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9TH WTO MINISTERIAL CONFERENCE, BALI, 2013

Briefing note: the WTO's Government Procurement Agreement

The WTO's Government Procurement Agreement (GPA) is a plurilateral treaty that commits members to certain core disciplines regarding transparency, competition and good governance in one of the most important and growing areas of the economic activity of any country. It covers the procurement of goods, services and capital infrastructure by public authorities.

Updated: November 2013

THIS EXPLANATION is designed to help the public understand developments in the WTO. While every effort has been made to ensure the contents are accurate, it does not prejudice member governments’ positions.

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The aim of the GPA is to open up to international competition as much as possible the government procurement of the parties to the agreement. It is designed to make the parties' measures regarding government procurement more transparent and to ensure non-discriminatory treatment regarding the products, services or suppliers of any party to the GPA. It also provides important flexibilities for developing country parties to manage their transition to a more internationally competitive government procurement regime.

Participation in the GPA is entirely optional. However, based on an assessment of potential benefits and costs, a growing number of WTO members are evaluating their options and showing renewed interest in potential accession to the agreement, recognizing the important economic and systemic benefits that accession can bring to them.

There are two key aspects to the accession process: conformity of the acceding member's legislation with the GPA; and agreement with existing parties regarding the entities and sectors of its public procurement that the acceding member wishes to open to international competition.

Governments are not expected to open up all their procurement and they might specifically exclude some sensitive sectors, such as defence-related procurement. The disciplines only apply to the entities, sectors and procurement levels (above certain financial value thresholds) specified in an appendix to the GPA, which is the outcome of negotiations.

Typically, the parties to the GPA cover entities at all the respective levels of government applicable to them. Goods are covered in principle (for instance, medicines, machinery and associated products, fuels and petroleum products, and textiles products) unless specified otherwise. In addition, a broad range of services and construction services are open to international competition, including:

  • transport infrastructure, such as highways, ports and airports
  • telecommunication services
  • computer and related services
  • financial services
  • management consulting and related services.

 

Membership

On 15 September 2011, Armenia became the 43rd WTO member to accede to the GPA. It therefore became the 15th party to the GPA (counting the European Union and its 28 member states as one party).

The 15 parties to the GPA (comprising 43 WTO members)

Parties

Date of accession

Armenia
Canada

15 September 2011
1 January 1996

European Communities
with regard to its 28 member states:

 

Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxemburg, the Netherlands, Portugal, Spain, Sweden and the United Kingdom

1 January 1996

Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovak Republic and Slovenia

1 May 2004

Bulgaria and Romania
Croatia

1 January 2007
1 July 2013

Hong Kong, China

19 June 1997

Iceland

28 April 2001

Israel

1 January 1996

Japan

1 January 1996

Korea, Republic of

1 January 1997

Liechtenstein

18 September 1997

Netherlands with respect to Aruba

25 October 1996

Norway

1 January 1996

Singapore

20 October 1997

Switzerland

1 January 1996

Chinese Taipei

15 July 2009

United States

1 January 1996

  
Observers to the GPA — WTO members (those underlined are negotiating accession)

Observer government

Date of acceptance by GPA Committee as observers

Albania

2 October 2001

Argentina

24 February 1997

Australia

4 June 1996

Bahrain

9 December 2008

Cameroon

3 May 2001

Chile

29 September 1997

China

21 February 2002

Colombia
FYR Macedonia

27 February 1996
29 May 2013

Georgia

5 October 1999

India
Indonesia

10 February 2010
31 October 2012

Jordan

8 March 2000

Kyrgyz Republic
Malaysia

5 October 1999
18 July 2012

Moldova
Montenegro

29 September 2000
31 October 2012

Mongolia

23 February 1999

New Zealand

9 December 2008

Oman
Russian Federation

3 May 2001
27 June 2013

Saudi Arabia

13 December 2007

Sri Lanka

23 April 2003

Turkey

4 June 1996

Ukraine
Viet Nam

25 February 2009
5 December 2012

 

 

 

 

Recent work at the WTO

Negotiations to improve the GPA

The GPA incorporated a built-in mandate for negotiations to improve the text of the agreement, expand coverage and further eliminate discriminatory measures. These negotiations started in 1997 and have now been completed.

On 15 December 2011, at the WTO's 8th Ministerial Conference, negotiators reached a political agreement on the outcome of the re-negotiations of the 1994 plurilateral agreement following a breakthrough in the negotiations on the coverage of the GPA. The adoption of the revised agreement took place on 30 March 2012 following a final verification and legal review.

Revised text of the Government Procurement Agreement

The revised text of the GPA entails a complete revision of its provisions, with a view to making them more user-friendly. The provisions have also been updated to take into account developments in current government procurement practices, including the role of electronic tools in the procurement process.

Additional flexibility has been built in on some points - for example, shorter time periods for procuring goods and services of a type available in the commercial market place. Special and differential treatment for developing countries has been more clearly spelled out in a manner that is intended to facilitate future accessions by such countries.

Attention has been given to such questions as domestic review procedures for supplier challenges and the rules for modification of the coverage lists of parties to the GPA. The parties have agreed that the new text should be used as the basis for accession negotiations with countries wanting to join the GPA, even before formal entry into force of the revised agreement.

Extension of the coverage of the GPA

The negotiations have resulted in a significant extension of the coverage of the GPA (which will be effective after the entry into force of the revised agreement). These gains in market access have been provisionally estimated by the WTO Secretariat to be in the range of US$ 80 billion to US$ 100 billion annually.

The gains result from lower thresholds and additions of new entities and sectors to the existing parties' schedules of commitments. For example, three major parties to the GPA will provide new coverage of so-called “build-operate-transfer” agreements (BOTs). One party has agreed to cover all of its provinces and territories. The other parties to the GPA have together included at least 200 additional entities to be included in their schedules of commitments. Additional services coverage has been added by various parties. Also, two parties have agreed to reduce their thresholds for procurement by central government entities.

The revised text will enter into effect when two-thirds of members have ratified it.

 

Negotiations for the GPA accession of new members

Ten countries are currently in the process of acceding to the GPA. Of these, the accession processes of China, New Zealand and Ukraine are currently the most active. The accession process of Jordan is at an advanced stage. China has submitted two offers and has re-affirmed its commitment to provide a third “robust improved offer” before the end of 2013. This is expected to extend coverage to “sub-central” entities (regions, provinces and municipalities) and would set the basis for continuing negotiations with the Chinese authorities.

Benefits: non-discrimination and increased competition

Accession to, and participation in, the GPA provides important benefits for parties to the GPA, their entities and suppliers. These include:

  • potential trade gains based on legally assured access to the covered foreign procurement markets
  • ensuring a transparent, competitive and predictable government procurement regime, contributing to good governance in this sector
  • keeping markets open in times of crisis where the temptation for protectionism rises
  • in the context of acceding candidates, facilitating internal policy coordination and harmonization in the government procurement sector
  • improved public, supplier and investor confidence in the government procurement system, potentially stimulating inbound foreign direct investment
  • enhanced competition for contracts, leading to improved value for money outcomes
  • facilitating a more effective and efficient use of public resources.

The GPA provides a useful tool for optimizing value for money, governance and trade objectives in the government procurement sector. Participation in the GPA also affords the opportunity to influence the future evolution of the agreement.

Some figures

In most countries, the government and the agencies it controls are often cumulatively the biggest purchasers of goods and services of all kinds, ranging from basic commodities to high-technology equipment and information and communication services. Some key figures are provided below.

  • In most countries, government procurement accounts for 15 to 20 per cent of GDP.
  • In the European Union, government procurement accounts for 17 per cent of GDP (EUR 2,088 billion).
  • The value of the total market access commitments under the GPA has been estimated at US$ 1.6 trillion in 2008, representing 2.64 per cent of the world's GDP.
  • China has indicated that the central government procures more than US$ 88 billion in goods and services annually and that its sub-central government procurement is even more significant.
  • The EU Chamber of Commerce in China, a private sector body, calculates that the overall public procurement market in China, including central, sub-central and other government entities, is worth approximately US$ 1.02 trillion, representing 20 per cent of China's GDP.
  • In India, government procurement has been estimated to constitute about 30 per cent of GDP or US$ 347.8 billion in 2008.
  • In nominal terms, the GPA-covered procurement markets of some key parties to the GPA have grown by up to 300 per cent over a 10-year period to 2006-07.

History

In terms of international trade regulation, the concept of open government procurement has evolved over the years. Government procurement was excluded in the first 30 years of the multinational trading system. The first GATT disciplines were agreed in 1979 and came into force in 1981 (the Tokyo Round Government Procurement Code).

The current GPA, which entered into force in January 1996, expanded coverage of the agreement to include sub-central and other government entities, such as utilities and services, including construction services.

 

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