Procurement of products and services by government agencies for their own purposes represents an important share of total government expenditure and of a country's GDP (typically 10-15% of GDP). As a result, government procurement plays a significant role in domestic economies, and restrictions imposed on government procurement can have a notable impact on international trade in goods and services. Yet, despite its importance, government procurement has been effectively omitted from the scope of the multilateral trade rules under the WTO in the areas of both goods and services.
In the General Agreement on Tariffs and Trade (GATT), originally negotiated in 1947, government procurement was explicitly excluded from the key provision of national treatment. The first attempt at bringing government procurement under internationally agreed trade rules was undertaken in the Tokyo Round of Trade Negotiations. This resulted in the 1979 Agreement on Government Procurement, which was subsequently amended in 1987. In parallel with the Uruguay Round, Parties to the Agreement held negotiations to extend the scope and coverage of the Agreement. The new Agreement on Government Procurement (GPA) was signed in Marrakech on 15 April 1994 - at the same time as the Agreement Establishing the WTO- and entered into force on 1 January 1996. The GPA is one of the so-called "plurilateral" agreements included in Annex 4 to the Agreement Establishing the WTO, signifying that not all WTO Members are bound by it.
The cornerstone of the GPA is non-discrimination, either with respect to domestic products, services and suppliers (National Treatment), or with respect to goods, services and suppliers of other Parties (MFN Treatment). The Agreement does not apply to all government procurement of the Parties, but excludes purchases below a certain threshold and those by certain sub-national governments or state enterprises, such as utilities. Another feature of the GPA is that it allows special and differential treatment to developing countries in recognition of their specific development objectives. Finally, the Agreement incorporates specific rules on enforcement and dispute settlement.
- GPA and specific features
- Hoekman, Bernard and Petros C. Mavroidis. (editors) 1997, Law and policy in public purchasing: the WTO agreement on government procurement, Ann Arbor, University of Michigan Press.