TRANSPARENCY IN GOVERNMENT PROCUREMENT Ready to negotiate an agreement, or not yet?

For the last six years the WTO has actively pursued a work programme on transparency in government procurement. This has been based on a mandate adopted by ministers at the WTO Singapore Ministerial Conference held in December 1996 to: “establish a working group to conduct a study on transparency in government procurement practices, taking into account national policies, and, based on this study, to develop elements for inclusion in an appropriate agreement”. (Because the mandate came from the Singapore meeting, transparency in government procurement is sometimes described as one of four “Singapore issues”.)

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The Doha mandate

At the Doha Ministerial Conference, in November 2001, the ministers went a step further and stated that “recognizing the case for a multilateral agreement on transparency in government procurement and the need for enhanced technical assistance and capacity building in this area. We agree that negotiations will take place after the Fifth Session of the Ministerial Conference (Cancún) on the basis of a decision to be taken, by explicit consensus, at that session on modalities of the negotiations”.

The mandate reflects the heavy emphasis on transparency placed throughout the WTO’s system of rules and practices. Transparency is often referred to as one of the three fundamental principles of the WTO (the others being non-discrimination and stability/predictability). The final part of the sentence, dealing with negotiations, was discussed at length and reflects widely different sensitivities among WTO member governments.


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In the background: the plurilateral agreement

Transparency is perhaps most important in situations where general rules can only have a limited effect on trading conditions, and where governments are freest to make decisions at their discretion. Government procurement is a notable example.

A Government Procurement Agreement was first negotiated in the Tokyo Round in the 1970s, and entered into force on 1 January 1981. It was updated in the Uruguay Round. The agreement is “plurilateral”, meaning that only some WTO members have signed it — currently the number is 28.

The plurilateral agreement’s purpose is more than just transparency. The aim is to open up as much government procurement as possible to international competition, through general rules and obligations, and schedules (or lists) of national entities in each member country whose procurement is subject to the agreement. A large part of the general rules and obligations deals with tendering procedures.

Transparency is one means of achieving the objective. The transparency provisions aim to ensure that adequate information on procurement opportunities is made available and that decisions are fairly taken. They also aid monitoring to ensure that signatory governments abide by their commitments under that agreement — commitments not to discriminate against suppliers and supplies from other signatory countries.

But only 28 members are applying these provisions.


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The multilateral exercise: transparency

The focus of the multilateral work currently underway, on transparency in government procurement, is somewhat different. First, the work is multilateral, aiming to produce an agreement that all 146 WTO members will sign. Second, the focus is on transparency as such, rather than on transparency as a vehicle for monitoring market access commitments. However, some members say they want future negotiations to have a broader mandate — in the long term it could mean exploring the possibility of market access at a multilateral level.

The WTO Working Group on Transparency in Government Procurement held its first meeting in May 1997. It began by hearing presentations from other intergovernmental organizations which have international instruments and activities relevant to transparency in government procurement, notably the United Nations Commission for International Trade Law (UNCITRAL) and the World Bank. It then considered a WTO study comparing the transparency-related provisions in existing international instruments on government procurement procedures as well as in national practices. This covered the procedures under the plurilateral WTO Agreement on Government Procurement, the UNCITRAL Model Law and the World Bank Guidelines, as well as available material on national practices.

Next came the systematic study of 12 issues identified as important for transparency in government procurement. These are: definition and scope of government procurement; procurement methods; publication of information on national legislation and procedures; information on procurement opportunities, tendering and qualification procedures; time-periods; transparency of decisions on qualification; transparency of decisions on contract awards; domestic review procedures; other matters related to transparency; maintenance of records of proceedings; information technology; language; fight against bribery and corruption; information to be provided to other governments; WTO dispute settlement procedures; and technical cooperation and special and differential treatment for developing countries.

Many members have supplied information on their national practices, suggestions on issues meriting study, and ideas for action. Several countries have described their experiences in using information technology in government procurement, and their experiences in regional arrangements such as in the Free Trade Area of the Americas (FTAA) negotiations, the Government Procurement Experts Group of the Asia-Pacific Economic Cooperation (APEC), and others.

In the working group, members agree that transparency in government procurement is important, and that the WTO should pursue its work in this area. The differences among them are essentially about how this should be done. A number of members argue that after the intensive work of the past six years, the WTO is now in a position to negotiate a transparency agreement in the context of a new round. On the other hand, a number of developing countries are concerned about enforcement rules in this area, including the use of the WTO dispute settlement system. They doubt whether the issue is ripe enough to launch negotiations.

In Cancún, ministers have to decide whether there is an “explicit consensus” on modalities that would allow negotiations to go ahead, leading to new WTO rules on transparency in government procurement.