Pros and Cons of India joining the GPA

The Agreement on Government Procurement (‘GPA’) is a plurilateral agreement at the WTO. This implies that all WTO members at their option can become parties to the Agreement (https://www.wto.org/english/tratop_e/gproc_e/gpa_1994_e.htm). The GPA has 45 WTO members and 30 observers in the GPA Committee as observers. 10 of these members are in the process of acceding to the Agreement. The aim of the GPA is to reciprocally open government procurement markets among its parties. Procurement activities worth an estimated US$ 1.7 trillion annually have been opened to international competition (i.e. to suppliers from GPA parties offering goods, services or construction services).

Since 2010, India has had an observer status at the GPA. It has now been almost five years of India testing the waters to see if the GPA indeed is a right fit for it. A case has been made by many scholars both for and against India joining the GPA but in my opinion in spite of all the arguments made for positively affirming such a move, I do not feel that the same should be pursued by India. In this post I will be focussing on three primary arguments made in this contentious debate; on that of market access, enhanced competition and transparency and dispute resolution.

One of the biggest advantages that is talked about (in relation to becoming a member of the GPA) is that of market access to other countries’ procurement regimes. There is a huge possibility of a potential export market gain as a direct consequence of accessing the other GPA Parties’ covered procurement markets. However, all these are just that, potentials and estimates that indicate of available market access opportunities in a given country which may not lead to any deals actually coming into fruition. The GPA may provide legal right to access another member’s government procurement market but it is a fact that most developed countries procure from markets of other developed countries while developing countries procure from both. Signing onto the GPA and listing down India’s open services in public procurement would mean that the developed countries would get a preferential treatment on account of the GPA’s National Treatment and Most Favoured Nation (‘MFN’) provisions and have access to the massive Indian market while the contrary may not turn out to be true. Such a policy is also at odds with internal Indian initiatives which require that certain procurements must be made from within India and especially from Medium and Small Sized Enterprises. India would have to reevaluate its industrial policy as the Government of India uses preferential treatment in Procurement as a tool to further the needs of the vulnerable sections of the its society.  Furthermore, this is a time when India is trying to do away with provisions like MFN as is evidenced in the new Model Bilateral Investment Treaty that is under consideration in India at present. While it may not be absolutely correct to equate the two policies, it may be worth some thought and may point to the path the Indian Government wants to adopt while moving forward.

Another advantage often discussed is that of enhanced competition and transparency which would include international competition and improved governance in the acceding country’s own procurement markets and the possible consequence of the country getting better value for its money within its own national procurement system. The GPA integrates provisions that limit discrimination in awarding of tenders. This brings about the general benefits of greater competition that are lower prices, better quality and more efficient firms. Nevertheless, this again is not a goal that a country cannot achieve on its own by ensuring that procurement regimes function in a manner that eliminate barriers to competition, including international competition and eradicate corrupt practices from their procurement systems. In India’s present procurement regime mechanisms exist like Rule 137 of the General Financial Rules 2005 which lays down the basic underlying principles that stipulates that every authority that procures goods in public interest should have the responsibility and accountability to bring about efficiency, economy and transparency in matters relating to public procurement and for fair and equitable treatment of suppliers and promotion of competition in the regime. All government purchases must be in accordance with these outlined principles. Organisations are required to mandatorily publish their tender notices within the country in both newspapers and on websites. There are adverse consequences to be faced if they were to disobey these rules. The lackadaisical implementation of these Rules should be rectified on their own and India should not have to accede to an international agreement to set its house in order when that should be done in the first place anyhow.

The last gain from the GPA that is haughtily deliberated upon is the one with respect to dispute resolution in the procurement regime. In India, the authority deciding on tenders is to record the reasons for rejection of the bids. Essentially, a speaking order has to be provided to an unsuccessful bidder. More often that is not the case and the only remedy that unsuccessful bidders have is to resort to Writ remedies under the Indian Constitution. That is a lengthy process and one which an organization may not be willing to put itself through. There is also no requirement to publish details of the contracts awarded. This challenge mechanism is not one that can compete with the ones present under the GPA or other regional trade agreements. The GPA incorporates the WTO dispute settlement mechanism, which offers a binding independent forum to any party under the Agreement. Bid challenges of themselves are essential as self-monitoring and self-implementing mechanisms. They allow for national procurement laws to have redressal and ensure that lacunae within the procurement regimes are identified and addressed efficiently. GPA offers a legislative thrust and a compliance mechanism under such circumstances and definitely one that the Indian procurement regime should take into account and address apart from a general remedy under the Constitution.

I would like to conclude by saying that while there may be advantages to signing onto the GPA, this is a move I would personally wish that the Indian Government delayed for a while and continued with its observer status. Provisionally, I would wish that they sign onto alternative public procurement management systems by either negotiating at the Bilateral or Regional level (as in case of Japan and India’s Comprehensive Economic Partnership Agreement) or implement unilateral reforms based on the UNCITRAL Model Law.

Reference: 

• World Trade Organisation, The WTO Regime on Government Procurement: Challenge and Reform (Sue Arrowsmith & Robert D. Anderson eds., 1st ed. Cambridge Univ. Press 2011)
• Ministry of Micro, Small and Medium Enterprises, .Public Procurement Policy for Micro and Small Enterprises MSEs) Order, 2012. order dated March 23, 2012 http://eprocure.gov.in/cppp/sites/default/files/gos/imsme_FinalPressorder.pdf, last accessed on December 29, 2015
• Sinha, Shri Pratyush (2009). “Enhancing value in public procurement,” (Special address by Shri Pratyush Sinha, Central Vigilance Commissioner, Conference on Competition, Public Policy and Common Men, 16th November 2009 organized by Competition Commission of India in Delhi).
• Assessing The Value Of Future Accessions To The Wto Agreement On Government Procurement (Gpa): Some New Data Sources, Provisional Estimates, And An Evaluative Framework For Individual Wto Members Considering Accession, Staff Working Paper ERSD-2011-15
• WTO, Agreement on Government Procurement,

This post has been authored by Ishita Mishra, a third year student at the West Bengal National University of Juridical Sciences.