BRUSSELS- Governments and local authorities around the world have for decades put domestic companies first in the massive public procurement decisions they make with taxpayer money.
But as they look to spend trillions on post-pandemic recoveries – and as western suspicion of China grows – many are taking an even more protectionist stance to ensure the funds are spent locally to create or protect jobs.
The World Trade Organization’s 164 members commit to provide trade on the same terms with other partners and treat imported and locally produced goods equally, but are largely left to their own devices on public procurement.
Although some legal challenges have questioned the role of state-owned firms, this means national, regional and local authorities can effectively set their own terms.
So these markets are closed?
Not quite. 48 WTO members, mostly developed countries and not including China, are signatories to the Agreement on General Procurement (GPA), hatched in 1994 and revised in 2012.
This provides a partial liberalization, with its backers filing “coverage schedules” that spell out what levels of government will open up and to what extent.
In the case of the United States, its schedule only covers 37 states, a third of which exclude purchases of construction steel, vehicles and coal, while at the federal level, there are extensive carve-outs of Department of Defense purchases, as well as for aeronautics and mass transit.
Beijing has submitted offers to join, but the current members have not deemed them sufficient to let China in.
Public procurement accounts for 15-20 percent of global gross domestic product and GPA commitments represent around 1.3 trillion euros ($1.54 trillion) in business opportunities, according to European Commission data. – Reuters
