China Pushing Bid to Join WTO Procurement Pact, Xi Says

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By Bryce Baschuk

China will “accelerate the process of joining” the World Trade Organization’s Government Procurement Agreement, Chinese President Xi Jinping said April 10.

Xi made the remarks during a keynote speech at the Boao Forum for Asia.

In recent years the U.S. and European Union have been frustrated by what they see as China’s lackluster effort to accede to the agreement, which sets out rules guaranteeing fair conditions of international competition for government procurement contracts.

Though China agreed in 2001 to join the agreement, parties to the accord have spent more than a decade trying to persuade China to offer sufficient access to its state procurement marketplace.

The benefits of China’s accession to the agreement are significant and could yield market access gains of up to $289 billion per year, according to the WTO.

$1.7 Trillion Deal

The Government Procurement Agreement covers government purchases of goods, services, and construction valued at $1.7 trillion annually, according to WTO statistics.

The plurilateral agreement is under the umbrella of the WTO, meaning that its market access concessions are only granted to suppliers in countries that are party to the agreement.

There are 47 parties to the agreement: Armenia; Canada; the EU, with its 28 member states; Hong Kong; Iceland; Israel; Japan; Liechtenstein; Moldova, Montenegro; the Netherlands with respect to Aruba; New Zealand, Norway; Singapore; South Korea; Switzerland; Taiwan, Ukraine, and the U.S.

China is among 10 WTO members seeking to join the agreement.

Dragging its Heels

A year ago the Chinese delegation to the WTO said it would submit a revised accession bid in 2018 for the Government Procurement Agreement, amid criticism that was China dragging its heels in negotiations that stretch back to 2008.

Members to the agreement rejected China’s most recent offer in 2014 because they said it didn’t sufficiently incorporate state-owned enterprises that provide key public services like energy generation.

In addition to greater inclusion of state-owned enterprises, negotiators for the Government Procurement Agreement are seeking to reduce the number of exclusions in China’s offer — notably with respect to the military — among other concerns.

Countries seeking to join the agreement must first reach an agreement with current members on their proposed terms of participation before they can become full members.

The WTO Committee on the Government Procurement Agreement will review China’s effort during their next meeting, which is scheduled for the last week of June.

To contact the reporter on this story: Bryce Baschuk in Geneva at correspondents@bloomberglaw.com

To contact the editor responsible for this story: Jerome Ashton at jashton@bloomberglaw.com

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