Australia launches bid to join government procurement pact

Australia launches bid to join government procurement pact

Australia has formally launched its bid to join the Agreement on Government Procurement (GPA), underlining its commitment to work towards timely accession to the pact. The announcement was made at a 3 June meeting of the Committee on Government Procurement where progress was also reported on the accession bids of several pending applicants.

Australia said it planned to submit an initial market access offer for GPA accession within the coming months, which will trigger the negotiations on its entry terms.

“Australia enjoys a world-class government procurement system based on the principles of value for money and non-discrimination and is open to competition from foreign suppliers,” Australia told the committee.

At the same meeting, parties to the GPA agreed to accept the requests from Costa Rica and Thailand for observer status in the committee. Thirty-one WTO members now hold observer status; 12 of these observers are negotiating accession to the GPA, with two — Montenegro and New Zealand — having already completed their accession talks.

Costa Rica noted that the GPA already serves as the model for government procurement chapters in existing free trade agreements, including those Costa Rica has already concluded with the European Union and Singapore. The agenda of the committee is also of great interest as it addresses issues in key areas such as encouraging small and medium-size enterprises to become more active in procurement bidding, Costa Rica said.

Thailand said observer status in the committee presented an excellent opportunity to learn more about the GPA and eventually contribute to the system, as well as prepare Thailand for other negotiations in the future.

Both new observers emphasized the importance of sound government procurement systems based on international best practices for good governance and economic development.

Parties to the GPA welcomed the moves by Costa Rica and Thailand and expressed hope that the two countries would ultimately decide to initiate negotiations on accession to the agreement.

Pending ratifications

Montenegro told the committee that its domestic ratification process for the GPA has now been successfully concluded. Montenegro said it expected to submit the GPA instrument of acceptance to the WTO in the coming days. The committee decided in October 2014 to accept Montenegro as a party to the GPA and gave it six months to deposit its instrument of accession, a deadline which was later extended until 29 June 2015.

New Zealand also told the committee that its parliament has approved the GPA and that the domestic ratification process was now being finalized, with the country on track to deposit its instrument of acceptance by the 29 July deadline. New Zealand was also accepted as a party to the GPA last October.

Separately, Armenia notified the committee that it has ratified therevised GPA, which came into force in April 2014. The Republic of Korea and Switzerland are the only two current parties to the GPA that have not yet ratified the revised agreement; Korea said it was still awaiting a review of the agreement by its constitutional court, which it described as a procedural step, while Switzerland noted that ratification was linked to changes in its domestic procurement rules which still required review at both the federal and sub-federal levels.

Pending accessions

Parties welcomed the submission by Ukraine on 26 May of a draft final offer and said they had no remaining issues with Kiev on the proposed membership terms. Ukraine said it would make every effort to circulate the final offer by the end of June so that its membership could be approved at the next committee meeting in September, a move which would open the way for possible ratification before the WTO's 10th Ministerial Conference in Nairobi next December. The parties praised Ukraine for its efforts in bringing the talks towards a successful conclusion. Ukraine applied for GPA accession in February 2011, with its initial offer submitted in March 2014.

Tajikistan told the committee it was still reviewing questions posed by parties regarding its initial offer for GPA accession submitted in February and would get back with replies as soon as possible. The majority of parties welcomed the quality of the initial offer and said they would be seeking improvements in areas such as the covered procuring entities and the proposed thresholds in addition to information on Ukraine's procurement system. Tajikistan applied for GPA accession in February 2015.

Moldova said it has sorted out remaining concerns with parties on its GPA membership terms and believed the negotiations on its accession had come to a successful end. One party said it was pleased Moldova had responded to its concerns about its suppliers being granted equal, non-discriminatory access to the country's procurement market and that it was prepared to join a consensus behind welcoming Moldova as a GPA member. Committee chairman John Newham (Ireland) said the “foot was on the pedal” for Moldova's accession and that parties would come back in September to decide on the remaining steps. Moldova applied for GPA accession in February 2002.

China's delegation delivered a short statement on its pending accession. China noted that it submitted its 5th revised GPA accession offer last December where it explained the changes contained therein (some detailshere). China said its position on acceding to the GPA as soon as possible has never changed and that accession would be to everyone's benefit. China said it was also willing to continue the dialogue with parties and try to find a solution on its membership terms. Finally, China urged parties to take a practical attitude towards the 5th revised offer and accelerate the accession process.

Parties generally took a conciliatory tone towards China. One party said it had a constructive and encouraging bilateral with China the previous day and welcomed in particular Beijing's willingness to communicate and find solutions. China's last offer showed it could deliver significant improvements, but the 5th offer still fell short in several areas, notably coverage of sub-central entities, state-owned enterprises and the proposed thresholds, the party said. Others similarly welcomed China's efforts and constructive bilateral talks with the Chinese delegation but cited similar shortcomings in the 5th revised offer. All those intervening said they were pleased with China's reaffirmation of its support for the GPA and its willingness to continue engagement and dialogue.

Mr Newham said the interventions were encouraging and that everyone agrees on the high importance attached to China's GPA accession and the appetite for further discussion. Delegations have expressed their desire to return to substantive discussions in September, he noted, adding that perhaps China could offer a timeline on a possible future revised offer at that meeting. China applied for GPA accession in December 2007.

The Kyrgyz Republic said it had planned to submit a new offer for GPA accession at the June meeting but this had been delayed due to the recent resignation of its government and its accession to the Eurasian Economic Union (EEU). It would do so as quickly as possible.

Other matters

The chairman outlined his “hopes and aspirations” for the committee over the remainder of the year. He said the committee should be ambitious and aim to conclude negotiations on at least one, and if possible, two or three accessions. Adopting a decision on arbitration procedures for facilitating resolution of objections to proposed changes in a member's GPA commitments (as mandated in the revised GPA), carrying forward efforts on the committee's new work programmes under Article XXII:8 of the revised GPA in an “energetic and constructive” spirit, and addressing any outstanding questions regarding the entry into force of the revised GPA were identified by the chairman as other priorities for the year. He also said parties should consider holding a further ministerial-level meeting on the margins of the upcoming Nairobi Ministerial Conference, as they did during the two previous ministerials. Experience has shown holding such a meeting can be a useful tool in progressing the committee's work and giving a higher profile to the GPA generally, Mr Newham said.

Without doubt, the Agreement on Government Procurement is becoming more and more important over time. This is a consequence not only of the Agreement's increasing membership, its role as a bulwark of market access in the modern global economy, and its recent successful renegotiation, but also of its growing role as an instrument of good governance and its significance for related internal reforms that are being pursued by many countries.

- John Newham, chairman of the Committee on Government Procurement

Background

Government procurement accounts for 15-20 per cent of gross domestic product (GDP) in developed and developing countries. Only a part of this is currently covered by the Agreement on Government Procurement. The aim of the Agreement is to open up as much of government procurement as possible to international trade and competition, while ensuring appropriate transparency and a commitment to good governance.

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 dimensions of coverage:

• 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; and

• exceptions to the coverage.

Recently, the GPA was revised to modernize certain aspects of its rules and to expand its scope. The revised version of the Agreement came into force in April 2014.

The GPA is a plurilateral agreement within the framework of the WTO, meaning that not all WTO members are parties to the Agreement. Currently, it covers 43 WTO members: Armenia; Canada; the European Union, with its 28 member states; Hong Kong, China; Iceland; Israel; Japan; Korea; Liechtenstein; the Kingdom of the Netherlands with respect to Aruba; Norway; Singapore; Switzerland; Chinese Taipei; and the United States. The accession terms of Montenegro and New Zealand were approved on 29 October 2014 and their accessions will take effect when the required legal instruments are submitted.

Other WTO members that have started the process of acceding to the Agreement on Government Procurement are Albania, Australia, China, Georgia, Jordan, the Kyrgyz Republic, Moldova, Oman, Tajikistan and Ukraine. A further five members — the former Yugoslav Republic of Macedonia, Mongolia, the Russian Federation, Saudi Arabia and Seychelles — have provisions regarding accession to the Agreement in their respective protocols of accession to the WTO.

Further information on the WTO and government procurement is availablehere.

ENDS

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