Government procurement
Government Procurement Agreement
Government procurement accounts for an average of 15 per cent or more of a country’s GDP. The WTO’s Agreement on Government Procurement covers government purchasing of goods services and construction work valued at US$ 1.7 trillion annually. This brochure produced to mark the WTO’s 20th anniversary looks into how the Agreement came about and what it embodies.
The WTO Regime on Government Procurement
Originally an important but relatively obscure plurilateral instrument the WTO Agreement on Government Procurement (GPA) is now becoming a pillar of the WTO system as a result of important developments since the Uruguay Round. This collection examines the issues and challenges that this raises for the GPA as well as future prospects for addressing government procurement at a multilateral level. Coverage includes issues relating to pending accessions to the GPA particularly those of developing countries with a large state sector such as China; the revised (provisionally agreed) GPA text of 2006 including provisions on electronic procurement and Special and Differential Treatment for Developing Countries; and procurement provisions in regional trade agreements and their significance for the multilateral system. Attention is also given to emerging issues especially those concerning environmental social and SME policy; competition law; and the implications of the recent economic crisis.
International Trade and Green Hydrogen
Hydrogen produced exclusively from renewable power – known as green hydrogen – is widely recognised as a key pillar in replacing fossil fuels and decarbonizing sectors that cannot easily be electrified such as some industrial processes shipping and aviation. This publication – jointly produced by the International Renewable Energy Agency (IRENA) and the World Trade Organization (WTO) – explores how trade policies can support the development of green hydrogen markets. The publication highlights in particular how lowering tariffs on key products building reliable infrastructure realigning domestic support programmes and developing green government procurement can foster the development of green hydrogen supply chains and the transition to a low-carbon economy. International trade could also play a significant role in matching supply and demand for green hydrogen as the potential for domestic production in some economies might not be enough to satisfy domestic demand. The publication also addresses the challenges and opportunities for developing economies offered by green hydrogen and its derivatives such as green methanol and green ammonia. It underscores the importance of international cooperation and the need to align regulatory frameworks to encourage technology development enhanced transparency and market growth.
India’s possible accession to the Agreement on Government Procurement: What are the pros and cons?
This chapter examines the pros and cons of accession to the WTO Agreement on Government Procurement (GPA) by India. This discussion is of relevance since despite consistently resisting pressure to negotiate government procurement provisions in its regional and bilateral trade agreements in February 2010 the Government of India became an observer to the GPA. India’s decision to be a GPA observer comes at a time when interest in the GPA appears to be growing and signals that major developing countries such as India are assessing their interests in relation to GPA accession.
The benefits for developing countries of accession to the Agreement on Government Procurement: The case of Chinese Taipei
On 9 December 2008 the World Trade Organization (WTO) Committee on Government Procurement adopted the accession of the Separate Customs Territory of Taiwan Penghu Kinmen and Matsu (Chinese Taipei) to the Agreement on Government Procurement (GPA). After completing the relevant domestic legislative procedures Chinese Taipei delivered its accession document to the WTO in June 2009 and formally became the forty-first signatory to the GPA on 15 July 2009.
Untying aid through the Agreement on Government Procurement: A means to encourage developing countries’ accession to the Agreement and to improve aid effectiveness?
This chapter examines the compatibility of tied aid (i.e. aid granted on condition that goods and services for the aid-financed project are purchased from the donor country only) with the Agreement on Government Procurement (GPA) and investigates whether inserting untied aid commitments within the GPA coverage could favour developing countries’ accession to the GPA while enhancing the development character of the GPA itself and the success and coherence of donors’ development aid policies
A case study of regionalism: The EC–CARIFORUM Economic Partnership
The EC–CARIFORUM Economic Partnership Agreement was the first full Economic Partnership Agreement (EPA) to be negotiated and signed between the EC and an African Caribbean and Pacific (ACP) region as required by the terms of the Cotonou Agreement of 2000. It is also the only EPA under negotiation to dedicate a chapter to the regulation of government procurement policies. As such it stands not only as a reference point for other ACP countries’ EPA negotiations and other north–south regional trading agreements (RTAs) but it might also offer some insight into the perceived role of government procurement regulation in developing countries’ trade agreements with developed countries.
Designing effective challenge procedures: The EU’s experience with remedies
A mechanism for verifying and enforcing the applicable rules is widely considered to be an important feature of a transparent regulatory system in public procurement. An effective remedies system provides tenderers with an effective means of redress deters the contracting authorities from breaching the rules in the first place and builds confidence among businesses and the public. One regulatory regime that provides such a supplier remedies system is that of the European Union (EU) the objective of which is to open up public procurement to EU-wide competition and to encourage cross-border procurement. As part of that system the EU provides for a stringent system of supplier remedies before national review bodies that goes back more than two decades which must be put in place in each of the EU Member States. Based on experience of implementing and operating the system in the different Member States it has recently undergone significant revision at EU level with the aim of ensuring that the system is fully effective to promote its objectives.
The limited case for permitting SME procurement preferences in the Agreement on Government Procurement
Governments of countries with diverse levels of wealth maintain preferential procurement policies to support small and medium-sized enterprises (SMEs). The US is one of the most remarkable examples. With billions of dollars annually set aside for contract awards made exclusively to what in the US are known as small business concerns the US maintains some of the most extensive SME procurement preference policies that can be found anywhere in the world. So much for all the rhetoric on President Obama as socialist; these programmes have been in existence since 1953. Irony is the notion that comes to mind when trying to understand the US approach as the US also is able to liberalize substantial dollar values of its procurements as a contracting party to the World Trade Organization (WTO) Agreement on Government Procurement (GPA) and in unilateral and regional trade agreements. Other countries maintain preferential SME policies. South Africa maintains an evaluation preference system to award points to firms contributing to what is known as broad-based black empowerment in South Africa. Notably South Africa’s programme is nowhere near as broad as the programmes found in the US. Some US programmes benefit firms owned by individuals who belong to historically disadvantaged groups in the US but the US programmes also benefit ordinary SMEs regardless of ownership. Malaysia maintains a substantial preference programme to award government contracts to people of Malay descent the Bumiputera who are the majority population in the country to counter the market-dominant Chinese minority in that country.
Social policies in procurement and the Agreement on Government Procurement: A perspective from South Africa
Public procurement is extensively used in South Africa as a tool to achieve horizontal policies – that is policies that are not necessarily directly connected with the functional purposes of the goods works or services acquired in the procurement. The most pervasive of these policies are the social-policy-underlying mechanisms to redress inequalities in the South African economy created by colonization and apartheid. This policy of economic redress in favour of previously disadvantaged groups generally known as black economic empowerment (‘BEE’) forms part of the larger project of constitutional transformation in South Africa which informs the entire government agenda. In public procurement specifically the primacy of this policy is reflected in the constitutional mandate for BEE mechanisms in procurement. The policy of BEE is so pervasive that it has also found its way into private procurement in South Africa through the Broad-Based Black Economic Empowerment Act (‘BBBEEA’). The South African system thus provides an interesting example to test the ‘fit’ of the WTO’s Agreement on Government Procurement (GPA) in a context where social policy plays a major role in shaping procurement practices.
Developing multilateral rules on government procurement: The value of soft law
Discriminatory government procurement practices in many countries present a significant barrier to international trade. However to a large extent they still remain unaddressed by multilateral market-access rules. Further the WTO’s initiatives to develop multilateral disciplines on procurement have now effectively been put on hold mainly due to the strong opposition against multilateral rules on procurement from many WTO Members especially developing country Members.
The WTO Regime on Government Procurement: Challenge and Reform
Originally an important but relatively obscure plurilateral instrument the WTO Agreement on Government Procurement (GPA) is now becoming a pillar of the WTO system as a result of important developments since the Uruguay Round. This collection examines the issues and challenges that this raises for the GPA as well as future prospects for addressing government procurement at a multilateral level.
The procurement of state trading enterprises under the WTO Agreements: A proposal for a way forward
WTO members both developed and developing countries have traditionally engaged in state trading for various public policy goals such as income support for domestic producers price stabilization continuity in domestic food supply government revenue generation protection of public health and strategic control etc.
Work of UNCITRAL on government procurement: Purpose, objectives and complementarity with the work of the WTO
The United Nations Commission on International Trade Law (‘UNCITRAL’) is the main legal body of the United Nations system in the field of international trade law with a general mandate to further the progressive harmonization and unification of the law of international trade through the issuing of conventions and model laws cooperation with other international organizations and technical assistance.
The national treatment and exceptions provisions of the Agreement on Government Procurement and the pursuit of horizontal policies
This chapter discusses the relationship between two of the general provisions of the Agreement on Government Procurement (GPA) and the significance of this relationship for the use of public procurement as a policy tool to promote various industrial social and environmental policies that are not necessarily related to the goods works or services being acquired. Examples of such policies include providing economic development opportunities for underdeveloped regions for small and medium-sized enterprises (SMEs) or for disadvantaged social groups. These policies have been variously referred to as ‘secondary’ ‘collateral’ or (as here) ‘horizontal’ policies.
Government procurement provisions in regional trade agreements: A stepping stone to GPA accession?
The majority of regional trade agreements (RTAs) that have been notified to the World Trade Organization (WTO) in recent years contain provisions on government procurement whether of a detailed or a limited nature. Such provisions are of interest for a number of reasons some specific to the field of government procurement and some general or systemic. To begin with government procurement provisions in RTAs are of importance in their own right in that in many jurisdictions they go a long way to establish the prevailing conditions of trade and competition in public procurement markets. This impact may be manifested through both behavioural rules that regulate procurement procedures and through coverage schedules that subject specific procurements to international competition. As such government procurement provisions in RTAs can directly affect performance in a key economic sector with implications for economy-wide economic development and growth.
Global procurement law in times of crisis: New Buy American policies and options in the WTO legal system
What should governments do to protect their citizens in a global economic crisis? National economies are interdependent and economic risk is systemic on a global scale but economic policy remains pervasively national in scope. Fiscal policy is one tool that some economists advocate to counteract economic downturns. Fiscal policy however has not been the subject of collective action at the global level and if it has states accomplish it in ad hoc political (as opposed to legal) arrangements in response to particular crises. More generally states retain primary responsibilities for structuring institutions to promote economic justice for their citizens. Despite moves towards conceptualizing justice as a global concern justice remains primarily a concern for domestic constitutional orders. Fiscal policy and economic justice are widely understood as the domain of the political orders of states national in their reach tied to notions of statehood. These features of the state are in tension with the increasingly complex interdependencies of states and with the dense web of treaty commitments they have undertaken particularly in economic matters.
The coverage negotiations under the Agreement on Government Procurement: Context, mandate, process and prospects
This chapter of the book considers the ongoing negotiations on coverage under the 1994 Agreement on Government Procurement (GPA). The chapter is largely descriptive and procedural in nature since the negotiations are ongoing and the contents of Parties’ offers in the negotiations are (by intention) not publicly available. Nonetheless information on a number of aspects of the negotiations is in the public domain including information on the background of and context for the negotiations; the purpose and mandate of the negotiations as they are set out in the Agreement and related documents of the Committee on Government Procurement; the processes by which the negotiations have been conducted; and the current state of play. Such information provides valuable insights into the nature and scope of the negotiations the issues at stake and the prospects for conclusion of the negotiations
The design and operation of a bid challenge mechanism: The experience of Hong Kong, China
Under the Agreement on Government Procurement (GPA) Parties are required to establish a system of challenge procedures. Of all the Parties to the GPA Hong Kong China (henceforth ‘Hong Kong’) presents an interesting case study as it combines the features of a clean and effective government and a highly internationalized procurement market. In this chapter the author examines the efforts made by the Hong Kong government to implement its obligation under the GPA to provide challenge procedures. The chapter starts by reviewing the general background to the Review Body on Bid Challenges of Hong Kong. It then discusses in detail the bid challenge procedures and how such procedural rules have been applied and elaborated through the cases that came before the Review Body. The chapter concludes by noting that the bid challenge system in Hong Kong generally conforms to its GPA obligations.
Annex
This annex provides a comprehensive but non-exhaustive list of quality infrastructure elements for green hydrogen (GH2) that should be implemented according to an Expert Survey for IRENA’s ongoing project “Quality Infrastructure for Green Hydrogen: technical standards and quality control for the production and trade of renewable hydrogen”.
Acknowledgements/Abbreviations
This publication has been prepared under the overall guidance of Aik Hoe Lim of the World Trade Organization (WTO) and Roland Roesch of the International Renewable Energy Agency (IRENA).
Mapping supply chain issues from a trade perspective
Green hydrogen has a number of uses. It can be used directly as an energy carrier and chemical input in multiple end-use applications. It can also be combined with a sustainable carbon source or with nitrogen to produce derivative compounds such as methanol or ammonia which can be used as feedstock for chemical production (e.g. plastics and fertilizers) or as sustainable fuels.
Corée - Mesures affectant les marchés publics
Le 01 mai 2000 l’OMC a publié le rapport du Groupe spécial dans l’affaire “Corée - Mesures affectant les marchés publics”.
Corea - Medidas que afectan a la contratación pública
El 01 de mayo de 2000 la OMC hizo público el informe del Grupo especial sobre el caso “Corea - Medidas que afectan a la contratación pública”.
Korea - Measures Affecting Government Procurement
On 16 February 1999 the US requested consultations with Korea in respect of certain procurement practices of the Korean Airport Construction Authority (KOACA) and other entities concerned with the procurement of airport construction in Korea. The US claimed that such practices were inconsistent with Korea’s obligations under the Agreement on Government Procurement (GPA). These include practices relating to qualification for bidding as a prime contractor domestic partnering and the absence of access to challenge procedures that are in breach of the GPA. The US contended that KOACA and the other entities are within the scope of Korea’s list of central government entities as specified in Annex 1 of Korea’s obligations in Appendix I of the GPA and pursuant to Article I(1) of the GPA apply to the procurement of airport construction.
Assessing the Value of Future Accessions to the WTO Agreement on Government Procurement (GPA)
The WTO Agreement on Government Procurement (GPA) is a plurilateral Agreement meaning that it comprises only a subset of the full Membership of the WTO. Currently a number of WTO Members that are not Parties to the Agreement either are actively seeking accession to it have commitments to accede to the GPA in their respective WTO accession protocols or are on their own initiative looking at the potential pros and cons of accession. In this context there is a need for factual information concerning the potential consequences of GPA accession and a framework to assess related benefits and costs. Of interest is both the systemic value of such accessions – i.e. the value they will add to the extent of market access commitments under the Agreement – and their potential benefits and costs for individual acceding Parties. This Working Paper introduces new sources of information relevant to these topics (principally the statistical reports that have been circulated recently by GPA Parties) and shows their relevance to and usefulness in assessing the above-noted matters. The Paper presents estimates of the size of potential market access gains from pending and possible future GPA accessions based on simple extrapolations from the data sources identified. Next the Paper shows how the same data sources can assist in throwing light on the potential benefits and costs of GPA accession for individual WTO Members/countries contemplating accession. The latter use of the data is developed in the context of a more general discussion of the benefits and costs of GPA accession for individual WTO Members also drawing on existing literature qualitative aspects and "insights from the field" (i.e. our own work in advising and conducting seminars for such countries and other WTO Members).
The Relationship between Services Trade and Government Procurement Commitments
To date government procurement has been effectively carved out of the main multilateral rules of the WTO system. This paper examines the systemic and other ramifications of this exclusion from both an economic and a legal point of view. In addition to relevant elements of the WTO Agreements particularly the Agreement on Government Procurement (GPA) and the General Agreement on Trade in Services (GATS) it derives insights from a large number of Regional Trade Agreements (RTAs) that embody substantive provisions on both government procurement and services trade. An important finding is that from an economic perspective general market access commitments with respect to services trade and commitments regarding government procurement of services are complementary and mutually reinforcing. In contrast from a legal point of view and at the multilateral level disciplines in the two areas have been "divided up" into two Agreements with different (but complementary) spheres of application: the key provisions regarding the scope of application of the GATS and the GPA make clear that each serves purposes that the other does not. Analysis of corresponding provisions of RTAs broadly supports and extends this finding. In light of the foregoing a question arises as to possible ways of deepening disciplines in this area. Part 5 sets out for reflection several related options: (i) the built-in mandate in the GATS for negotiations on services procurement (Article XIII:2); (ii) "multilateralization" of the GPA; (iii) the eactivation of work in the (currently inactive) WTO Working Group on Transparency in Government Procurement; and (iv) the taking up of relevant issues in the context of bilateral or regional negotiations. Overall we find that each of these possibilities has potential merits though none is without related challenges.
Infrastructure Provision and Africa’s Trade and Development Prospects
Transitioning from the post-2008 financial meltdown to a sustained period of global growth and prosperity involves a major challenge: how to ensure the effective management of international economic interdependence. Trade growth good governance and sustainable development constitute essential ingredients to any solution as is a fairer distribution of the gains of trade. Two issues stand out in this conversation. The first concerns the unfinished business of the global fight against the scourge of poverty which impacts one region more than most: Africa. At the same time a key pre-requisite for economic performance - affordable and efficient public infrastructure and services – remains lacking in this region – notably in Sub-Saharan Africa. To address this the region itself has initiated a major long-term continent-wide infrastructure development programme which is intended to fix this problem sustainably - namely the Programme for Infrastructure Development in Africa (PIDA). Its success foreshadows an economic transformation that will potentially usher in an emergent Africa in the 21st century. Secondly in one area of economic activity – trade in government procurement markets - the revised WTO Agreement on Government Procurement (GPA) is emerging as a multi-dimensional tool of trade governance and development. The thesis of this paper is that GPA participation by African countries - a prospect which to date they have declined to take up - holds strong potential to reinforce the positive effects of PIDA and to contribute to the region's growth and development more generally. Developing this thesis the paper examines the possible application of the GPA to support Africa's infrastructure programme drawing on its three dimensions of instrument of governance market access instrument and 'policy space' instrument in support of the development financial and trade needs of developing countries. Based on the analysis the paper concludes that the potential benefits outweigh the potential costs of participation in the GPA by African countries and accordingly that the GPA merits consideration by the region in this regard. A successful implementation of the infrastructure programme also portends a significant expansion in the size of the African government procurement market. Were African countries to accede to the Agreement in this context it would constitute not only a big rise in membership numbers but also a significant expansion in the value of market access under the Agreement. The broad outlines of a potential win-win scenario for both African countries and GPA Parties thus begin to emerge. The paper nonetheless acknowledges that delivering these benefits would involve significant practical and political challenges. It concludes that if the challenges can be overcome and the mutual benefits delivered the revised GPA would have been demonstrated as an effective tool for balancing flexibility and reciprocity in the government procurement sector consistent with sustainable development principles with the capability to deliver win-win benefits for a broad range of stakeholders in the post-2015 era.
The Revised WTO Agreement on Government Procurement (GPA)
The WTO's plurilateral Agreement on Government Procurement ("the GPA" or "the Agreement") is an important ongoing success story for the Organization. In March 2012 the GPA Parties completed a comprehensive revision of the Agreement encompassing both its text and coverage (market access commitments). The revised GPA the negotiating processes that led to its adoption and coming into force and the continuing gradual broadening of its membership are of therefore interest for the evolution of the international trading system. The GPA's successful renegotiation the continuing growth of its membership and its vitality as an instrument of public policy were not achieved through happenstance. The paper discusses a number of specific design features of the GPA that clearly facilitated the successful conclusion of the renegotiation and that as such may in the future be relevant to other areas of global trade liberalization. In addition to the Agreement's plurilateral nature of particular interest are the approach taken with respect to application of the most-favored-nation (MFN) principle in the Agreement; the GPA's continuing strong emphasis on principles of reciprocity in market access concessions; and its approach to special and differential treatment for developing countries in all of which it differs from approaches that are widely used in other WTO Agreements. Apart from the above the GPA revision is important for the merging of trade and good governance concerns that it exemplifies. As discussed in the paper the themes of governance and the sound management of public resources that are treated in the revised Agreement were not afterthoughts to the renegotiation; rather they permeated the revised text and received focused attention from the Parties in their own right. As well the GPA has direct implications for investment policy and for domestic economic reforms and is an important tool of e-commerce. And the revision has made possible very significant synergies between the GPA and other international instruments and activities in reducing barriers to participation and strengthening governance in public procurement markets. For all these reasons the revised Agreement is likely to have a wider impact than meets the eye and well merits the support and attention that it has received from the participating WTO Member governments.