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Pact may boost global trade
Source: Agencies |
December 16, 2011, Friday
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Print Edition
THE United States, the European Union, Japan and other countries have agreed after 14 years of talks to give foreign companies greater ability to compete for each others' government procurement contracts.
The World Trade Organization estimated the agreement could add between US$80 billion and US$100 billion to global trade each year. Government supply contracts typically come to about 15-20 percent of a nation's gross domestic product.
Officials said the pact was reached after the 27-nation EU and Japan ironed out remaining differences early yesterday. As part of the 42-nation deal, Japan will allow foreign firms to bid for contracts to rebuild areas hit by this year's tsunami.
The agreement, which takes aim at corruption and favoritism in supply contracts, tries to create an incentive for governments to find cheaper ways to do business and come up with more money to repay debt. It generally applies to goods and services over US$200,000 and construction projects starting at about US$5 million.
Opting into the agreement is optional among members of the Geneva-based WTO, but once nations sign on they are bound under international trade law to follow the pact and ensure their laws also conform. Nations are not expected, however, to open up all their government contracting to international competition.
"This is, in my view, a very powerful signal," said Nicholas Niggli, a Swiss diplomat to the WTO who chairs its government procurement committee.
EU Internal Markets Commissioner Michel Barnier said the updated Government Procurement Agreement would "modernize and simplify and render more transparent" trading among nations that participate.
US Trade Representative Ron Kirk said the deal would benefit American jobs, and he hoped China would join it soon.
China's possible participation has been a major attraction to other nations hoping for access to its enormous market.
An earlier WTO anti-corruption deal on government contracting took effect in January 1996. That had covered about US$500 billion in trade in a huge variety of goods, services and construction initially among 28 WTO member nations, ranging from drugs and high-tech computer items to machinery and building.
The World Trade Organization estimated the agreement could add between US$80 billion and US$100 billion to global trade each year. Government supply contracts typically come to about 15-20 percent of a nation's gross domestic product.
Officials said the pact was reached after the 27-nation EU and Japan ironed out remaining differences early yesterday. As part of the 42-nation deal, Japan will allow foreign firms to bid for contracts to rebuild areas hit by this year's tsunami.
The agreement, which takes aim at corruption and favoritism in supply contracts, tries to create an incentive for governments to find cheaper ways to do business and come up with more money to repay debt. It generally applies to goods and services over US$200,000 and construction projects starting at about US$5 million.
Opting into the agreement is optional among members of the Geneva-based WTO, but once nations sign on they are bound under international trade law to follow the pact and ensure their laws also conform. Nations are not expected, however, to open up all their government contracting to international competition.
"This is, in my view, a very powerful signal," said Nicholas Niggli, a Swiss diplomat to the WTO who chairs its government procurement committee.
EU Internal Markets Commissioner Michel Barnier said the updated Government Procurement Agreement would "modernize and simplify and render more transparent" trading among nations that participate.
US Trade Representative Ron Kirk said the deal would benefit American jobs, and he hoped China would join it soon.
China's possible participation has been a major attraction to other nations hoping for access to its enormous market.
An earlier WTO anti-corruption deal on government contracting took effect in January 1996. That had covered about US$500 billion in trade in a huge variety of goods, services and construction initially among 28 WTO member nations, ranging from drugs and high-tech computer items to machinery and building.
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