On July 9, 2010, China submitted its revised offer to join the World Trade Organization (WTO) Agreement on Government Procurement (GPA). The GPA is a plurilateral and voluntary agreement that requires open, transparent and non-discriminatory access to government procurement markets of signatory countries. China became a GPA observer upon its WTO accession in 2001 and submitted its initial offer to join the GPA on December 28, 2007. China’s revised offer reportedly contains “significant improvements” compared to the country’s 2007 offer to join. Reported major improvements in the revised offer include: (i) the addition of 15 central government agencies that would be covered by the GPA; (ii) lower thresholds for GPA applications in China; (iii) a truncated transition period for full implementation of the GPA; and (iv) adoption of international classification standards for goods, construction projects and services.
However, concerns and uncertainties about China’s revised offer and China’s entry into the GPA remain. Other GPA members have complained that state-owned enterprises (SOEs) and sub-central government agencies, which account for a large part of the Chinese government procurement market, are excluded from the revised offer. The Chinese government has indicated that SOEs are specifically excluded from the government’s revised offer because any related procurement would be market-driven and commercial in nature. The Chinese government also has indicated that SOE procurement is subject to commercial procurement law, including the Tenders and Bids Law.2 It appears that the exclusion of local government agencies was driven by the complexity of China’s administrative system and limits of local government’s authority to make procurement decisions. One Chinese WTO negotiator recently noted that China’s adjustment of its government procurement regime and related laws and regulations could be more time-consuming and more arduous than the GPA negotiating process itself.
Another contentious issue involves how China’s revised WTO offer will affect its indigenous innovation policies in government procurement. China has recently moved forward with indigenous innovation policies that some US firms believe provide preferences to Chinese firms over foreign firms with respect to Chinese government procurement. Sources within the Chinese government note that China now focuses on encouraging indigenous innovation in order to promote future, long-term economic growth. If China does become a GPA signatory that could push it to adopt indigenous innovation policies that do not discriminate against foreign invested enterprises.