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1 1 (January 24, 2022)

handle is hein.crs/govehfw0001 and id is 1 raw text is: Congressional Research Serico Informing the legiative debate since 1914 Updated January 24, 2022 WTO Agreement on Government Procurement (GPA) During the past 50 years, the United States has played a prominent role in developing international trade rules on government procurement. Most U.S. free trade agreements include government procurement obligations. The most notable international procurement agreement to which the United States is a party is the World Trade Organization (WTO)'s Agreement on Government Procurement (GPA). The GPA has opened procurement opportunities around the world to foreign competition, worth trillions of U.S. dollars annually. It also requires parties to establish transparent and nondiscriminatory rules for covered procurement. In particular, the agreement enables U.S. businesses to bid for certain government contracts in the markets of other GPA parties. Likewise, it allows foreign businesses to bid for contracts tendered by U.S. procuring entities in areas where federal and state governments have agreed to open up their procurement markets. The WTO estimates the size of the procurement market covered by the GPA at $1.7 trillion; data limitations make it difficult to quantify accurately the extent to which governments acquire goods and services from suppliers of other GPA parties. The Coronavirus Disease 2019 (COVID-19) pandemic has increased Congress' interest in better understanding the role of international trade in U.S. government procurement. In particular, some Members and the Trump and Biden Administrations have sought ways to incentivize U.S.-based production by prioritizing the procurement of domestic goods and services by the federal government and limiting waivers to statutory domestic preference provisions such as the Buy American Act (BAA). Within this context, some Members have raised questions about the GPA, including (1) how U.S. commitments under the agreement affect federal agency acquisitions of goods and services, and (2) how the federal government met negotiating objectives with respect to the GPA, specified by Congress in 2015, under Trade Promotion Authority (P.L. 114-26). Background In recognition of the economic and political benefits of open, transparent, and nondiscriminatory trade, the United States and other major trading partners established the General Agreement on Tariffs and Trade (GATT) in the aftermath of World War II. The first six rounds of GATT trade negotiations dealt primarily with tariff measures. The seventh round-the Tokyo Round (1973-1979)-took a significant step in addressing nontariff barriers, such as government procurement policies. Negotiators addressed many of these barriers in a series of codes, including the Government Procurement Code, which went into effect in 1981. The Code imposed a set of rules that signatories had to apply in their procurement procedures and practices. Later, as part of the GATT's Uruguay Round-which resulted in the creation of the WTO in 1995-Code- signatories negotiated a new agreement, the WTO GPA. It entered into force in 1996. The GPA extended the scope of the 1981 Code to include additional entities and thresholds, as well as applicability to procurements of services and construction services. Signatories agreed to enter into negotiations to expand the GPA's membership and coverage three years after the agreement entered into force. Figure 1. Parties and Observers to the WTO GPA a WTO GPA Parties UParties and Observers Observers Negotiating Accession Other Observers Source: CRS with information from the WTO. In 2012, after more than a decade of negotiations, GPA parties adopted a revision to the 1996 agreement, which entered into force in 2014. It reflected new procurement practices, clarified obligations, and expanded the scope of procurement activity covered by the 1996 GPA. General Obigations under the G PA The GPA governs procurement by any contractual means and applies to laws, regulations, and practices regarding any covered procurement. It may thus cover procurement by central and sub-central government entities, as well as utilities and other government enterprises that a party designates. The GPA does not cover every country or sector. The parties bound by the GPA negotiate market access commitments on a reciprocal basis. In its schedule of commitments (i.e., Appendix), each party specifies government entities, as well as categories of goods and services-subject to limitations and monetary thresholds- that are open to procurement bids by companies from other GPA parties. For example, the U.S. Appendix covers 85 federal entities and voluntary commitments by 37 states. Consistent with the overall framework of the WTO, the agreement requires nondiscrimination and transparency in contracting-the GPA's two cornerstone principles. In addition, the GPA contains obligations regarding tendering, selection, and awarding requirements, qualification of suppliers, offsets, and challenge procedures. It also contains general exceptions from GPA obligations. For example, countries typically exclude certain defense and national security-related purchases, and in the case of the United States, set-asides for small and minority-owned businesses. In negotiating reciprocal GPA procurement commitments, the United States has not required that other parties open all of their markets to foreign competition in the same nominal amounts, or offered to open all U.S. markets to foreign

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