Info Service on WTO and Trade Issues (Feb15/03)
16 February 2015
Third World Network
becomes observer to GPA, China's latest offer discussed
Published in SUNS #7961 dated 13 February 2015
12 Feb (Kanaga Raja) -- The Committee on Government Procurement of
the WTO, at its meeting on 11 February, amongst others, admitted Pakistan
as an observer and discussed the latest revised offer tabled by China
for its accession to the Government Procurement Agreement (GPA). The
Committee also heard renewed criticisms of the US ‘Buy America' provisions.
The current Parties to the plurilateral GPA are: 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 LATEST REVIEW OF CHINA'S REVISED OFFER
According to trade officials, the discussion focused on the fifth
revised offer that was submitted by China to the WTO on 22 December
2014. Its first offer was submitted back in January 2008, with subsequent
offers made in 2011, 2012 and 2013 respectively.
At the meeting on 11 February, China said that it had worked day and
night in order to send a ‘big Christmas gift' to the GPA Parties,
and it has done that. It was a comprehensive and substantive improvement
over its previous offer.
China outlined its fifth revised offer, highlighting in particular:
(i) reductions in China's proposed thresholds (for example, if a contract
is above a certain value it will come under GPA coverage); (ii) coverage
of entities from five provinces that China had not previously proposed
to cover; (iii) initial coverage of fourteen "other entities",
including the China Post Group, the first state-owned enterprise to
be covered; (iv) coverage of five new service sectors; and (v) expanded
coverage of some construction services.
According to trade officials, China said that it has made improvements
in all fields and believes that its offer is now commensurate with
the offers that other GPA Parties currently have in their schedules.
It shows the sincerity of the Chinese government, said China, adding,
however, that progress in its negotiations mainly depends on the positions
of other Parties now.
While Parties welcomed what some described as substantial improvements
in China's latest offer, a number of Parties including the US, the
European Union, Korea, Japan, Canada, Norway and Switzerland said
that further improvements were necessary before the negotiations could
According to trade officials, a key complaint was the continued absence
of coverage for procurement by China's state-owned enterprises (SOEs)
under Annex 3 as well as China's request for certain general exemptions
from coverage under Annex 7, including procurement that impairs "important
national policy objectives" and procurement contracts that include
provisions such as domestic content requirements, offset procurement
and transfer of technology obligations.
The EU welcomed China's revised offer and appreciated its efforts.
The latest offer is an encouraging step forward, said the EU, noting
that China had eliminated some of the exclusions that it had been
asking for earlier for certain types of procurement.
However, the EU considers that important gaps remain and that these
gaps need to be filled. In particular, the EU was concerned about
what it called the "persistent refusal" of China to cover
procurement by state-owned enterprises (SOEs) under Annex 3.
It is necessary for China to take the steps to respond to these repeated
requests for it to cover SOEs, said the EU, adding that it was also
extremely concerned about persistent general and specific notes allowing
blanket exceptions for some procurement, including domestic content
The EU was further concerned about the continued demands for transitional
periods. It also needs clarity that what China is offering in its
revised offer won't be subject to further restrictions in the future.
The US said that it appreciated China's efforts, but that the current
offer does not adequately respond to the US request for further coverage
Korea welcomed China's revised offer, saying that overall it was a
big improvement. It noted that substantial progress was made in this
offer and it is a meaningful step as well as being a good signal of
China's accession to the GPA in the near future.
Nevertheless, it had some concerns. In particular, it wanted more
local government entities to be covered, including SOEs, which are
important. Korea also called for further coverage of provinces.
Japan also cited the need for expanded entity coverage under Annex
3. It noted that Japan had over 100 SOEs in its schedule.
Canada said that it believed that significant gaps remain in the Chinese
offer, particularly for SOEs. As many SOEs play a big role in key
sectors of procurement, a substantial proportion of China's procurement
market would be excluded without substantial improvement of Annex
3, Canada said.
According to trade officials, China noted the concerns expressed by
some GPA Parties, but stressed that China is at a different stage
of development than the other GPA Parties.
China said there was no room left for further expansion of covered
entities in the future but that it was willing to clarify the exceptions
that it was seeking.
China further said that it was willing to continue the negotiations
but hoped that the GPA Parties would adopt a practical attitude towards
According to trade officials, the Chair of the Committee, Mr Krzysztof
Trepczynski of Poland, said that he understood what China was saying
in that it would be difficult to offer further entities.
The EU noted that China unfortunately has indicated that there was
no room left for further expansion of coverage. It would like to continue
the negotiations in a constructive way with China. It would also like
to invite China to reconsider its position on the scope of coverage.
Even though it understood the difficulties that China is facing, the
EU said that it wants China to remain engaged and to consider possible
further expansion of coverage.
The US also requested China to reconsider its approach regarding an
expanded coverage offer.
According to trade officials, the EU, the US, Japan and Canada asked
China to explain how it sees the negotiations going forward, including
a timetable for a further revised offer.
China said it was willing to continue and conduct further negotiations.
However, it was not sure about a further revised offer.
The Chair concluded that ‘we can't find any further solution at this
According to trade officials, with respect to the accessions of Moldova
and Ukraine to the GPA, a number of delegations expressed hope that
the negotiations with both these countries could be concluded by early
June (when the Committee is scheduled to meet next) or by the summer
break this year.
The EU, US, Canada, Japan and Chinese Taipei said that they were pleased
with Moldova's fourth and "final" offer submitted in late
The US and Chinese Taipei, however, said that a few items still needed
to be clarified regarding the offer and domestic reforms on procurement.
Ukraine, which had submitted its first offer in March 2014, said that
it had already discussed with GPA Parties a draft third offer that
has yet to be circulated and that it believed this offer addresses
all outstanding concerns.
While its membership will be the starting point towards creating a
more competitive and transparent procurement market, Ukraine stressed
the need for technical assistance from GPA Parties, the World Bank
and other financing entities to achieve this aim.
The EU, the US, Canada, Japan, Norway, Chinese Taipei, Singapore,
Switzerland and Korea cited Ukraine's positive engagement and hard
work, with most hoping that the negotiations would be wrapped up by
PAKISTAN ACCEPTED AS OBSERVER
At the meeting on 11 February, the GPA Committee agreed to Pakistan's
request for observer status.
According to trade officials, Pakistan said that it had already undertaken
some domestic procurement reforms and had developed a strategy for
achieving a "fair, transparent, efficient and effective"
public procurement regime.
Despite the many challenges facing the country on different grounds,
Pakistan said that it was determined to undergo the necessary reforms
in view of joining the GPA.
Japan, the EU, the US, Canada, Norway, Hong Kong-China, Chinese Taipei
and Switzerland welcomed Pakistan's decision. Some said that they
hoped to soon receive Pakistan's application for its accession to
the GPA and its first offer.
CONCERNS OVER US ‘BUY AMERICA' PROVISIONS
Concerns were raised by Canada and several others at the meeting relating
to the US ‘Buy America' provisions.
According to trade officials, Canada noted that in the last two Committee
meetings, it had raised concerns about a number of legislative initiatives
in the US which would impose discriminatory measures against foreign
companies for federal, state and municipal government contracts.
Canada again asked the US to explain how these initiatives were consistent
with Article XXII: 6 of the revised GPA.
The Article states that each party "shall seek to avoid introducing
or continuing discriminatory measures that distort open procurement,"
a provision Canada said applies to any measure taken in relation to
procurement regardless of whether it applies to procurement not covered
by the GPA.
Canada highlighted two new concerns over the US initiatives.
The first is a statement by US Secretary of Transport Anthony Foxx
to the Senate Committee on Environment and Public Works on 28 January,
where he had noted the Barack Obama administration's desire to strengthen
‘Buy America' forced localisation requirements for programmes funded
by the US Department of Transportation.
The second is the Obama administration's budget proposal on 2 February
for fiscal year 2015-2016 in which it had indicated its intent to
resubmit the GROW America Act to Congress in the coming weeks.
Canada said that this proposed legislation would expand federal funding
for infrastructure projects in the US to $478 billion over six years,
and that much of this spending would be transferred to state and local
governments and would be subject to ‘Buy America' requirements.
In addition, said Canada, under the GROW America Act, the Obama administration
is proposing to raise the current 60% threshold for ‘Buy America'
to 100% for public transportation projects.
Canada said that it would be unfortunate if forced localisation requirements
became the de facto norm for the funding of infrastructure projects.
It encouraged the US to address its concerns.
According to trade officials, Canada's concerns were shared by the
EU, Japan, Israel, Hong Kong-China, Switzerland and Singapore.
The EU, Japan and Switzerland welcomed the decision on 5 February
by New Jersey Governor Chris Christie to veto state legislation that
would impose domestic procurement requirements.
Japan said that Christie's decision will benefit New Jersey and make
it a more attractive investment location for Japanese companies. It
expressed hope that others would take action to contain protectionism
as Governor Christie did last week.
According to trade officials, the US said that it takes its international
obligations seriously, including its obligations under Article XXII:
6, and ensures that all covered procurement complies with its commitments.
It was willing to engage with any GPA Party on the issue, said the
US, also noting that a number of comments showed interest in expanded
access to the US procurement market.
In this context, it questioned whether the Committee was the appropriate
forum for this, or whether these issues were better addressed in the
ongoing free trade agreement negotiations the US is currently engaged
in with some GPA Parties.
Meanwhile, Mr John Newham of Ireland is expected to take over the
chairmanship of the Committee in March. +