China's Accession to the WTO Government Procurement Agreement--Challenges and The Way Forward

Abstract

Government procurement, whilst important for international trade,1 has been largely excluded from the reach of multilateral regulation under the World Trade Organization (WTO).2 In the absence of multilateral rule, China's trade partners have made considerable efforts, before and after China's WTO accession, to persuade China to become party of the plurilateral WTO Agreement on Government Procurement (GPA). After 5 years of intensive discussion, on 28 December 2007, China finally submitted a formal application to become party to the GPA.3 This included an offer of GPA coverage (the so-called ‘Appendix I offer’) and signaled the initiation of China's GPA accession process.4 However, China's initial offer has been regarded as ‘very limited’ and ‘deeply disappointing’ by China's trade partners.5 It is safe to argue that China's GPA accession poses significant challenges for negotiators due to a number of factors. Firstly, the GPA itself, even after its recent revision, is not fully equipped to deal with acceding countries with a large state sector6 and existing GPA Parties have made little progress in extending the coverage commitments following the revision. Secondly, so far as the position of China is concerned, Chinese government structure is complicated and the problem has been aggravated by a new round of central government reorganization completed after the application and the division between the Chinese government and state enterprises is difficult to ascertain, especially with regard to investment, which make coverage negotiations problematic. Furthermore, the legal and institutional frameworks underlying current Chinese public procurement regime remain fragmented and incoherent whilst it is also evident that China has in recent years intensified the use of government procurement as a policy instrument to promote national industrial and environmental policies. These add to the lack of political supports for speeding up the GPA accession and complicate the negotiation and adaptation of domestic legislation. Finally, the structural link between administrative tribunals/judiciary and the local government gives rise to the concern of local protectionism and put the effectiveness of a GPA-compliant supplier review system in question.