WTO agrees on procurement deal, U.S. urges China to join

Reuters News
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Posted: Dec 15, 2011 10:58 AM
WTO agrees on procurement deal, U.S. urges China to join

By Tom Miles

GENEVA (Reuters) - The World Trade Organization clinched a landmark reform of its Government Procurement Agreement on Thursday after the European Union, Japan and the United States agreed terms for opening up government contracts to foreign competition.

U.S. Trade Representative Ron Kirk welcomed the deal, reached after 10 years of negotiations, saying it clarified rules and represented an opportunity for U.S. suppliers of goods and services.

EU spokesman Tomas Baert said all major obstacles had been cleared after last-minute negotiations on the agreement, which WTO officials expect to open procurement contracts worth $80-100 billion in the 42 countries that are members of the pact.

EU Internal Market Commissioner Michel Barnier told reporters in Geneva: "It's a very important and positive signal for European companies, big and small."

"This agreement marks real progress, more openness, more reciprocity and more balance in our trade relations...which is a good signal at this point because we have to act for growth and for jobs," he said.

Members of the pact, which dates from 1994, have been trying for a decade to modernize and broaden it, but faced a "now or never" ultimatum on Thursday after the chairman of the negotiations said the available deal was the best they could expect in the current economic climate.

Although a deal will bring immediate dividends for existing members, a much more important effect will be to attract new members such as China, India and Russia, whose eventual participation could multiply the benefits.

WTO Director-General Pascal Lamy said the agreement meant better discipline for awarding government contracts in infrastructure, transport and hospital equipment, and better use of public resources in an era requiring fiscal discipline.

Lamy put the value of increased market access at around $100 billion a year.

"The accession of China... would probably bring to the pot the same amount that has just been put in the pot by the existing parties to this agreement," he told a news conference.

Kirk pointedly called on China to speed up its accession to the pact saying that its market access offers still fell short.

"For example, we are urging China to cover state-owned enterprises, add more sub-central entities and services, reduce its thresholds for the size of covered contracts and remove other broad exclusions," Kirk said in a statement.

The deal was wrapped up on the first day of the WTO's biennial ministerial conference in Geneva.

One diplomat involved in the talks said the European Union had removed a major stumbling block by backing down on a demand to get access to procurement by Japan Railways.

Japan had insisted on taking the railway spending out of the agreement after privatization removed it from government hands, and that question will now be handled by a separate negotiation.

(Editing by Alistair Lyon)