On December 9, 2008, the World Trade Organization (“WTO”) Committee on Government Procurement formally invited Taiwan (often referred to as “Chinese Taipei”) to join the plurilateral Government Procurement Agreement (“GPA”) after more than 13 years of negotiations. Adopted in 1981, the aim of the GPA is to ensure fairness of competition between domestic and multinational enterprises bidding on government procurement, tender and construction projects. The GPA implements regulations and procedures to encourage transparency, to reduce favoritism for domestic contractors, and to eliminate discrimination against foreign contractors. As a GPA member, Taiwan will open its market to foreign firms, and Taiwanese firms will have greater access to foreign markets, including the United States.
Opportunities for U.S. Procurement
Taiwan’s accession to the GPA is a major step in opening up U.S. procurement markets to products from Taiwan. Currently, only those products from the United States or certain “designated countries” are eligible for sale in the U.S. procurement marketplace under the U.S. Trade Agreements Act (“TAA”). Currently, Taiwan is not a designated country and, as such, its products are not eligible for sale under U.S. Government contracts. However, under U.S. law and regulation, the term “desingated countries” includes WTO GPA member counties. With Taiwan’s accession to the WTO GPA, it is expected that the U.S. Federal Acquisition Regulations (“FAR”) will be modified to include Taiwan as an eligible product going forward. U.S. contractors and Taiwanese suppliers should be on the lookout for this important change.
Opportunities for Taiwanese Procurement
Reflecting the immediate impact of his country’s accession to the GPA, Taiwanese President Ma Ying-jeou reportedly called for foreign firms to bid on projects in Taiwan’s major “i-Taiwan” infrastructure initiative, which aims to generate $121 billion worth of investment over the next eight years. President Ma pointed out that the investment environment for foreign firms has improved in Taiwan as a result of its recent accession to the GPA. The United States Trade Representative has welcomed Taiwan’s accession to the GPA, saying it would assure U.S. suppliers access to the Taiwanese market, worth approximately $20 billion annually. While there will certainly be opportunities for U.S. and other GPA member companies to participate in the Taiwanese procurement market, U.S. companies seeking to take advantage of procurement opportunities in Taiwan must continue to comply with U.S. export controls.