Countries agree to widen access to gov't contracts

AP News
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Posted: Dec 15, 2011 8:29 AM
Countries agree to widen access to gov't contracts

Trade officials say the United States, European Union, Canada, Japan and other countries have agreed after 14 years of talks to give foreign companies greater access to each others' government procurement contracts.

The World Trade Organization estimates that the agreement could add between $80 billion and $100 billion to global trade each year. Government supply contracts typically come to about 15 to 20 percent of a nation's gross domestic product.

European Union officials said the agreement was reached after the 27-nation EU and Japan ironed out remaining differences early Thursday.

As part of the 42-nation deal Japan will allow foreign companies to bid for contracts in the $100-million reconstruction of regions hit by this year's tsunami.

The idea behind the new agreement taking aim at corruption and favoritism in supply contracts is 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 $200,000 and construction projects starting at about $5 million. But participation by WTO members is optional.

"This is, in my view, a very powerful signal," said Nicholas Niggli, a Swiss diplomat to the World Trade Organization who chairs its government procurement committee.

U.S. 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 to get in on that enormous emerging market.

An earlier WTO anti-corruption agreement on government contracting took effect in January 1996. That earlier agreement covered 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.

Participation by WTO members is optional, trade officials say, though there's strong incentive to do so because it can help nations get a foothold into new markets by expanding the deal among 200 new ministries, government agencies and other entities.

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Frank Jordans contributed to this report