10 - Government procurement

Summary

Introduction

Public procurement is the activity whereby public entities contract with external private providers for the supply of the goods and services they require to carry out their functions. The overwhelming majority of bilateral and regional preferential-trade agreements (PTAs) seek to regulate this activity, or at least set out a commitment to do so. Of the seventy-seven or so agreements that have entered into force since January 2000, only eleven make no reference to procurement. Of the remaining sixty-six agreements, forty-two recognise the liberalisation of procurement markets, and the need to develop procurement disciplines, as objectives. A further six agreements go further than this in that they presently seek to regulate procurement with the use of general principles. The remaining eighteen agreements can be described as fully fledged systems of international regulation in the sense that general principles are supplemented with detailed rules on contract award procedures.

Part II of this chapter discusses why procurement is subject to international regulation. At a certain level, the rationale for international regulation can be easily explained and understood. Discrimination against foreign suppliers in procurement markets can amount to a significant barrier to trade. International regulation therefore seeks to address distortions in the conditions of competition between domestic and foreign suppliers which can be caused by ‘buy-national’ tendencies and measures.

Beyond this explanation however, explaining the rationale for international regulation, and its relationship with national regulation, throws up some challenging conceptual issues which can be introduced as follows.