Looking beyond accession: Challenges to implementing the world trade organization government procurement agreement in china
| Pages | 93-116 |
| DOI | https://doi.org/10.1108/JOPP-15-01-2015-B004 |
| Published date | 01 March 2015 |
| Date | 01 March 2015 |
| Author | Daniel J. Cook |
| Subject Matter | Public policy & environmental management,Politics,Public adminstration & management,Government,Economics,Public Finance/economics,Texation/public revenue |
JOURNAL OF PUBLIC PROCUREMENT, VOLUME 15, ISSUE 1, 93-116 SPRING 2015
LOOKING BEYOND ACCESSION: CHALLENGES TO IMPLEMENTING THE
WORLD TRADE ORGANIZATION GOVERNMENT PROCUREMENT
AGREEMENT IN CHINA
Daniel J. Cook*
ABSTRACT. Much of the literature on China’s ongoing attempts to accede to
the World Trade Organization (“WTO”) Agreement on Government
Procurement (“GPA”) focuses on which Chinese entities will ultimately be
covered by the Agreement. While coverage issues are, no doubt, important,
this paper argues that China will face an even greater number of challenges
when implementing and harmonizing the requirements of the GPA with its
own domestic procurement laws. In particular, the GPA’s Article XVIII
requirement for an effective domestic review mechanism may be especially
difficult for China to achieve. In light of these challenges, this paper argues
that current GPA members s hould address problems with China’s domestic
legal framework for procurement now, not look to the domestic review
device to resolve problems after accession.
INTRODUCTION
China first opened its doors to international business in the late
16th century (Gray, 2002). Almost 400 years later, the economic
opportunities of the Chinese market continue to entice foreign
companies. In recent years, following the adoption of the “Reform
and Opening Up” policy of the late 1970s, China’s economy has
expanded at a dramatic rate. From the beginning, this economic
expansion has been a boon for foreign businesses, many of which
have achieved incredible success capitalizing on China’s growing
free-market commercial sector. All the while, however, foreign
-----------------------
Daniel J. Cook, Esq., is a public procurement attorney at DLA Piper LLP (US)
in Washington, D.C., wh ere he works with government contractors in a
variety of capacities including bid protests, co ntract disputes and
compliance issues. Mr. Cook worked in China for a n umber of years in
project management consulting and speaks and reads Mandarin Chinese.
Copyright © 2015 by PrAcademics Press
94 COOK
businesses have been excluded from another, equally enticing sector
of the Chinese economy—the $264.5 billion dollar a year government
procurement market (Mo, 2015).
Clearly, China is not unique in favoring domestic suppliers during
government procurements. A number of nations have “domestic
preference” laws that require government entities to purchase from
domestic contractors, or demand that domestic contractors be given
preferential treatment.1 Plainly, such laws create barriers to
international trade. As such, since 1996, the World Trade
Organization (“WTO”) has provided member countries with the option
of acceding to the Agreement on Government Procurement (“GPA”),2
an agreement in which member countries are given access to each
other’s government procurement markets, in exchange for mutually
suspending their own domestic preference rules.3 As a “plurilateral”
agreement, membership to the GPA is limited to those countries that
want to be a party, and agree to adhere to its terms (Grier, 2006, p.
387). In this way, both the benefits and the restrictions of the GPA
are voluntary. Accession to the GPA, however, is not aut omatic.
Applicant nations engage in negotiations with the current GPA
members, before submitting an “offer” that outlines the specific
governmental entities the applicant country intends to be covered by
the GPA.
At present, forty-two countries have acceded to the GPA, thereby
consenting to the treaty’s quid-pro-quo arrangement (Parties and
Observers to the GPA). For China, however, “the siren’s song of
protectionism” remains too seductive (Mathieson, 2010, p. 237).
Despite promising to accede to the GPA “as soon as possible” after
joining the WTO, China has failed – four times4 – to provide an
acceptable offer. In each case, China’s offer was rejected for failing
to include State-Owned Enterprises (“SOEs”) within the scope of the
GPA (Mathieson, 2010). In response, the U.S. Government and
business community has expressed “deep[] disappointment” at
China’s “limited” and “unrealistic” offers (Mathieson, 2010, p. 240).
In the beginning of 2014, China made a fifth bid to accede to the
GPA, following through on its promises to the current GPA member
nations. Whether the offer is deemed acceptable, however, remains
to be seen.
Examining China’s failed efforts at GPA accession reveals a
complicated picture. Current GPA members, particularly the U.S.,
To continue reading
Request your trial