Updated March 15, 2021
WTO Agreement on Government Procurement (GPA)
During the past 50 years, the United States has played a
as well as applicability to procurements of services and
prominent role in developing international trade rules on
construction services. Signatories agreed to enter into
government procurement. Most U.S. free trade agreements
negotiations to expand the GPA’s membership and
include government procurement obligations. The most
coverage three years after the agreement entered into force.
notable international procurement agreement to which the
Figure 1. Parties and Observers to the WTO GPA
United States is a party is the World Trade Organization
(WTO)’s Agreement on Government Procurement (GPA).
The GPA has opened 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.
In 2012, after more than a decade of negotiations, GPA
The Coronavirus Disease 2019 (COVID-19) pandemic has
parties adopted a revision to the 1996 agreement, which
increased Congress’ interest in better understanding the role
entered into force in 2014. It reflected new procurement
of international trade in U.S. government procurement. In
practices, clarified obligations, and expanded the scope of
particular, some Members and the Trump and Biden
procurement activity covered by the 1996 GPA.
Administrations have sought ways to incentivize U.S.-based
General Obligations under the GPA
production by prioritizing the procurement of domestic
goods and services by the federal government and limiting
The GPA governs procurement by any contractual means
waivers to statutory domestic preference provisions such as
and applies to laws, regulations, and practices regarding any
the Buy American Act. Within this context, some Members
covered procurement. It may thus cover procurement by
have raised questions about the GPA, including (1) how
central and sub-central government entities, as well as
U.S. commitments under the agreement affect federal
utilities and other government enterprises that a party
agency acquisitions of goods and services, and (2) how the
designates. The GPA does not cover every country or
federal government is meeting negotiating objectives with
sector. The parties bound by the GPA negotiate market
respect to the GPA, specified by Congress in 2015, under
access commitments on a reciprocal basis. In its schedule of
Trade Promotion Authority (P.L. 114-26).
commitments (i.e., Appendix), each party specifies
Background
government entities, as well as categories of goods and
services—subject to limitations and monetary thresholds—
In recognition of the economic and political benefits of
that are open to procurement bids by companies from other
open, transparent, and nondiscriminatory trade, the United
GPA parties. For example, the U.S. Appendix covers 85
States and other major trading partners established the
federal entities and voluntary commitments by 37 states.
General Agreement on Tariffs and Trade (GATT) in the
aftermath of World War II. The first six rounds of GATT
Consistent with the overall framework of the WTO, the
trade negotiations dealt primarily with tariff measures. The
agreement requires nondiscrimination and transparency in
seventh round—the Tokyo Round (1973-1979)—took a
contracting—the GPA’s two cornerstone principles. In
significant step in addressing nontariff barriers, such as
addition, the GPA contains obligations regarding tendering,
government procurement policies. Negotiators addressed
selection, and awarding requirements, qualification of
many of these barriers in a series of codes, including the
suppliers, offsets, and challenge procedures. It also contains
Government Procurement Code, which went into effect in
general exceptions from GPA obligations. For example,
1981. The Code imposed a set of rules that signatories had
countries typically exclude certain defense and national
to apply in their procurement procedures and practices.
security-related purchases, and in the case of the United
States, set-asides for small and minority-owned businesses.
Later, as part of the GATT’s Uruguay Round—which
resulted in the creation of the WTO in 1995—Code-
In negotiating reciprocal GPA procurement commitments,
signatories negotiated a new agreement, the WTO GPA. It
the United States has not required that other parties open all
entered into force in 1996. The GPA extended the scope of
of their markets to foreign competition in the same nominal
the 1981 Code to include additional entities and thresholds,
amounts, or offered to open all U.S. markets to foreign
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WTO Agreement on Government Procurement (GPA)
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
Nondiscrimination. 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.
favorable” than that given to their domestic goods, services and
Security and General Exceptions. The GPA contains a
suppliers throughout the procurement process for covered entities. In
national security exception, broadly in line with GATT
other words, parties cannot favor domestic goods, services, or
1994’s Article XXI. The exception states that a party is
suppliers, nor can they treat the goods, services or suppliers of one
allowed to take “any action or not [disclose] any
GPA party more favorably those of another GPA party.
information that it considers necessary for the protection of
Transparency. Each party is required to publish information on its
its essential security interests relating to the procurement of
procurement system, including applicable laws, regulations, and judicial
arms, ammunition or war materials, or to procurement
decisions, in an officially designated medium that is widely
indispensable for national security or for national defense
disseminated and accessible to the public. Parties are also required to
purposes.” In addition, the GPA also contains general
collect and report statistics on the contracts covered by the
exceptions modeled after GATT’s Article XX. These
agreement. On request of any other party, a party must provide any
include—but are not limited to—safety, human, animal, or
information necessary to determine whether a procurement was
plant life or health, and philanthropic institutions.
conducted fairly and in accordance with the agreement.
Issues for Congress
As the 117th Congress and the Biden Administration review
Procurement Practices. A procuring entity must
and modify processes and contemplate amending legislation
conduct procurement in a transparent manner consistent
and regulations on U.S. government procurement, Members
with the GPA, avoid conflict of interest, and prevent
may consider the implications of such measures for the U.S.
corrupt practices. Additionally, parties are to ensure that
economy and their consistency with U.S. commitments
their procedures do not preclude competition or create
under the GPA. For example, Members may engage with
unnecessary obstacles to international trade. The GPA also
the Administration to assess the extent to which domestic
establishes general rules regarding the systems through
producers are able to meet U.S. government demand and
which suppliers engage in competitive bidding for contracts
satisfy various essential national needs with inputs and
(i.e., open, selective, and limited tendering procedures).
products exclusively sourced from the United States.
Offsets. Government entities may not impose, seek, or
The Trump Administration reviewed the benefits of the
consider offsets either in qualifying and selecting suppliers,
GPA, and according to one news report, considered
goods, or services, or in evaluating tenders and awarding
withdrawal from the agreement. While some Members
contracts. An offset is defined as any condition “that
reportedly contend that the GPA is “imbalanced” and
encourages local development or improves a party’s
support U.S. withdrawal from it, others have called for
balance-of-payments accounts, such as the use of domestic
modifying U.S. commitments under the agreement and
content, the licensing of technology, investment,
modernizing rules regarding government procurement.
counter‑trade, and similar action or requirement.”
Others argue that participation in the GPA not only
Dispute Settlement (DS). The WTO Dispute
maintains U.S. companies’ ability to compete for foreign
Settlement Understanding applies—with certain
government contracts, but it also gives the United States
exceptions—to consultations and disputes involving the
leverage to negotiate greater market access and better terms
GPA. For example, only GPA parties may participate in
with WTO members in accession negotiations (e.g., China).
decisions or actions by the DS Body in GPA disputes. In
U.S. government contractors often rely on global supply
the event of lack of compliance in a dispute, cross-
chains to support their U.S. government contracts, including
retaliation is not allowed with respect to the GPA. As such,
networks of suppliers and manufacturing facilities in the
parties may not suspend GPA benefits as a countermeasure
territories of other GPA parties. Even when manufactured
in disputes brought under a different WTO agreement.
in the United States, many of the products that U.S.
Modifications. A GPA party generally cannot modify the
suppliers deliver to federal and state entities may have
procurement that it covers without the consent of—or
inputs from other GPA parties. Therefore, U.S. withdrawal
absence of objections from—the other parties. To make
from the GPA, or modifications to U.S. commitments under
changes, a party must notify the WTO Committee on
it, could potentially require U.S. businesses to restructure
Government Procurement and explain the likely
their supply chains—including, for example, by changing
consequences for the mutually agreed coverage of the
suppliers or relocating facilities—to comply with domestic
agreement. If parties are unable to reach an agreement over
sourcing laws. Moreover, as countries compete to set global
the proposed changes, they may pursue DS procedures.
standards (e.g., 5G technology), U.S. firms unable to bid for
government contracts in GPA parties’ markets may find
Accession Negotiations. Any WTO member may
themselves at a disadvantage, ceding opportunities to
accede to the GPA on terms agreed between that member
competitors from other countries.
and all GPA parties. Since the GPA entered into force in
1996, its membership has grown from 23 to 48 parties
Andres B. Schwarzenberg, Analyst in International Trade
(counting EU members separately). The GPA accession
and Finance
process is based on negotiations with the acceding member
on the procurement that it will cover and a determination by
IF11651
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WTO Agreement on Government Procurement (GPA)
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