership Agreements (CEPAs) in record time. In contrast to many free trade agreements that take years to negotiate, sign, ratify, and implement, the UAE completed its CEPAs in a two-year period. Its ambitious negotiating agenda may explain its flexibility in the government procurement terms in the agreements.
Launching its first CEPA negotiations—with India—in August 2021, the UAE and India signed the UAE-India CEPA in February 2022 and implemented it the following May. The UAE initiated talks with Indonesia and Israel in 2021 and Türkiye in 2022, bringing the last of the CEPAs into force in September 2023. In addition, the UAE concluded negotiations of a trade pact with South Korea in October 2023, after launching them in 2021. That agreement has yet to be ratified. (A CEPA with Cambodia, implemented in January 2024 did not include any procurement provisions.)
The CEPAs draw their procurement provisions from the GPA, of which Israel is a party, and India, Indonesia, and Türkiye are observers. The UAE-Israel CEPA adheres the most closely to the GPA’s procedures and obligations, while the agreement with India incorporates most (but not all) of the GPA’s provisions. The UAE-Indonesia CEPA includes a number of the GPA’s procedures but not its non-discriminatory principle. The fourth, the UAE-Türkiye CEPA, does not contain any procedures or obligations, limiting its two government procurement provisions to a recognition of the importance of cooperation on procurement and the possibility of negotiating a new chapter in two years.
The CEPAs with India and Israel incorporate GPA-type schedules to specify their covered procurement with each party listing the central government entities subject to the pact. The UAE lists 41 entities in its India CEPA but only 31 in its pact with Israel. India opens 34 central government entities in its first agreement to cover procurement.
In contrast, the Indonesia CEPA only applies to government procurement “expressly open to international competition,” indicating that it does not open any new procurement. Rather than specifying time periods for tendering, the CEPA merely requires that they be in accord with the party’s laws and regulations. In another instance of deferring to a party’s laws, the Indonesia pact allows limited tendering—in addition to the circumstances detailed in the GPA—under any other circumstances provided in a party’s laws and regulations. That agreement also does not provide for domestic review of supplier complaints, as do the other CEPAs.
The India CEPA recognizes government procurement as a tool in the expansion of domestic production and trade. Under it, both parties may apply domestic preferences: for India, preferences authorized by government orders, and for the UAE, a 10% price preference for domestic green suppliers and green domestic goods.
The UAE-Israel agreement permits the use of offsets with Israel applying offsets in procurement above three million Special Drawing Rights up to 35% of the contract and the UAE a “Unified In-Country Value percentage” for evaluating bids. It also allows the UAE to maintain two types of domestic preferences: a 10% preference for small and medium enterprises (SMEs) and a 10% price preference for domestic green suppliers and green goods of domestic origin.
The three CEPAs with substantive provisions include provisions not found in the GPA. One requires the parties to maintain measures to address corruption and avoid conflicts of interest. Another directs them to specify measures to promote participation in government procurement by SMEs, including a requirement that preferences for SMEs be transparent. Third, a provision permits parties to apply technical specifications to protect sensitive government information, “including specification that may affect or limit the storage, hosting, or processing of such information outside the territory of the Party.”
Both the India and Indonesia agreements require the parties to endeavor to make procurement Information available in English. They also exclude procurement from dispute settlement.
Although the text of the UAE-Korea agreement has not been made public, it likely follows the UAE-Israel CEPA's incorporation of much of the GPA since South Korea is a party to the WTO agreement.
With the UAE’s CEPAs, three more countries have joined an expanding array of parties to the GPA and bilateral and regional agreements that are applying procurement rules based on the GPA.
Jean Heilman Grier
February 16, 2024
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