Close the trillion-dollar market? U.S. considers withdrawing from WTO government procurement agreement

Source: Xinhuanet Time: 2020-02-06

US government sources revealed that President Donald Trump is considering withdrawing from a World Trade Organization global agreement worth US$1.7 trillion in government procurement contracts, which may exclude foreign investment from the US$1 trillion US government procurement market.

[Allies hurt the most]

Bloomberg reported on the 5th, citing sources, that Trump administration officials are circulating a draft executive order. According to the draft, if the \"Government Procurement Agreement\" of the World Trade Organization (WTO) is not modified according to the United States, the United States will withdraw from the agreement.

The \"Government Procurement Agreement\" aims to allow foreign competitors to participate in the government procurement market and help increase government procurement transparency. The current size of the US government procurement market is about $837 billion.

According to a report released by the US Government Accountability Office in 2019, the amount of government procurement contracts awarded to foreign companies in the US in 2015 amounted to US$12 billion. Among them, the contract amounts to the European Union, Japan, South Korea and Canada were 2.8 billion US dollars, 1.1 billion US dollars, 755 million US dollars and 623 million US dollars.

If the United States withdraws from the agreement, parties including the United Kingdom, Japan, South Korea, Canada, and the European Union will lose their preferential access status in the US government's bidding process, and will be subject to the United States' Purchase of American Products Act. According to the bill, without special exemptions, most foreign companies cannot bid for US government contracts.

Bloomberg reported that if the United States withdraws from the \"Government Procurement Agreement\", it will complicate the trade negotiations between the United States and the United Kingdom and the European Union, and will bring greater challenges to the implementation prospects of the \"United States-Mexico-Canada Agreement\" (referred to as the US-Mexico-Canada Agreement).

The US-Mexico agreement will replace the original \"North American Free Trade Agreement\", which has been approved by the legislative bodies of Mexico and the United States and still needs the approval of the Canadian Parliament to take effect. Government procurement is an important issue in this agreement, and in the event of major changes, Canadian Prime Minister Justin Trudeau will lobby the parliament more difficult.

【Inertial thinking causes trouble】

Some political analysts believe that the Trump administration has revealed the idea of ​​withdrawing from the \"Government Procurement Agreement\", the real purpose is to force all parties to renegotiate the agreement framework more conducive to the United States. The United States is accustomed to \"retreating from the masses to promote concessions\" routine, even if the negotiation target is an ally, there will be no scruples.

\"It’s no surprise to me that the US government is acting like this,\" said Stuart Harbinson, a former WTO official.\"Their overall view is that the WTO needs the United States more than the US needs the WTO.\"