December 2015
  • China and the Agreement on Government
    Procurement: Costs, Benefits and Challenges of
    Accession and Implementation

    Chao Wang

Since its first attempt in 2001, China continues its negotiations with the World Trade Organization (WTO) to become a party to the Agreement on Government Procurement (GPA). The benefi ts of joining the Agreement would relate mainly to market access. Additionally, becoming a party to GPA would promote transparency in governance by tackling and eliminating “illegitimate practices” in government procurement. Literature suggests that the major cost of China’s accession to the Agreement would be the loss of its ability to use public procurement as a tool to pursue secondary policy objectives. In this article the cost, benefits and challenges of China’s GPA accession and implementation are identifi ed and assessed, in order to see whether the Agreement offers any real benefi ts and whether there are tempting incentives for China to join the Agreement.

WTO; GPA; China; secondary policy objectives; bid challenge procedures; state-owned enterprises; confl ict of laws

Click here to read extracts of the article

After a negotiation process lasting over 15 years, China joined the World Trade Organization (WTO) in 2001 and has since then been engaged in negotiations to become a party to the WTO’s plurilateral Agreement on Government Procurement (GPA).1 China tabled its offer to join the GPA on 28 December 2007 and has since then submitted several revised versions of its offer, the most recent being its offer made on 22 December 2014.2
Based on the economic theory of comparative advantage,3 the goals of the WTO are “raising standards of living” by promoting free trade through “substantial reduction” of trade barriers and “elimination of discriminatory treatment”. 4To achieve these goals, transparency and national treatment are identifi ed as the “core principles” of the WTO and its agreements, including GPA. 5The GPA aims to facilitate competition and transparency in government procurement, in order that governments can get value for money.6
This article is structured as follows: Section I outlines China’s ongoing negotiations for accession to the GPA, focusing mainly on the successive offers the country has submitted for consideration. Section II outlines the costs, benefi ts and challenges of China’s GPA accession. Section III considers challenges to China’s accession, in particular, those arising from the exclusion of state-owned enterprises (SOEs) from the GPA coverage. Section IV sets out the challenges that China has to face after its GPA accession; in other words the challenges of domestic implementation of the GPA. Section V presents some conclusions.