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 Introduction
There are three areas of work in the WTO on government procurement:
Regulations relating to the procurement of goods and services by a government (through its departments and agencies) for its own use, are outside the scope of the main WTO rules for goods and services (Article III and XVII of the GATT and Article XIII of GATS).
Transparency in government purchases: towards multilateral rules
The WTO already has an Agreement on Government Procurement. It is plurilateral — only some WTO members have signed it so far. The agreement covers such issues as transparency and non-discrimination.
The decision by WTO ministers at the 1996 Singapore conference did two things. It set up a working group that was multilateral — it included all WTO members. And it focused the group’s work on transparency in government procurement practices. The group did not look at preferential treatment for local suppliers, so long as the preferences were not hidden.
The first phase of the group’s work was to study transparency in government procurement practices, taking into account national policies. The second phase was to develop elements for inclusion in an agreement.
Government procurement: services
This multilateral Working Party on GATS Rules (WPGR) was established by the Council for Trade in Services. Among its responsibilities are negotiations on government procurement of services, as required under Article XIII: 2 of the General Agreement on Trade in Services (GATS).
Government procurement: the plurilateral agreement
The Government Procurement Committee oversees the work of the Agreement on Government Procurement (GPA). The GPA is a plurilateral agreement — only some countries (members of the WTO) are parties to this agreement.
In most countries the government, and the agencies it controls, are together the biggest purchasers of goods of all kinds, ranging from basic commodities to high-technology equipment. At the same time, the political pressure to favor domestic suppliers over their foreign competitors can be very strong.
An Agreement on Government Procurement was first negotiated during the Tokyo Round and entered into force on 1 January 1981. Its purpose is to open up as much of this business as possible to international competition. It is designed to make laws, regulations, procedures and practices regarding government procurement more transparent and to ensure they do not protect domestic products or suppliers, or discriminate against foreign products or suppliers.
The agreement has 28 members (Egypt is not a Member). It has two elements — general rules and obligations, and schedules of national entities in each member country whose procurement is subject to the agreement. A large part of the general rules and obligations concern tendering procedures.
The present agreement and commitments were negotiated in the Uruguay Round. These negotiations achieved a 10-fold expansion of coverage, extending international competition to include national and local government entities whose collective purchases are worth several hundred billion dollars each year. The new agreement also extends coverage to services (including construction services), procurement at the sub-central level (for example, states, provinces, departments and prefectures), and procurement by public utilities. The new agreement took effect on 1 January 1996.
It also reinforces rules guaranteeing fair and non-discriminatory conditions of international competition. For example, governments will be required to put in place domestic procedures by which aggrieved private bidders can challenge procurement decisions and obtain redress in the event such decisions were made inconsistently with the rules of the agreement.
The agreement applies to contracts worth more than specified threshold values. For central government purchases of goods and services, the threshold is SDR 130,000 (some $185,000 in June 2003). For purchases of goods and services by sub-central government entities the threshold varies but is generally in the region of SDR 200,000. For utilities, thresholds for goods and services is generally in the area of SDR 400,000 and for construction contracts, in general the threshold value is SDR 5,000,000.
Role of CD/WTO
For more information on Government Procurement, please click on the links below:
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