The European Union’s Policy on Public Procurement in Preferential Trade Agreements

Abstract

The European Union’s policy on public procurement in the preferential trade agreements (PTAs) has to be seen against the broader EU aims of shaping international trade rules and ensuring market access to key markets. The EU policy on procurement has both shaped and has been shaped by international norms. Initially pressure from the United States (US) led to international discussions in the OECD. These shaped the initial EU Directives aimed at creating a Europe wide procurement market in the early 1970s. But it was not until the late 1980s, as part of the EU Single Market programme, that EU moved to create a competition based, comprehensive regional procurement market. From this point on the EU became a proponent of stronger international rules on procurement. This shift by the EU paved the way for a significant extension of the international rules in the 1996 revision of the World Trade Organisation’s Government Procurement Agreement (GPA). EU policy now has two main components. First, to achieve an equally comprehensive international regime that can ensure access to other major economies, including the emerging markets. Second, to promote the adoption of international best practice in the government procurement, which accounts for a important share of GDP in all economies but it too often subject to a lack of transparency and due process and thus a potential source of abuse and corruption. In these efforts the EU has had partial success in the face of significant opposition. The EU pressed for multilateral negotiations on procurement rules in the WTO’s Doha Development Agenda (DDA), but without success. It had some more success in the plurilateral negotiations to extend the coverage of the (non-MFN) GPA, but this was very largely in the form of greater commitments by existing developed signatories to that agreement. Preferential trade agreements (PTAs) have offered an alternative means of fulfilling the EU’s objectives and in these the EU has had some success, but there remains considerable opposition. Public procurement arguably marks the high tide mark for the extension of the liberal paradigm of an open, rules-based order into national policy autonomy. It remains to be seen whether recent developments in leading OECD economies, such as the call for more Buy America policies by the incoming Trump Administration will threaten the scope of the existing rules.