42 Final Offers on Govt. Procurement Next Week – Deal Likely in Current WTO Ministerial – China to Accede

The WTO’s eighth ministerial conference kicked off in Geneva on Thursday morning, with 42 countries finalising a deal that would liberalise billions of dollars in public contracts. Along with this week’s scheduled accessions of Russia, Samoa, and Montenegro, the announcement lifted the spirits of trade negotiators who had otherwise expected a relatively uneventful meeting.

Public procurement deal clinched

The Government Procurement Agreement’s 42 countries managed to take out a conclusion to the decade-long discussions.

The revised GPA would liberalise US$100 billion in public contracts, in addition to the US$500 billion already covered by the pact.

The market access gains are largely expected to come from adding new entities to the pact’s coverage, such as government ministries and agencies, as well as bringing more services and goods into the agreement.

Trade sources also particularly highlighted the importance of new and simpler rules on transparency and due process in helping fight hidden protectionism and corruption, as well as facilitating the accession of other parties.

Thursday’s announcement was lauded by trade officials; on the corridors it was hailed as a new agreement for its substantial increase in market coverage and the tightening of legal obligations.

The ten years of negotiations were marred with difficulties, with long-standing disagreements between the EU, US, and Japan threatening to further delay the talks.

EU Internal Market Commissioner Michel Barnier called the revised agreement a win-win opportunity that would deliver growth and jobs, as well as enhance competitiveness.

Barnier said the EU had gained significantly expanded access to a number of strategic markets, particularly with regard to public spending on railway equipment in Japan, a key sector for the EU. The EU, as others, is also likely to benefit from the partial inclusion of Canada’s provincial public procurement.

The next steps for the deal include final review and legal ratification, which is expected to take three months.

China

The new pact also sets the stage for a wave of new accessions, officials said, particularly that of China.

China, with its enormous government procurement sector, agreed to join the GPA in its 2001 WTO accession protocol but subject to special negotiations.

For long China has maintained that it was not ready to abide by the imprecise rules of the old GPA, but instead insisted on a review of rules. The old rules, China feared, did not provide sufficient clarity on the type of entities and actions covered - an issue of great relevance in China’s complex governmental spending system.

The new GPA - also agreed to by China - substantially increases the likelihood of China eventually concluding its accession negotiations.

The final stumbling block in the GPA-group negotiations had also surrounded this issue, as members disagreed on the legal nature of the new accord. It now applies as a ‘revision’, replacing the old GPA once it enters into force. China is thus effectively already negotiating its accession to the new agreement - an accession that, Lamy noted, will likely bring another US$100 billion “into the pot.”

China’s latest offer - submitted just last week - included sub-central entities, as well as agencies under the central government, although at the time of writing it was not clear which entities and/or services would be covered.

But the new offer drew a lukewarm response from some countries, with US Trade Representative Ron Kirk stressing that China “still has some distance to go” before its coverage is on par with that of current GPA parties.

Among the areas where the US is seeking changes, Kirk said, were the inclusion of state-owned enterprises in China’s offer, along with more sub-central entities and services and reduced thresholds for the size of covered contracts.

WTO officials said they expected the final offers of all 42 GPA parties to be available next week.