Updated January 10, 2023
WTO Agreement on Government Procurement (GPA)
During the past 50 years, the United States has played a
construction services. Signatories agreed to enter into
prominent role in developing international trade rules on
negotiations to expand the GPA’s membership and
government procurement. Most U.S. free trade agreements
coverage three years after the agreement entered into force.
include government procurement obligations. The most
Figure 1. Parties and Observers to the WTO GPA
notable international procurement agreement to which the
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
Source: CRS with information from the WTO.
procurement market covered by the GPA at $1.7 trillion;
In 2012, after more than a decade of negotiations, GPA
data limitations make it difficult to quantify accurately the
parties adopted a revision to the 1996 agreement, which
extent to which governments acquire goods and services
entered into force in 2014. It reflected new procurement
from suppliers of other GPA parties.
practices, clarified obligations, and expanded the scope of
The Coronavirus Disease 2019 (COVID-19) pandemic has
procurement activity covered by the 1996 GPA.
increased Congress’ interest in better understanding the role
of international trade in U.S. government procurement. In
General Obligations under the GPA
particular, some Members and the Trump and Biden
The GPA governs procurement by any contractual means
Administrations have sought ways to incentivize U.S.-based
and applies to laws, regulations, and practices regarding any
production by prioritizing the procurement of domestic
covered procurement. It may thus cover procurement by
goods and services by the federal government and limiting
central and sub-central government entities, as well as
waivers to statutory domestic preference provisions such as
utilities and other government enterprises that a party
the Buy American Act (BAA). Within this context, some
designates. The GPA does not cover every country or
Members have raised questions about the GPA, including
sector. The parties bound by the GPA negotiate market
how U.S. commitments under the agreement affect federal
access commitments on a reciprocal basis. In its schedule of
agency acquisitions of goods and services.
commitments (i.e., Appendix), each party specifies
government entities, as well as categories of goods and
Background
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
Consistent with the overall framework of the WTO, the
aftermath of World War II. The first six rounds of GATT
agreement requires nondiscrimination and transparency in
trade negotiations dealt primarily with tariff measures. The
contracting—the GPA’s two cornerstone principles. In
seventh round—the Tokyo Round (1973-1979)—took a
addition, the GPA contains obligations regarding tendering,
significant step in addressing nontariff barriers, such as
selection, and awarding requirements, qualification of
government procurement policies. Negotiators addressed
suppliers, offsets, and challenge procedures. It also contains
many of these barriers in a series of codes, including the
general exceptions from GPA obligations. For example,
Government Procurement Code, which went into effect in
countries typically exclude certain defense and national
1981. The Code imposed a set of rules that signatories had
security-related purchases, and in the case of the United
to apply in their procurement procedures and practices.
States, set-asides for small and minority-owned businesses.
Later, as part of the GATT’s Uruguay Round—which
In negotiating reciprocal GPA procurement commitments,
resulted in the creation of the WTO in 1995—Code-
the United States has not required that other parties open all
signatories negotiated a new agreement, the WTO GPA. It
of their markets to foreign competition in the same nominal
entered into force in 1996. The GPA extended the scope of
amounts, or offered to open all U.S. markets to foreign
the 1981 Code to include additional entities and thresholds,
as well as applicability to procurements of services and
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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. In May 2020, Brazil became the latest country
favorable” than that given to their domestic goods, services and
to submit an application to join 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 disseminated
arms, ammunition or war materials, or to procurement
and accessible to the public. Parties are also required to collect and
indispensable for national security or for national defense
report statistics on the contracts covered by the agreement. On
purposes.” In addition, the GPA also contains general
request of any other party, a party must provide any information
exceptions modeled after GATT’s Article XX. These
necessary to determine whether a procurement was conducted fairly
include—but are not limited to—safety, human, animal, or
and in accordance with the agreement.
plant life or health, and philanthropic institutions.
Procurement Practices. A procuring entity must
Issues for Congress
conduct procurement in a transparent manner consistent
As Congress oversees the implementation of recent
with the GPA, avoid conflict of interest, and prevent
legislation and the Biden Administration updates processes
corrupt practices. Additionally, parties are to ensure that
and regulations on U.S. government procurement, Members
their procedures do not preclude competition or create
may consider the implications of such measures for the U.S.
unnecessary obstacles to international trade. The GPA also
economy and their consistency with U.S. commitments
establishes general rules regarding the systems through
under the GPA. For example, Members may engage with
which suppliers engage in competitive bidding for contracts
the Administration to assess the extent to which domestic
(i.e., open, selective, and limited tendering procedures).
producers are able to meet U.S. government demand and
Offsets.
satisfy various essential national needs with inputs and
Government entities may not impose, seek, or
products exclusively sourced from the United States.
consider offsets either in qualifying and selecting suppliers,
goods, or services, or in evaluating tenders and awarding
The Trump Administration reviewed the benefits of the
contracts. An offset is defined as any condition “that
GPA, and according to one news report, considered
encourages local development or improves a party’s
withdrawal from the agreement. While some Members
balance-of-payments accounts, such as the use of domestic
reportedly contend that the GPA is “imbalanced” and
content, the licensing of technology, investment,
support U.S. withdrawal from it, others have called for
counter‑trade, and similar action or requirement.”
modifying U.S. commitments under the agreement and
Dispute Settlement (DS).
modernizing rules regarding government procurement.
The WTO Dispute
Others argue that participation in the GPA not only
Settlement Understanding applies—with certain
maintains U.S. companies’ ability to compete for foreign
exceptions—to consultations and disputes involving the
government contracts, but it also gives the United States
GPA. For example, only GPA parties may participate in
leverage to negotiate greater market access and better terms
decisions or actions by the DS Body in GPA disputes. In
with WTO members in accession negotiations (e.g., China).
the event of lack of compliance in a dispute, cross-
retaliation is not allowed with respect to the GPA. As such,
U.S. government contractors often rely on global supply
parties may not suspend GPA benefits as a countermeasure
chains to support their U.S. government contracts, including
in disputes brought under a different WTO agreement.
networks of suppliers and manufacturing facilities in the
territories of other GPA parties. Even when manufactured
Modifications. A GPA party generally cannot modify the
in the United States, many of the products that U.S.
procurement that it covers without the consent of—or
suppliers deliver to federal and state entities may have
absence of objections from—the other parties. To make
inputs from other GPA parties. Therefore, U.S. withdrawal
changes, a party must notify the WTO Committee on
from the GPA, or modifications to U.S. commitments under
Government Procurement and explain the likely
it, could potentially require U.S. businesses to restructure
consequences for the mutually agreed coverage of the
their supply chains—including, for example, by changing
agreement. If parties are unable to reach an agreement over
suppliers or relocating facilities—to comply with domestic
the proposed changes, they may pursue DS procedures.
sourcing laws. Moreover, as countries compete to set global
Accession Negotiations. Any WTO member may
standards (e.g., 5G technology), U.S. firms unable to bid for
accede to the GPA on terms agreed between that member
government contracts in GPA parties’ markets may find
and all GPA parties. Since the GPA entered into force in
themselves at a disadvantage, ceding opportunities to
1996, its membership has grown from 23 to 48 parties
competitors from other countries.
(counting EU members separately). The GPA accession
process is based on negotiations with the acceding member
Andres B. Schwarzenberg, Analyst in International Trade
on the procurement that it will cover and a determination by
and Finance
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WTO Agreement on Government Procurement (GPA)

IF11651


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https://crsreports.congress.gov | IF11651 · VERSION 18 · UPDATED

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