Government Procurement with Strings Attached: The Uneven Control of Offsets by the World Trade Organization and Regional Trade Agreements
Asian Journal of International Law, Forthcoming
23 Pages Posted: 14 Mar 2016 Last revised: 11 Aug 2016
Date Written: March 14, 2016
This article explores the practice of governments imposing domestic content based requirements known as ‘offsets’ on suppliers in order to secure public procurement contracts. Known to cause economic harm and distortions in international trade, offsets are forbidden under the WTO’s GPA and in the procurement chapters of several RTAs, although these restrictions have severe limitations with full offset prohibitions only accepted by a handful of developed countries. Given the sensitivity of procurement policy and the pressing need to stimulate local economies, Asian countries in particular show a lack of willingness in addressing offsets in their international agreements. While other WTO agreements restrain the use of local content rules, these regimes are ill-suited to control the harmful effects of offsets in a procurement context because of their focus on traditional commercial markets. The article suggests that an enlargement of offset prohibitions would be advisable given the expected expansion of global procurement markets commensurate with economic development.
Keywords: government procurement, WTO, subsidies, offsets, TRIMs Agreement, investment treaties
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