The Impact of the TPP on Opening Government Procurement to International Competition in the Asia-Pacific Region

Abstract

The Trans-Pacific Partnership (“TPP”) would have been by far the world’s largest regional trade agreement. The TPP will still be of tremendous regional importance if it endures in some form following the recent withdrawal from it by the USA, and if the USA incorporates the procurement related concessions reached while negotiating the TPP into bilateral agreements. As a complex multi-theme agreement, the TPP also covers government procurement among many other issues. While the TPP on the whole may not bring about a Copernican revolution in terms of actual trade liberalisation and market access, the TPP procurement chapter may bring about a huge change in terms of opening the TPP parties’ government procurement markets to foreign competition.

Prior to the TPP, among the TPP parties, only the USA, Canada, Japan and Singapore have been long-standing parties to the WTO Government Procurement Agreement (“GPA”) which New Zealand joined only in 2015 and Australia has been negotiating its accession. Apart from that, the scope of other public procurement liberalising international trade commitments has been very limited in the South-East Asia region and among TPP-signatories from South America, with only North American TPP-signatories having their public procurement markets previously integrated under the North American Free Trade Agreement (“NAFTA”).Public procurement relevant commitments within the Association of South-East Asian Nations (“ASEAN”) have been very limited and unclear, whereas procurement rules agreed upon by members of the Asia-Pacific Economic Co-operation (“APEC”) have been non-binding. Liberalisation of public procurement markets in the Trans-Pacific area did not gain momentum until (i) the

conclusion of the Trans-Pacific Strategic Economic Partnership (“TSEP” or “P4”), being the TPP’s predecessor, and (ii)subsequent proliferation of bilateral trade agreements directly preceding the conclusion of the TPP.

Procedural provisions imposed by the TPP procurement chapter virtually copy provisions of the GPA with minor modifications only, and this convergence implies that the determination of the TPP procurement chapter’s coverage in principle emulates solutions of the GPA model (with lists of covered procurers, goods, services and construction services as well as value-thresholds, along with averagedscopeofcountry-specificcommitments). MajordeficienciesoftheTPP procurement chapter’s coverage can be seen in some countries’ refusal to cover sub-central procurers (in the case of Malaysia, Mexico, New Zealand, United States and Vietnam) and utilities services (in the case of Canada, Mexico and Vietnam) as well as in extremely long transition periods (in some cases in excess of twenty years) for decreasing contract-value-thresholds of the TPP procurement chapter’s application to standard levels (in the case of Malaysia and Vietnam).

In terms of allowing non-commercial considerations in the public procurement process, the TPP procurement chapter green-lights the pursuit of sustainability- related goals to an even greater extent than the GPA. At the same time, country-specific derogations accommodate extensive traditional industrial/protectionist policies, for example by allowing significant set-asides from obligations under the TPP procurement chapter (in the case of Mexico and Vietnam.