US should adopt new thinking for GPA

Despite the determined efforts by the contracting parties to conclude the 10-year old negotiations for upgrading the Agreement on Government Procurement (GPA), it is proving difficult to finalize a deal by the upcoming World Trade Organization (WTO) Ministerial Conference on Dec 15-17.

The GPA is to date the only legally binding agreement in the WTO focusing on the subject of government procurement. The present version entered into force on Jan 1,1996. It is based on the principles of openness, transparency and non-discrimination, but it does not automatically apply to all government procurement, rather, the coverage of the Agreement is determined with regard to each of the 42 members to which it is applicable. The remaining countries are not party to the Agreement, either because they feel it is not in their interests, or because the terms and conditions for accession are yet to be agreed with GPA members.

One of the major obstacles to concluding the new deal is the gaps that exist between the United States, the European Union and Japan over further expanding coverage of sectors and entities for public procurement.

With regard to coverage of entities, for example, the US offered the inclusion of the state of Georgia for the list of sub-central entities to be bound by the GPA in order to satisfy the EU. However, the US suddenly withdrew this offer due to resolute opposition from the Governor of Georgia thus adding a new stumbling block to an already elusive deal.

According to Inside US Trade, 37 states have so far bound some of their procurements to the GPA, with the level of sector and entity coverage varying from state to state. This shows that the US Federal Government is not ready to include all its local governments and sectors in a binding commitment to the GPA. However, it has collaborated with the EU in strongly urging China to bind all its sub-central governments at the provincial level, and further down to 23 prefecture-level municipalities, for its accession to the Agreement. This is not acceptable to China as, regardless of its overall GDP and trade ranking, it is still a developing country with a much larger population and lower per-capita income than the US and EU.

Similar incidents have also occurred in the Doha round of multilateral trade negotiations. While the US has stubbornly resisted opening up its maritime transportation, it has demanded China satisfy its irrational requirements for further opening up its financial and telecommunication services, which are already extremely open when compared with some developed members of the WTO.

In the case of the GPA, China, in making its initial or improved offers for its accession negotiations, may have been considering what Chinese enterprises can get in return in the US public procurement market. But public procurement is an easy area for the US to arbitrarily resort to its magic weapon of "national security" as an excuse to prevent Chinese enterprises from gaining access to the US market.

But as the saying goes, one should not do unto others what you would not have them do unto you. China has always adhered to this saying as a principle in its relationship with other countries, including various WTO negotiations. The US cannot justify requesting China do what it is not prepared to do.

The mode of thinking and tactics the US adopted for China's WTO accession negotiations are out of date. They should therefore be totally abandoned for the Doha development round and negotiations related to the GPA.

The author is vice-chairman of the China Society for WTO Studies and Senior Adviser to the Shanghai WTO Affairs Consultation Centre.