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Canada opens provincial procurement markets to all GPA members

Our World Is Not For Sale members at the WTO in Geneva today a few moments before Pierre-Yves Serinet of Quebec (middle) was forced out of the building by security.

This morning in Geneva, the 42 members of the plurilateral (not mandatory) 1996 WTO Government Procurement Agreement agreed to “open yet further their public procurement markets to each other’s companies, an agreement that could provide a model for future trade deals,” writes the Financial Times. The WTO is calling it an “historic” deal. In fact, its remarkable mostly for being any kind of deal at all during a WTO negotiation rife with conflict on where to go now.

A United States Trade Representative (USTR) media release and fact sheet explains what’s new in the revised GPA. It says U.S. suppliers will gain access to 150 additional central government entities in EU members states, as well as other GPA member countries: Aruba, Hong Kong, Israel, Liechtenstein, Korea, and Switzerland. Also, Japan, Korea and Israel have opened new sub-central entities, says USTR.

“A major achievement of the negotiations,” says the USTR, “is Israel’s commitment to phase out the offsets – requirements for domestic content – that it has maintained since 1981. Over 15 years, Israel will progressively reduce its application of these offsets to zero from the current 20%, reduce the number of entities that apply offsets, and set a threshold below which offsets will not be applied.”

According to the Financial Times, “The agreement had been threatened by a disagreement between the EU and Japan about opening Japanese public spending on the country’s rail system to international tender. Brussels had complained that safety standards were being used to exclude foreign companies. On Thursday, Michel Barnier, the EU single market commissioner, said: ‘We are satisfied that safety measures will be applied in a transparent manner and a non-discriminatory manner.'”

However, the U.S., Korea and Japan will hold onto their own offsets for small- and medium-sized businesses, offsets Korea protected also from its recent Free Trade Agreement procurement commitments to the EU. It’s a bone of contention between the EU and U.S., which have established a new Bilateral Procurement Forum that “will take up procurement regulatory issues and international procurement issues, such as China’s accession to the GPA – a key priority for both sides,” as well as “explore the possible expansion of procurement commitments, primarily on a national treatment basis.”

The USTR fact sheet explains, “Canada, a member of the GPA, will extend coverage for sub-national governments, which it gave the U.S. in February 2010, to all GPA members.” There were no permanent commitments for municipal government measures in those Canadian offers, and most energy and transit purchases were carved out. The EU is pushing Canada to cover municipal governments as well as utilities under the procurement chapter of the Canada-EU Comprehensive Economic and Trade Agreement. But municipal governments are fighting back with statements asking to be excluded from any agreement.

The GPA deal is hardly historic. The language is much weaker than the EU would have liked, since it leaves in place preferential offsets for small businesses in several countries, including the U.S. It has to be said these offsets are completely reasonable, pro-jobs policies that all levels of government have used successfully to support local economies. The fact that Korea was able to protect these policies in its FTA with the EU should embolden Canadian municipalities to continue to seek an exemption from CETA.

The GPA is not a mandatory part of the WTO’s single undertaking. Even still, the consensus agreement announced today took a decade of slogging. Elsewhere at the WTO, things aren’t so pretty. ALBA nations from Latin American rejected the document called “elements for political guidance.” In their statement against the elements, the countries state in part:

Trade is a tool and not an end in itself. The Preamble to the Marrakesh Agreement Establishing the World Trade Organization, which lays down the general objectives of the multilateral trading system, confirms its strictly instrumental nature. Approaching it an any other way would irrevocably lead to a scenario of extreme trade liberalization among economies with large differences in productivity and competitiveness and thus to the destruction of the productive base of developing countries.

States have a positive role to play in stimulating economic development, which goes beyond creating the conditions for the market to function properly. All along the path to development, developed Members of this Organization have been pursuing and continue to pursue policies aimed at promoting economic restructuring and productivity growth, that is to say, explicit public interventions in the economy.

Therefore, in seeking to achieve prosperous, more egalitarian and stable societies, our countries, as developing countries, should have sufficient space for the application of such policies, and that space should be guaranteed in the multilateral trading system. More specifically, any regular or negotiating activity in the WTO and any interpretation of its Agreements should be carried out in the context of the wider economic and developmentrelated needs, policies and objectives of developing Members, as well as their external environment.

This is the polar opposite of the view of a group of countries, including Canada, against protectionism in all its forms and promising to roll-back such proactive measures as promoted in the statement above. The anti-protectionist pledge sounds almost silly. That’s Canada’s special touch, I guess, since Trade Minister Ed “Maggie” Fast coordinated it. The Latin American statement on the other hand is realistic. It is crazy to me that Fast can tar pro-active economic policy as knee-jerk ideology and get away with airy fairy statements like the one he released today from Geneva.

More on the WTO ministerial later…