The Relationship between Services Trade and Government Procurement Commitments: Insights from Relevant WTO Agreements and Recent RTAs

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 reactivation 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.


No: ERSD-2014-21

Authors: Robert D. Anderson, Claudia Locatelli, Anna Caroline Müller, and Philippe Pelletier

Manuscript date: November 2014

Key Words:

Agreement, Budget, Commercial Policy, Corruption, Developing Countries, Developing Country, Development, Economic Integration, Expenditure, GATT WTO, General Agreement on Tariffs and Trade, Government, Government Expenditures, International Trade Agreements, International Trade Organizations, Liberalisation, Liberalization, MFN, Multilateralism, Openness, Optimal Trade Policy, Policy, Policy Making, Protection, Protectionism, Protectionist, Public Economics, Public Expenditure, Public Finance, Public Works, State Finance, Trade, Trade Agreements, Trade Liberalization, WTO.

JEL classification numbers:

F13, F15, F5, F53, F59, H5, H57, H7, H72, K2, K29, O1, O24, O29

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This is a working paper, and hence it represents research in progress. The opinions expressed in this paper are those of its authors. They are not intended to represent the positions or opinions of the WTO or its members and are without prejudice to members’ rights and obligations under the WTO. Any errors are attributable to the authors.

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