Government procurement in the WTO – the GPA

1. Background
Government procurement constitutes a very large market in most countries. These markets are of particular interest to actors in international trade. Efforts have therefore been made for some time to develop rules that grant market access to suppliers from different countries under predictable and transparent conditions.

The WTO agreement on government procurement, the Government Procurement Agreement (GPA), came into force in 1996, as a result of the Uruguay Round and the establishment of the WTO. The GPA is plurilateral, and includes the following 13 members: Aruba (the Netherlands), Canada, the EU, Hong Kong (China), Iceland, Israel, Japan, South Korea, Liechtenstein, Norway, Singapore, Switzerland and the USA. Norway acceded to the GPA when the WTO was set up, but was also party to the corresponding 1981 GATT agreement on government procurement.

The aim of the GPA is to ensure transparency in relation to laws, regulations and procurement practice. It will lay a foundation for well-functioning markets and better use of resources, by enabling international competition on deliveries to states and local authorities. This will reduce corruption and other dubious business practices.

Most WTO member countries have chosen not to participate in the GPA. Government procurement is nevertheless also an issue in the global WTO context, in which all member countries participate. Transparency in government procurement is one of the four “Singapore issues”, named after the WTO Ministerial Conference held in Singapore in 1996. A WTO working group has considered this issue, not least to assess how it can be incorporated into an expanded WTO agreement. During the Ministerial Conference held in Cancun in 2003, this issue was one of the reasons that the conference was concluded without achieving a result. Agreement was subsequently reached in July 2004 on a framework for further WTO negotiations, one provision of which was that the government procurement issue was to be laid aside for the time being. The working group has accordingly stopped work.

Government procurement is also an issue in the WTO services negotiations. GATS Article XIII, which resulted from the Uruguay Round and the establishment of the WTO in 1995, contains a mandate for negotiations on the issue. There has been no sign of progress in the negotiations, despite their having been on the agenda since 1995.

2. Status of the work under the GPA
The GPA is presently the subject of negotiations. These are independent of the broad WTO negotiations of the Doha Round. The negotiation mandate is apparent from Article XXIV, para. 7(b), of the GPA, which states:

“(…) the Parties thereto shall undertake further negotiations, with a view to improving this Agreement and achieving the greatest possible extension of its coverage among all Parties on the basis of mutual reciprocity, having regard to the provisions of Article V relating to developing countries.”

Negotiations on improvements to the text of the agreement have been taking place for an extended period of time. Market access in the countries party to the GPA is detailed in lists showing the scope of the agreement in those countries. These lists are appended to the actual GPA, and set out the public bodies, goods and services that are subject to its provisions.

Negotiations on market access were begun at the end of 2004, when the parties put forward their opening demands. Norway’s demands are largely determined by its current obligations, and principally seek to support the effort to simplify and harmonise the GPA to make it easier to understand and more accessible to users.

Norway also considers conformity between the different legal instruments applicable in this area (the GPA, the EEA Agreement, the EFTA Agreement and free trade agreements between EFTA and other countries) to be desirable, to avoid making administration of the system unnecessarily complicated. Norway’s opening demands in December 2004 were therefore “generic” demands, which applied to all countries. In the course of the negotiations, additional demands will be made of individual countries, based not least on the business community’s experiences in different countries in relation to access to competitive tender processes.

Norway made its initial offer on 29 March 2006. As Norway already has a very open procurement regime, the opening bid merely entailed making minor adjustments to the system already in place under existing GPA obligations.