D38

18 August 1995

GATT/WTO AGREEMENT ON GOVERNMENT PROCUREMENT

The Department of Foreign Affairs and Trade has begun a detailed examination on the implications for Australia of a new international Agreement on Government Procurement, which will enter into force on 1 January 1996.

The Department will work closely with the Department of Administrative Services and other departments on the project, and anticipates presenting a report to relevant Ministers at the end of the year.

Government procurement accounts for a significant proportion of world trade and economic activity. However multilateral trade disciplines, under the General Agreement on Tariffs and Trade 1994 (GATT 1994) and other agreements under the World Trade Organisation, do not generally apply to purchases by governments.

The Agreement on Government Procurement aims to liberalise trade in the government procurement area by enhancing opportunities for companies to supply the government purchasing markets of other countries. It covers contracts for goods, services and construction above certain thresholds, and provides rules designed to provide transparency and non-discrimination in tendering procedures. Its provisions apply not only to central government purchasing entities, but also to nominated sub-central entities, such as States, and government business enterprises, on a negotiated basis. Worldwide, the agreement covers government purchasing worth several hundred billion dollars annually.

Australia is not a member of the Agreement on Government Procurement which was negotiated concurrently with the Uruguay Round. The new agreement substantially expands upon an earlier plurilateral agreement concluded by a small number of countries in the Tokyo Round of Multilateral Trade Negotiations.

When the new agreement takes effect next year, membership will include the countries of Western Europe, Japan, the United States of America, Canada, the Republic of Korea and Israel. Australia is under no obligation to join the agreement and has given no commitment to do so. Any country wanting to become a member would have to negotiate terms of membership with the current parties to the agreement.

The agreement raises important issues for a wide range of Federal and State entities, as well as businesses interested in the domestic or international government purchasing market. Accordingly, an extensive consultation process will be required if the full domestic and international implications of the agreement are to be properly assessed.

To assist that process the Department has released a discussion paper which outlines the scope of the agreement and draws attention to some of the factors that will need to be considered. Views from industry and other interested parties, gained through the consultative process, will identify issues needing further study before all potential costs and benefits, including those to exporters, can be quantified.

Copies of the discussion paper and the agreement can be obtained from the Department of Foreign Affairs and Trade in Canberra. Contact Frank McKeown on 06 261 2456 or Leanne Caflisch 06 261 3759.