Public procurement agreement will open access to €80bn of business, says European Commission

Out-Law News | 07 Apr 2014 | 11:50 am | 2 min. read

Businesses in the European Union will benefit from worldwide public sector procurement opportunities worth an extra €80 billion annually now that the World Trade Organisation's (WTO) revised Agreement on Government Procurement (GPA) comes into force, according to the European Commission.

Singapore, Hong Kong and Taiwan have also ratified the terms of the WTO deal.

The revised GPA updates the existing GPA which has been in effect since 1996. The treaty, which has been signed by the EU and 14 other parties, regulates the government procurement of goods and services by the public authorities of its signatories. According to the WTO the treaty is designed to ensure openness, transparency and non-discrimination in the procurement of public contracts, and it is the only legally binding agreement in the WTO which focuses on this area of trade.

The revised GPA increases the number of government ministries, agencies and other areas of public procurement which will now fall within the GPA's scope of application. The development will create better market access for signatories, and increase public sector procurement opportunities globally by €80 billion annually, said a statement by the European Commission. The revised GPA also lays down an updated set of tender rules.

Ten out of the 15 GPA parties have so far ratified the protocol of the revise GPA - the EU, Hong Kong, Singapore, Chinese Taipei (China), the United States, Iceland, Liechenstein, Norway, Israel and Japan. The revised GPA is now in force for all these parties except Japan, for whom it will come into effect on 16 April this year. GPA signatories which have yet to ratify the protocol are Canada, Switzerland, Armenia, South Korea and The Netherlands with respect to the Caribbean island of Aruba, which is part of its territory.

“I warmly welcome the entry into force of the revised GPA concluded in December 2011," said EU internal market and services commissioner Michel Barnier. "The revised GPA will give businesses in the countries that are party to the agreement significant additional opportunities on each other’s’ public procurement markets. It will also make public procurement rules in the GPA jurisdictions more transparent and predictable, in line with the spirit of the recently adopted reforms of EU public procurement rules. I invite all the GPA parties that have not yet ratified it to do so and hope that the entry into force of the revised GPA will pave the way for other WTO members to join in the near future.”

In January this year the European Parliament agreed to overhaul current EU public procurement rules. The new EU measures, already agreed with Council of Europe ministers, will for the first time sets common EU standards on concession contracts, in an attempt to boost fair competition. The measures also aim to ensure best value for money by introducing new award criteria that place more emphasis on environmental considerations, social aspects and innovation, the European Commission said. The EU measures will also make it easier for small and medium-sized firms to bid for public contracts and include tougher provisions on subcontracting.  

EU law expert Caroline Ramsay of Pinsent Masons, the law firm behind, said: "The entry into force of the revised GPA is another significant step forward for businesses operating in GPA countries in terms of ensuring a more transparent and fair government procurement market. The fact that the revised GPA is coming into force in the same year as the newly reformed European procurement law regime demonstrates that the world markets are truly opening up in terms of government procurement.  This will create fantastic opportunities for businesses in all sectors to expand into new territories which they may have previously been nervous of because of the uncertainty of a different public procurement law regime."