Briefing note: WTO Agreement on Government Procurement

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 thereby contributes to good governance and to the promotion of value for money in covered procurement markets. 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 for most WTO members. 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 acceding  to the Agreement. At present, 10 WTO members are in the accession queue. These include Albania, Australia, China, Georgia, Jordan, Kyrgyz Republic, Moldova, Oman, Tajikistan and Ukraine. Five other WTO members have undertaken commitments in their WTO accession protocols to initiate accession to the GPA. They are Mongolia, the Russian Federation, Saudi Arabia, Seychelles and the former Yugoslav Republic of Macedonia.

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 activities 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 thresholds) specified in an appendix to the GPA, which is the outcome of the negotiations.

Typically, the parties to the GPA cover most entities at the central government level as well as entities at the sub-central government level and other entities, such as state-owned enterprises.  All goods are covered in principle (for instance, medicines, machinery and associated products, fuels and petroleum products, and textile products) unless specified otherwise. In addition, a range of services are open to international competition, including:

• telecommunications services
• computer and related services
• financial services
• management consulting and related services.

All parties cover construction services, subject to some minor exceptions.

 

Membership

On 12 August 2015, New Zealand became the 45th WTO member to accede to the GPA. It therefore became the 17th party to the GPA (counting the European Union and its 28 member states as one party).

The 17 parties to the GPA (comprising 45 WTO members)

Parties	Date of accession
Armenia	15 September 2011
Canada	1 January 1996
European Union 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 Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovak Republic and Slovenia Bulgaria and Romania Croatia	1 January 1996     1 May 2004   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
Montenegro	15 July 2015
Netherlands with respect to Aruba	25 October 1996
New Zealand	12 August 2015
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 

Observer government	Date of acceptance by GPA Committee as observer
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	27 February 1996
Costa Rica	3 June 2015
Georgia *	5 October 1999
India	10 February 2010
Indonesia	31 October 2012
Jordan *	8 March 2000
Kyrgyz Republic *	5 October 1999
Malaysia	18 July 2012
Moldova *	29 September 2000
Mongolia	23 February 1999
Oman *	3 May 2001
Panama	29 September 1997
Pakistan	11 February 2015
Russian Federation	29 May 2013
Saudi Arabia	13 December 2007
Seychelles	16 September 2015
Sri Lanka	23 April 2003
Tajikistan*	25 June 2014
Thailand	3 June 2015
The former Yugoslav Republic of Macedonia (FYROM)	27 June 2013
Turkey	4 June 1996
Ukraine *	25 February 2009
Viet Nam	5 December 2012

* negotiating accession

 

History of the GPA

Government procurement was excluded in the first 30 years of the multinational trading system. The first disciplines of the General Agreement on Tariffs and Trade (GATT) were agreed in 1979 and came into force in 1981 (the Tokyo Round Government Procurement Code). This was amended in 1987 and the amendment entered into force in 1988. Parties to the agreement then held negotiations to extend the scope and coverage of the agreement in parallel with the Uruguay Round. Finally, a new Agreement on Government Procurement (GPA 1994) was signed in Marrakesh on 15 April 1994 — at the same time as the Agreement Establishing the WTO — and entered into force on 1 January 1996.

Within two years of the implementation of GPA 1994, the GPA parties initiated the renegotiation of the Agreement according to a built-in provision of the 1994 Agreement. The negotiation was concluded in December 2011 and the outcome of the negotiations was formally adopted in March 2012. The revised GPA entered into force on 6 April 2014.

The revised GPA

The revised GPA streamlines and modernizes the Agreement’s text — for example, by taking proper account of the widespread use of electronic procurement tools. It provides gains in market access for the parties’ businesses that have been estimated to be in the range of $80-100 billion annually. This results from adding numerous government entities (ministries and agencies) to the scope of the Agreement as well as new services and other areas of public procurement activities. The revision also incorporates improved transitional measures that are intended to facilitate accession to the Agreement by developing and least-developed economies.

Parties will continue improving the GPA. The revised GPA clearly sets out that no later than three years after the entry into force of the revised GPA and periodically thereafter the parties shall undertake further negotiations to progressively reduce and eliminate discriminatory measures and to achieve the greatest possible extension of the coverage of the Agreement. In this spirit, the GPA parties have also agreed to undertake a number of work programmes which will have an impact on the future evolution of the Agreement.

The GPA Committee

The GPA Committee was established to administer the implementation of the GPA. It is composed of representatives from each of the parties as well as WTO members and intergovernmental organizations with observer status. The Committee meets regularly, around four times a year, to give parties the opportunity to consult on any matters relating to the implementation and operation of the Agreement or the furtherance of its objectives. It also carries out other responsibilities as may be assigned to it by the parties.

 

Negotiations for the accession of new members

Accession to the GPA requires, in addition to the existence of GPA-compliant national procurement legislation, the reaching of agreement on the terms of participation by each acceding WTO member. This is achieved through negotiations with the existing parties to the Agreement.

The schedule of each party setting out terms of participation contains several annexes which define the party’s commitment with respect to four areas:

• the procuring entities covered by the Agreement
• the goods, services and construction services covered by the Agreement
• the threshold values above which procurement activities are covered by the Agreement
• exceptions to the coverage.

Two WTO members are set to become parties to the GPA in the near future.  Moldova’s terms for accession were approved by the GPA Committee on 16 September 2015. It will formally become a GPA party 30 days after it submits its instrument of acceptance to the WTO Secretariat. Ukraine’s terms for accession were approved by the GPA Committee on 11 November 2015; it will also become a GPA party 30 days after it submits its instrument of acceptance.

Of the remaining applicants, the accession processes of China, Tajikistan and Australia are currently the most active. China submitted its sixth offer in December 2014 and has emphasized its continued commitment to joining the GPA.  Tajikistan submitted its initial offer in February 2015 and has vowed to complete accession as soon as possible. Australia submitted its initial offer in September 2015 and has said it hopes to secure accession in 2016.

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, the GPA can help to reform the government procurement sector in line with international best practices, and lock in the benefits of such reforms
• 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.