ACCESSION TO THE WTO AGREEMENT ON GOVERNMENT PROCUREMENT AND LEGAL REFORM Anna Caroline Müller Legal Affairs Officer, WTO Secretariat INTERNATIONAL ANNUAL.

ACCESSION TO THE WTO AGREEMENT ON GOVERNMENT PROCUREMENT AND LEGAL REFORMAnna Caroline MüllerLegal Affairs Officer, WTO Secretariat

INTERNATIONAL ANNUAL WTO FORUM KALININGRAD25 – 27th of March 2015

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QUICK INTRO TO GOVERNMENT PROCUREMENT & THE GPA

Part I

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Why procurement regimes matter: economic, social and trade dimensions

o A large proportion of Gross Domestic Product (15-20 % in most countries, more in some cases)

o Supports essential functions of government, vital for development and social policy purposes:o Provision of transportation and other vital infrastructure (airports,

highways, ports)o Public health (hospitals, medicines, water and sewer systems)o Schools and universities

o Significance as a component of international tradeo Importance for “good governance”.

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Factors currently enhancing the significance of the GPA for the multilateral trading system (1): increasing membership of the

Agreement worldwideo A plurilateral Agreement opening procurement markets to international

competition.o Currently, the GPA covers 43 WTO Members including the EU and its 28 member

States; most other developed countries (i.e. US, Canada, Japan; Liechtenstein, Norway and Switzerland); plus Hong Kong, China; Iceland; Israel; Korea; Singapore; Chinese Taipei; Aruba and Armenia.

o Eleven more WTO Members currently seeking accession (Albania, China, Georgia, Jordan, the Kyrgyz Republic, Moldova, Montenegro, New Zealand, Oman, Tajikistan and Ukraine). Two to be concluded at the next Committee meeting

o Four additional WTO Members have commitments to seek GPA accession (eventually), as part of their WTO accession protocols: the former Yugoslav Republic of Macedonia, Mongolia, the Russian Federation, and Saudi Arabia.

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Factors currently enhancing the significance of the GPA for the multilateral trading system (2): the policy context

o Enhanced importance of the procurement sector in light of: (i) the global economic crisis; and (ii) emerging economies’ infrastructure needs.

o Also greater emphasis on procurement and good governance as an underpinning of development.

o Increased pressures for policies potentially limiting access to important procurement markets.

o GPA and/or bilateral/regional agreements embodying similar disciplines are the main tool of exporting economies to preserve market access rights in this crucial sector.

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Factors enhancing the significance of the GPA (3): synergies with other international instruments, and

national legislationo GPA a distillation of best practices internationally, as seen by the

participating WTO Member governments.o Carefully harmonized with the UNCITRAL Model Lawo Of interest in current review of the World Bank Procurement

Guidelines.o The model for procurement chapters in bilateral FTAs and regional

trade agreements worldwide. o An important benchmark for national procurement reforms.

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Objectives of the GPA(see Preamble)

o Trade aspect: a guarantee of market access; assurance of fair treatment for all suppliers (foreign and domestic)

o Governance aspect:o Integrity and predictability of government procurement

systems;o Efficient and effective management of public resources;o Prevention of corrupt practices.

o Avoidance of conflict: promotion of compatible procurement systems worldwide

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Core principles of the Agreement(basis for all legal elements)

o Three core principles:o Non-discrimination (especially between foreign and

domestic suppliers);o Transparency of the procurement system and of individual

procurements;o Procedural fairness for suppliers/potential suppliers

NB: Above three principles underlie/explain all elements of the Agreement

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The recent entry into force of the revised GPA: overview

o The revised GPA has entered into force on 6 April!o “Political conclusion” to the negotiations reached by GPA Ministers on

15 December 2011, following intensive negotiations over almost a decade.

o Formal adoption of the results of the negotiations on 30 March 2012, following a verification process.

o Elements of the deal:o Market access enhancement package valued at $80-100 billion

annually.o Revised GPA text.o Package of Agreed Work Programmes on issues such as SMEs and

sustainability.

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The recent entry into force of the revised GPA (2): key improvements in the revised GPA text

o Core principles of the revised text are the same as the existing one (non-discrimination, transparency, procedural fairness). However, revised text incorporates:

o A complete revision of the wording of the provisions of the Agreement with a view to making them more streamlined, easier to understand and user-friendly;

o Updating of the text of the Agreement to take into account developments in current government procurement practice, notably the use of electronic tools;

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The recent entry into force of the revised GPA (3): improvements in the revised GPA text (cont’d)

o Additional flexibility for Parties' procurement authorities, for example in the form of shorter notice periods when electronic tools are used. Shorter time-periods have also been allowed for procuring goods and services of types that are available on the commercial marketplace.

o More explicit recognition of the GPA's significance for good governance and the fight against corruption, including in new substantive provisions that require participating governments to carry out their GPA-covered procurements in ways that avoid conflicts of interest and prevent corrupt practices; and

o Revised and improved transitional measures ("special and differential treatment") for new Parties that accede to the Agreement. Under the revised provisions, such measures are to be tailored to the particular developmental needs of the individual accession candidates.

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ACCESSION TO THE GPAPart II

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Article XXII:2“Any Member of the WTO may accede to this Agreement on terms to be agreed between that Member and the Parties, with such terms stated in a decision of the Committee. Accession shall take place by deposit with the Director-General of the WTO of an instrument of accession that states the terms so agreed. This Agreement shall enter into force for a Member acceding to it on the 30th day following the deposit of its instrument of accession. “

Accessions to the Agreement: Current Statuso 11 observers are in the process of acceding Albania; China; Georgia; Jordan; Kyrgyz Republic; Moldova; Montenegro New Zealand;

Oman; Tajikistan. Ukraine.

o 4 WTO Members have commitments to accede to the GPA the former Yugoslav Republic of Macedonia; Mongolia; Saudi Arabia; Russian Federation.

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GPA accession commitments by new WTO Members

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The GPA: What are the benefits?

Double benefit: external and internal!

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Internal benefits: “Locking in” reform

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Potential costs of accession*

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__________*It is recognized that each acceding WTO Member must ultimately asses these itself.

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Issues to be addressed

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Summary overview of coverage

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Entities Goods Services Construction Services

Annex 1 130,000 130,000 5,000,000

Annex 2 200,000 200,000 5,000,000

Annex 3 400,000 400,000 5,000,000o Coverage commitments of covered goods/services/construction

services by covered entities are only applicable to procurements above specified thresholds.

o Most Parties apply the general threshold levels.o Reciprocity is the foundation of coverage commitments generally.o Revised GPA: Some reductions in thresholds by some Parties

Thresholds (general levels in SDR)

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Flexibilities

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The GPA and Regional Trade Agreements

This part of the presentation……is based on an empirical study conducted by the WTO

Secretariat on RTAs notified to the WTO since 2000 which remain in force (138 RTAs in total).

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Overview

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Agreements with detailed GP provisionso GPA Parties more activeo Generally modelled on GPA

o Some later RTAs on revised text

o Agreements btw GPA Partieso Some further opening beyond

GPAo Between GPA and non-GPA

Partieso GPA as templateo Some use of NAFTA rules

o Between non-GPA Partieso Some regional patterns

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Basic principles of interaction between WTO Agreements and RTAs

o Preferential (regional) trade agreements are an exception to the general MFN principle contained in GATT and GATS.

o Article XXIV of the GATT 1994 and Article V of the GATS allow WTO Members to depart from the MFN rule to grant more favourable treatment to their trading partners within a customs union or a free trade area without extending such treatment to all WTO Members, subject to certain requirements.

o Different situation under GPA: Minimum standards for national legislation, limited MFN clause.

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Interaction between GPA and RTAs with procurement chapters

Text of the AgreementoRules of the Agreement have to be applied vis-à-vis other GPA Parties through the national procurement system.oIn order to be able to implement a single, functioning procurement regime, GPA and RTA rules have to be compatible.

Coverage schedulesoThe GPA’s MFN clause only applies to

o Treatment offered to Parties to the GPA (Treatment offered in RTAs to non-GPA Parties is not taken into account)

o Covered procurement (extra coverage offered to non-GPA Parties in RTAs is not taken into account)

oNo exception to the GPA’s MFN clause needed.

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Conclusionso GPA as a plurilateral Agreement of growing

importance in the international trading system.

o GPA accession as factor supporting national legislative reform.

o Compatible with regional integration, when taken into account in negotiating RTAs.

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