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Government procurement provisions in the CARIFORUM EPA and lessons for other ACP states

A summary of the papers main conclusions:

The economic benefits from international rules on government procurement flow mostly from increased specialisation and competition within national markets as well as more efficient purchasing. Cross border supply of procurement markets is limited even within the EU, which has comprehensive rules.

In government procurement, as in other policy areas, economic gains from reform can be achieved through unilateral measures. Most ACP states have initiated reform of government procurement based on international guidelines such as the UNCITRAL Model Law on Procurement of Goods, Services and Works.

From an ACP point of view, inclusion of government procurement in the Economic Partnership Agreements (EPAs) may be beneficial if this helps to maintain the momentum of the existing domestic reform processes or promotes open procurement markets in the ACP regions. There are unlikely to be gains from trade for most ACP economies.

Given the limited size of their national markets and capacity of their manufacturing and service sectors to supply EU procurement markets, the priority for most ACP states is likely to be opening the regional ACP procurement markets before making commitments to open to the EU.

For the ACP states the potential costs of including provisions on procurement in the EPAs come in two forms. First, any commitments on national treatment (liberalisation) will prohibit the use preferences for national suppliers as a policy instrument. Second, there will be costs complying with framework (transparency) rules.

The only EPA to include substantive provisions on procurement is the CARIFORUM - EC text. This provides for national treatment commitments, but leaves the decision on which procurement will be covered by such commitments to the Joint CARIFORUM - EC Council. The costs of complying with the framework rules in CARIFORUM - EC text would not be excessive for any country that is already committed to serious unilateral reform.

According to its 2006 Global Europe policy statement the focus of the EU’s offensive interests in public procurement lies in ‘emerging markets’ rather than poorer developing countries. But the EU is still seeking transparency or framework rules in the comprehensive EPAs.