For many developing countries government procurement reform is a key issue, and one which is, or ought to be, high on the good governance agenda.
Where procurement is conducted in accordance with sound principles there is the potential for direct benefits to the economy of a country; where it is not the door is opened to corruption, wasteful expenditure, higher prices, failure to deliver, loss of faith and integrity in the public sector, and many more ills.
It is not surprising, therefore, that agencies representing a broad range of interests are drawing attention to the need to revisit government procurement policies and practices; one such is the World Trade Organization (WTO). The only WTO instrument currently directed at these issues is the plurilateral Agreement on Government Procurement (GPA). This was first negotiated by member states at the Tokyo Round and later revised at the time of the Uruguay Round. As a plurilateral agreement, membership is voluntary. But some WTO members want to bring government procurement fully into the WTO.
While few would argue that reform of government procurement is undesirable or that improvements are not needed, there is some disagreement as to how to approach reform. What improvements are needed, and how should they be prioritised? Much depends on the goals to be achieved. In a country riddled with corruption, procurement reform would be aimed at eliminating this; in one where there are socio-economic inequities, it may be directed at redressing them. The limited resources and capacity of developing countries necessitate a prioritising of expenditure, the identification of the goals, and the most efficient mechanisms for achieving them.
It is in this framework that WTO endeavours to bring government procurement into the multilateral fold should be seen. Developing countries may well be in need of procurement reform, and any initiative to assist should be welcomed. But a country’s specific needs and constraints should not be overlooked in determining which procurement regime is the most appropriate.
Multilateral rules are in their infancy, with a considerable lack of clarity even on the goals to be achieved. In contrast to the case of agriculture, for example, it is neither necessary nor feasible to focus on the appropriateness of special and differential treatment (SDT) in current or proposed rules. Rather, the aim of this article is to identify the key features that need to be present in any procurement rules negotiated in the WTO, and to explain why many arrangements could prove to be not only highly technical, costly and burdensome on the public sector, but also irrelevant to the ills faced by a particular country.
This article aims to help developing countries identify and prioritise their internal procurement requirements and to assess the extent to which their goals may be met within the WTO. Only when they are clear about their own needs can the costs and benefits of any multilateral agreement be properly weighed. This is particularly the case because of the absence of clear direction from the WTO as to what multilateral negotiations on procurement reform aim to achieve.
Readers of this article should bear in mind one caveat: research in this field is very much in its infancy: Evenett (2002) refers to it as ‘embryonic’. A number of developing countries at Doha argued that because of this, meaningful multilateral negotiations cannot yet commence. They argued that the WTO should continue discussing and studying the issue of procurement. A clearer understanding of the issues is required before negotiations on transparency are launched. This caution contrasts starkly with the fast-track approach suggested by some larger WTO members, such as the United States of America (USA) and the European Union (EU).
In the event, Doha provided a longer time-frame, which is to be welcomed. Developing countries won a window through which to gain a clearer understanding of how procurement negotiations will impact upon their developmental and other needs.
This article comes from the IDS Bulletin 34.2 (2003) Multilateral Talks on Transparency in Government Procurement: Concerns for Developing Countries