Government Procurement of Services: Whither Market Access?

Estimates of government procurement of goods and services range from 10-20% of GDPs of national economies. Given that governments source at least some of these services from abroad, such procurement has significant market access implications. Further, the method of procurement has implications for the size of procurement open to international competition. This paper looks at the government procurement of services from foreign suppliers by analyzing self-assembled and hitherto unanalyzed data submitted by Japan and Switzerland to the WTO. Using several metrics, the paper tests the effectiveness of the WTO’s Agreement on Government Procurement (“GPA”) in increasing market access in services procurement and finds it to be wanting in the case of these two Contracting Parties. In fact, our results indicate that despite the GPA, the proportions of services contracts awarded to foreigners have declined overtime for both countries and in their absence, the value of services contracts awarded to foreign firms would have been 65% higher in the case of Japan and almost six times more in the case of Switzerland. In a separate discussion, the paper also finds that the treatment of government procurement in preferential trade agreements has been limited so far, which again suggests greater scope for procurement reform.