This agreement was renegotiated in 1994 as part of the creation of the World Trade Organization (WTO) as a Public Procurement Agreement (GPA) and members agreed to develop the GPA in 2012. Last May, when Australia became the youngest member of the GPA, 48 countries were parties to the agreement, 34 of which were observers (10 of which were actively negotiating membership). While most countries have rules to ensure that public procurement is carried out fairly and transparently, procurement processes are vulnerable to a high incidence of corruption, particularly in the form of a disproportionate influence on the results of tenders. And while foreign suppliers are able to compete for some U.S. government contracts, the GPA and bilateral free trade agreements allow U.S. companies to compete in nearly $2 trillion in trade markets in other signatory countries, an opportunity that would be greatly reduced by exiting the GPA. In general, countries exclude defence and national security purchases from the agreement and purchase rights for small minority and veteran businesses. GPA disputes can be raised through the WTO`s dispute settlement system. Not only does GPA participation maintain the ability of U.S. companies to compete with foreign markets, but it also gives the U.S.
government leverage to negotiate better market access on better terms by attempting to expand coverage. This can be particularly important as economies around the world grow and begin to spend higher percentages of their budgets on public procurement. The GPA now covers $1.7 trillion for public procurement by its member states. The GPA includes general disciplines to ensure fair, open and transparent procurement processes for products that exceed the dollar threshold set in the agreement. In addition, each country has committed to establishing a “timetable” specifying which of its companies and purchases is subject to the agreement. Prior to the GPA, Congress passed a series of national content statutes to ensure that U.S. tax-funded public procurement projects benefit U.S. businesses and workers.
The Buy American Act of 1933 stipulates that the purchase of items, consumables and materials from American countries or manufactured products must be “essentially all” made from domestic inputs. Currently, 48 WTO members (including the EU and its 28 member states) are bound by the agreement. Australia is the youngest member to join the agreement in early 2019. The GPA aims to open public procurement markets to foreign competition, to a reciprocal extent and to the extent agreed among WTO members, and to make public procurement more transparent. It provides legal guarantees for non-discrimination of the products, services and suppliers of the parties to the GPA in covered purchasing activities, which currently represent an estimated value of $1.7 trillion per year. The United States includes GPA`s supply languages in its bilateral free trade agreements, such as the recently negotiated agreement between the United States and Mexico-Canada. In total, the United States has purchase agreements with 58 countries, including GPA countries and countries with which it has separate free trade agreements. The GPA is a multi-lateral agreement that can be open to all WTO members, but only binds the contracting parties to the agreement. The terms of participation of each candidate are negotiated with the parties to the GPA and specified in its respective schedule, which contains several annexes that specify the obligations of the party with respect to the buy-American requirements are removed in three circumstances: (1) when it is decided that this is in the public interest; (2) if the cost of U.S.-made products is inadequate; or (3) if the products are not available in quality or in sufficient quantities from the United States.