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Assessing the Potential Impacts of Liberalizing Government Procurement

Government procurement is an area that is increasingly attracting attention in negotiations and discussions in free trade agreements (FTAs) and regional integration due to its perceived and real effects on trade and national development.

The main objective of liberalizing (open and non-discriminatory) government procurement (GP) is to promote competition among potential local and international suppliers of various goods and services in order to obtain the best value for money. However, GP is often driven by secondary objectives that are sometimes inconsistent with the principle of obtaining best value for money. For instance, the government being the largest procurer in most economies may discriminate against foreign companies in procurement to achieve its industrialization, development, and job creation objectives by promoting national industries. The government may also favour foreign firms for reasons such as promoting foreign direct investment (FDI). Achieving these secondary objectives usually involve using trade distorting techniques such as discriminatory tendering requirements and selective tendering among others.

It is in respect to the above that the EAC Geneva Forum meeting deliberated on government procurement. Discussions were based on EAC stakeholder’s views as expressed in country update notes, as well as an issue note prepared by CUTS International. Cross cutting findings from the EAC countries were that: all members have public procurement legislation and related laws in place with the objective of ensuring value for money; these laws however prioritise local suppliers so as to support and promote local industries and enterprises. Stakeholder’s in the region emphasised the need to maintain the status quo of favouring local suppliers until the countries have sufficiently developed competitiveness, only then can government procurement be liberalised. This is especially important in light of the fact that Governments are the biggest source of business.

In the discussions, Delegates concurred with the views from stakeholders, observing that even in the advanced economies, government procurement was only liberalised after attainment of competitiveness for local firms. In principle developing countries and especially least developed countries cannot afford to give up policy space of utilising government procurement to promote their development needs. In summing up, Delegates present expressed their appreciation of the EAC Forum meeting. It was suggested that the next forum should consider the issue of the Trade Related Investment Measures Agreement (TRIMs), with respect to either extension of grace period for implementation or derogation from the agreement. This issue is especially important as it will likely be negotiated in the forthcoming 11th WTO Ministerial meeting.


Ongoing Discussions

  • Burundi WTO discussion

    Feb 19, 2016 | 09:29 am

    We can discuss WTO issues here for Burundi

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    Feb 19, 2016 | 04:43 am

    Let us discuss topics of MTS to support our delegates in Geneva. Best regards, Julien Grollier Programme Officer CUTS International, Geneva Tel: +41 22 7346080 Fax: +41 22 7343914 Email: Web: Skype: cuts.grc [image: CUTS-Rlogo.jpg]

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