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WTO Agreement on Global Procurement

 

Agreement on Government Procurement UPSC: Relevance

  • GS 2: Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests.

 

WTO Agreement on Global Procurement: Context

  • Recently, the Ministry of Commerce and Industry has informed that India has no plans to join the Government Procurement Agreement of the World Trade Organization (WTO).

 

Government Procurement Agreement : Key points

  • The India-UAE FTA agreement, which came into effect on 1 May excludes government procurement for several union ministries.
  • This was the first time India had included government procurement in a free-trade pact, however, it is only limited to a few central ministries.
  • It excludes key sectors such as construction, infrastructure projects and health care, including medical devices and pharmaceutical products.
  • Under the India UAE pact, only government procurement contracts worth over ₹200 crore will be allowed for UAE-based companies on the same terms as Indian firms.
  • Moreover, Government procurement is open to 34 ministries and departments, including power and education.

 

WTO Agreement on Global Procurement_40.1

 

Agreement on government procurement (GPA)

  • What is GPA: The GPA is a plurilateral agreement within the framework of the WTO, meaning that not all WTO members are parties to the Agreement.
  • The fundamental aim of the GPA is to mutually open government procurement markets among its parties.
  • As a binding international treaty, the GPA is administered by the Committee on Government Procurement which is composed of representatives of all its parties.

 

WTO government procurement India

  • India is an observer under WTO Agreement on government procurement since 2010.
  • Earlier, India never took up government procurement for bilateral or multilateral trade agreements in order to protect domestic firms.
  • This was one of the bottlenecks in several key FTA negotiations, including the one with the EU.

 

WTO Agreement on Global Procurement_50.1

 

Should India join GPA?

Yes because

  • International market access: It would help India in promoting and reinforcing good governance practice as well as contributing to the effective management of the public resource and promoting convergence in international procurement systems.
  • Minimization of inefficiency: Since GPA promotes competition through transparency, it could do away with the inefficiencies like lack of effective competition in bidding markets; and concerns regarding corruption or lack of good governance.
  • Good governance: GPA includes transparency rules and provisions on domestic review to good governance and anti-corruption efforts in order to avoid conflicts of interest and prevents corruption practices.

 

No because

  • Higher cost: Low development of India’s procurement system could imply higher costs for bringing institutional reforms to make it GPA-compliant.
  • GPA requirements: Implementing GPA’s requirements regarding the transparency of procurement procedures, the implementation of an independent domestic review system, would mean a big change in the internal government structure through the implementation of reforms to its national legislation and procurement policies.

 

Government Procurement Agreement : Way forward

  • Accession to GPA involves many advantages. Nevertheless, it is important to take into consideration the present structure and procurement policies before joining any such groupings.

 

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