Public procurement, i.e. direct purchases of goods and services by public bodies, is an important component of the global economy, which on average accounts for between 10% and 15% of national GDP and is significantly higher for industrialized countries. Increased infrastructure spending in many emerging economies, supported by new development finance initiatives such as BANQUE BRICS, indicates that procurement will play an increasingly important role in the coming decades. Footnote 1 Given the size and overall nature of many enterprises capable of meeting public needs, public procurement is also an economic activity that, through discriminatory measures, is highly vulnerable to harmful distortions. In particular, governments that choose to impose national content requirements on providers, regardless of quality or price, can deduct public funds, just as companies may ultimately spend more than is necessary to meet tender preferences. Correcting these inefficient purchasing practices, known as offsets, is one of the most important but often overlooked objectives of the [WTO] Public Procurement Agreement [GPA], notes World Trade Organization footnotes and purchasing chapters of some regional trade agreements [VPA]. Any company in a signatory country wishing to sell GPA goods or services to a purchasing entity in another signatory country, which is listed in Schedule I of the GPA, may benefit from this agreement. The World Trade Organization estimates the value of the public procurement opportunities covered by the agreement at several hundred billion dollars a year. The text of the agreement establishes rules that require open, fair and transparent conditions of competition for public procurement. However, these rules do not automatically apply to all purchasing activities of each party. On the contrary, hedging schedules play a key role in determining whether or not a buying activity is covered by the agreement.
Only purchase activities carried out by listed companies that purchase goods, services or listed works above the specified thresholds are covered by the agreement. These calendars are open to the public. When a supplier believes that this agreement is in violation, it is encouraged to consult with the purchasing entity to resolve the issue. If such consultations do not result satisfactory, each undersigned government should provide that it imposes timely, transparent and effective non-discriminatory procedures that would allow suppliers to challenge alleged breaches of the agreement. Suppliers may be required to initiate an appeal procedure within a specified period of time (no less than ten days) from the date the basis of the complaint was known. Disputes must be heard by an impartial independent tribunal or audit body that is not interested in the outcome of the award of the contract. Dispute proceedings must be completed “in due course.” 81. Comprehensive Economic Partnership Agreement (CEPA), art. 13.12 (August 7, 2009).