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EU trade policy

The ability of governments to procure from firms of its own choice can be an important development tool and can also be an instrument for macroeconomic management. This Policy Brief analyses the scope of international trade rules governing government procurement in the EU’s Economic Partnership Agreements (EPAs) and free trade agreements (FTAs) with developing countries (DCs). The paper also examines the key provisions of EPAs regarding this topic, and its potential implications for development.

The paper firstly states that government procurement remains one of the few areas of state involvement not covered by any multilateral agreement. It is, however, an area which is increasingly being negotiated and discussed in FTAs. The development challenges that will result from liberalising public procurement in these FTAs /EPAs for DCs include:

• the prohibition of the use of preferences for national suppliers as a policy instrument
• high costs of compliance with transparency rules and insufficient support to overcome institutional and supply capacity constraints
• the asymmetric capacities of the EU compared to its DC partners, with the result being that only the EU benefits from these disciplines

Thus, given these points, the paper finds that DCs would have lost the opportunity to use regional procurement markets to develop industrial and services supply capacities in their sub-regions. Furthermore, the paper concludes that the lack of trained professionals and lack of regional regulatory capacity are major challenges in the area of government procurement. It is therefore not surprising that the need for adequate support and assistance to implement transparency rules related to government procurement has been always highlighted in the WTO discussions.

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