On March 17, 2014, the Office of the United States Trade Representative published its notice announcing that the Protocol Amending the Agreement on Government Procurement (GPA) of the World Trade Organization (WTO) will take effect on April 6, 2014, nearly two years after it was adopted by the GPA parties in March 2012.
The entry into force of the new GPA is a significant development for companies involved in international government procurement activities.
The new GPA amends, clarifies, and expands upon the 1994 Government Procurement Agreement in several important respects. Most significantly, the revised Agreement broadens the market access commitments by the GPA parties by including additional central and sub-central government entities to its coverage, including government ministries and agencies, as well as including additional services and goods into the GPA. Further, the revised GPA reduces the threshold values above which individual procurements are to be covered by the Agreement. It is estimated that these gains in market access will generate approximately $80-$100 billion annually in new global procurement opportunities for businesses in the signatory countries, including the United States.
The new GPA also streamlines and modernizes the 1994 Agreement’s text with respect to the parties’ obligations and reflects current procurement practices, such as the use of electronic procurement tools. The revision also includes new and simpler rules on transparency and due process that are intended to eradicate corruption and protectionism. The new GPA also provides more flexibility to allow for shorter time-periods for procuring goods and services that are available on the commercial marketplace and incorporates improved transitional measures that are intended to facilitate future accessions to the Agreement by developing countries. Indeed, in addition to the 43 WTO members that already participate in the GPA, current negotiations to accede to the revised GPA are underway with several other WTO members, such as China and New Zealand. The revised GPA, however, will not take effect for new parties until 30 days after they formally accept the revised GPA. Currently, the remaining five parties to the GPA (Armenia, Japan, Korea, Norway and Switzerland) are in the process of ratifying the new GPA.
As a “plurilateral” agreement, the GPA does not apply to all WTO members, but only to those members that specifically signed the GPA or that have subsequently acceded to the Agreement. In addition, it is important to recognize that the GPA does not automatically apply to all government procurement of the parties. Rather, it only applies to those activities and government entities that each party has committed to complying with the GPA as set forth in the Appendices to the Agreement. As a result, companies interested in taking advantage of the new government procurement opportunities provided by the revised GPA should carefully review whether the relevant procurement activities are covered under the new GPA.