September 17, 2020
WTO Agreement on Government Procurement (GPA)
During the past 50 years, the United States has played a
the 1981 Code to include additional entities and thresholds,
prominent role in developing international trade rules on
as well as applicability to procurements of services and
government procurement. All U.S. free trade agreements,
construction services. Signatories agreed to enter into
except with Jordan, include government procurement
negotiations to expand the GPA’s membership and
obligations. The most notable international procurement
coverage three years after the agreement entered into force.
agreement to which the United States is a party is the World
Figure 1. Parties and Observers to the WTO GPA
Trade Organization (WTO)’s Agreement on Government
Procurement (GPA). The GPA has opened many
procurement opportunities around the world to foreign
competition, worth trillions of U.S. dollars annually. It also
requires parties to establish transparent and
nondiscriminatory rules for covered procurement. In
particular, the agreement enables U.S. businesses to bid for
certain government contracts in the markets of other GPA
parties. Likewise, it allows foreign businesses to bid for
contracts tendered by U.S. procuring entities in areas where
federal and state governments have agreed to open up their
procurement markets. The WTO estimates the size of the
procurement market covered by the GPA at $1.7 trillion;
data limitations make it difficult to quantify accurately the
extent to which governments acquire goods and services

Source: CRS with information from the WTO.
from suppliers of other GPA parties.
Notes: As of 2020, parties’ obligations to Switzerland continue to be
The Coronavirus Disease 2019 (COVID-19) pandemic has
defined under the 1996 GPA, as opposed to the revised agreement.
increased Congress’ interest in better understanding the role
In 2012, after more than a decade of negotiations, GPA
of international trade in U.S. government procurement. In
parties adopted a revision to the 1996 agreement, which
particular, some Members and the Trump Administration
entered into force in 2014. It reflected new procurement
have sought ways to incentivize U.S. domestic production
practices, clarified obligations, and expanded the scope of
by prioritizing the procurement of domestic goods and
procurement activity covered by the 1996 GPA.
services by the federal government and limiting waivers to
General Obligations under the GPA
statutory domestic preference provisions such as the Buy
The GPA governs procurement by any contractual means
American Act. Within this context, some Members have
and applies to laws, regulations, and practices regarding any
raised questions about the GPA, including: (1) how U.S.
covered procurement. It may thus cover procurement by
commitments under the agreement affect federal agency
central and sub-central government entities, as well as
acquisitions of goods and services, and (2) how the federal
utilities and other government enterprises that a party
government is meeting negotiating objectives with respect
designates. The GPA does not cover every country or
to the GPA, specified by Congress in 2015, under Trade
sector. The parties bound by the GPA negotiate market
Promotion Authority (P.L. 114-26).
access commitments on a reciprocal basis. In its schedule of
Background
commitments (i.e., Appendix), each party specifies
In recognition of the economic and political benefits of
government entities, as well as categories of goods and
open, transparent, and nondiscriminatory trade, the United
services—subject to limitations and monetary thresholds—
States and other major trading partners established the
that are open to procurement bids by companies from other
General Agreement on Tariffs and Trade (GATT) in the
GPA parties. For example, the U.S. Appendix covers 85
aftermath of World War II. The first six rounds of GATT
federal entities and voluntary commitments by 37 states.
trade negotiations dealt primarily with tariff measures. The
Consistent with the overall framework of the WTO, the
seventh round—the Tokyo Round (1973-1979)—took an
agreement requires nondiscrimination and transparency in
important step in addressing nontariff barriers, such as
contracting—the GPA’s two cornerstone principles. In
government procurement policies. Negotiators addressed
addition, the GPA contains obligations regarding tendering,
many of these barriers in a series of codes, including the
selection, and awarding requirements, qualification of
Government Procurement Code, which went into effect in
suppliers, offsets, and challenge procedures. It also contains
1981. The Code imposed a set of rules that signatories had
general exceptions from GPA obligations. For example,
to apply in their procurement procedures and practices.
countries typically exclude certain defense and national
Later, as part of the GATT’s Uruguay Round—which
security-related purchases, and in the case of the United
resulted in the creation of the WTO in 1995—Code-
States, set-asides for small and minority-owned businesses.
signatories negotiated a new agreement, the WTO GPA. It
In negotiating reciprocal GPA procurement commitments,
entered into force in 1996. The GPA extended the scope of
the United States has not required that other parties open all
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WTO Agreement on Government Procurement (GPA)
of their markets to foreign competition in the same nominal
process is based on negotiations with the acceding member
amounts, or offered to open all U.S. markets to foreign
on the procurement that it will cover and a determination by
suppliers. Rather, its general aim has been to gain access to
the GPA parties that its procurement system complies with
comparable opportunities in other parties’ markets.
the GPA. Many members that have joined the WTO since
1995 committed to seek GPA membership as part of their
WTO GPA Cornerstone Principles
terms for accession, including China and Russia—both of
Non-discrimination. The GPA requires parties to accord to the
which continue to be engaged in GPA accession
goods, services and suppliers of other GPA parties treatment “no less
negotiations. Most recently, in May 2020, Brazil formally
favorable” than that given to their domestic goods, services and
submitted its application to accede to the GPA.
suppliers throughout the procurement process for covered entities. In
Security and General Exceptions. The GPA contains a
other words, parties cannot favor domestic goods, services, or
national security exception, broadly in line with GATT
suppliers, nor can they treat the goods, services or suppliers of one
1994’s Article XXI. The exception states that a party is
GPA party more favorably those of another GPA party.
allowed to take “any action or not [disclose] any
Transparency. Each party is required to publish information on its
information that it considers necessary for the protection of
procurement system, including applicable laws, regulations, and judicial
its essential security interests relating to the procurement of
decisions, in an official y designated medium that is widely
arms, ammunition or war materials, or to procurement
disseminated and accessible to the public. Parties are also required to
indispensable for national security or for national defense
collect and report statistics on the contracts covered by the
purposes.” In addition, the GPA also contains general
agreement. On request of any other party, a party must provide any
exceptions modeled after GATT’s Article XX. These
information necessary to determine whether a procurement was
include—but are not limited to—safety, human, animal, or
conducted fairly and in accordance with the agreement.
plant life or health, and philanthropic institutions.
Issues for Congress
Procurement Practices. A procuring entity must
The Trump Administration is reviewing the benefits of the
conduct procurement in a transparent manner consistent
GPA, and according to one news report, considering
with the GPA, avoid conflict of interest, and prevent
withdrawal from the agreement. Some Members and
corrupt practices. Additionally, parties are to ensure that
Administration officials reportedly contend that the GPA is
their procedures do not preclude competition or create
“imbalanced” and decreases U.S. leverage in trade
unnecessary obstacles to international trade. The GPA also
negotiations. Others argue that participation in the GPA not
establishes general rules regarding the systems through
only maintains U.S. companies’ ability to compete for
which suppliers engage in competitive bidding for contracts
foreign government contracts, but it also gives the United
(i.e., open, selective, and limited tendering procedures).
States leverage to negotiate greater market access and better
Offsets. Government entities may not impose, seek, or
terms with WTO members in accession negotiations—
consider offsets either in qualifying and selecting suppliers,
particularly with China.
goods, or services, or in evaluating tenders and awarding
The GPA stipulates that any party may withdraw, effective
contracts. An offset is defined as any condition “that
60 days after the WTO Director-General receives written
encourages local development or improves a party’s
notice. Any GPA party may, upon such notification, request
balance-of-payments accounts, such as the use of domestic
an immediate meeting of the Committee on Government
content, the licensing of technology, investment,
Procurement. Should the United States withdraw, foreign
counter‑trade, and similar action or requirement.”
firms could potentially lose nondiscriminatory access to the
Dispute Settlement (DS). The WTO Dispute
U.S. procurement market; U.S. firms, likewise, could
Settlement Understanding applies—with certain
potentially be disqualified from bidding for government
exceptions—to consultations and disputes involving the
contracts in the markets of other GPA parties.
GPA. For example, only GPA parties may participate in
U.S. government contractors often rely on global supply
decisions or actions by the DS Body in GPA disputes. In
chains to support their U.S. government contracts, including
the event of lack of compliance in a dispute, cross-
networks of suppliers and manufacturing facilities in the
retaliation is not allowed with respect to the GPA. As such,
territories of other GPA parties. Even when manufactured
parties may not suspend GPA benefits as a countermeasure
in the United States, many of the products that U.S.
in disputes brought under a different WTO agreement.
suppliers deliver to federal and state entities may have
Modifications. A GPA party generally cannot modify the
inputs from other GPA parties. Therefore, U.S. withdrawal
procurement that it covers without the consent of—or
from the GPA could potentially require U.S. businesses to
absence of objections from—the other parties. To make
restructure their supply chains—including, for example, by
changes, a party must notify the WTO Committee on
changing suppliers or relocating facilities—to comply with
Government Procurement and explain the likely
domestic sourcing laws. Moreover, as countries compete to
consequences for the mutually agreed coverage of the
set global standards (e.g., 5G technology), U.S. firms
agreement. If parties are unable to reach an agreement over
unable to bid for government contracts in GPA parties’
the proposed changes, they may pursue DS procedures.
markets may find themselves at a disadvantage, ceding
opportunities to competitors from other countries.
Accession Negotiations. Any WTO member may
accede to the GPA on terms agreed between that member
Andres B. Schwarzenberg, Analyst in International Trade
and all GPA parties. Since the GPA entered into force in
and Finance
1996, its membership has grown from 23 to 48 parties
(counting EU members separately). The GPA accession
IF11651
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WTO Agreement on Government Procurement (GPA)


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