Several members of the World Trade Organization (WTO) are pressuring the Philippines to harmonize its government procurement regime with multilateral trading rules by acceding to the Agreement on Government Procurement (GPA).
According to documents obtained by the BusinessMirror from a Geneva-based trade official, some WTO members even told Manila that liberalizing the country’s government procurement rules will boost the Duterte administration’s massive infrastructure program.
The European Union, Switzerland, Ukraine and the United States sent separate papers to the WTO calling on the Philippines to participate in the WTO’s GPA.
Parties to the GPA must implement a national treatment and nondiscriminatory policy for suppliers with respect to procurement of covered goods, services and construction providers. It also details procedural requirements framed to ensure a transparent and competitive procurement process that does not have a bias against products, services and suppliers of other parties. On the other hand, developing and least-developed countries are allowed to avail themselves of special and differential treatments under the procurement deal.
The Philippines is not a GPA signatory or observer. The GPA, ratified in 1994, is presently made up of 19 parties covering 47 WTO members and observed by 31 countries, of which 10 are in the process of ratifying the procurement deal.
Brussels, for one, urged Manila to expedite amendments to the country’s procurement law. “First, the EU would like to encourage the Philippines to speed up the ongoing revision process to improve nondiscriminatory access of foreign bidders and to lift restriction on foreigners’ participation in the public procurement of goods,” it said in a statement.
“For this, the EU would also suggest an easing of licensing requirements for foreign operators, in particular the Philippine Contractors Accreditation Board requirements, as well as local content requirements. The EU would also encourage the Philippines to join the GPA as an observer to attract more FDI [foreign direct investments],” it added.
The same sentiment was shared by the US, which indicated that various laws and regulations continue to hamper active and competitive participation of American firms in government biddings in the Philippines. In a statement, the United States lamented the eligibility requirement that specifies minimum Filipino-ownership requirement for bidders, as well as the government’s preferential treatment for local goods over imports in the bid-evaluation process.
“The Philippines has also remained on the sidelines of the WTO Agreement on Government Procurement. Given the benefits that could accrue to the Philippines from GPA membership, we strongly encourage the Philippines to adopt the agreement in the near future,” the statement read.
“Lifting the restrictions on government procurement makes even more sense, as the current Philippine government’s massive campaign to improve the national infrastructure could benefit greatly from the participation of foreign suppliers. We look forward to hearing more about the Philippines’s procurement market and efforts to broaden the opportunities for overseas companies on a fair and equitable basis,” it added.
Switzerland said the Philippines will benefit from the GPA deal because it will open more opportunities for the country under a transparent economy. As a “sizeable part of the Philippine economy,” government procurement should at least translate into “the workings of an open market,” Switzerland said in a statement.
“There are a great many efficiency gains to be made by bringing usually opaque market into line with the best practices of a modern and outward-looking economy. These gains would not only give public finances more breathing space but also ensure a better allocation of resources when it comes to the tremendous task of improving the country’s infrastructure,” it added.
Similar to Brussels’s recommendation, Bern told Manila to become an observer of the GPA. This way, it said, the country might be able to achieve a higher level of transparency, fairness and competitiveness in government biddings.
Ukraine posed the same question to the Philippine delegation in the WTO: Does the Philippines have any plans to the join the WTO Agreement on Government Procurement? It also asked what measures is the government taking to improve its procurement process.
In Southeast Asia only Singapore is a party to the GPA, while Indonesia, Malaysia, Thailand and Vietnam are under observer status. Like the Philippines, Brunei Darussalam, Cambodia, Lao PDR and Myanmar are not parties nor observers to the procurement deal.
Members of the WTO are currently quizzing the Philippines over its trade policies as part of the trade-policy review being conducted once in every six years. Trade Undersecretary Ceferino S. Rodolfo Jr. heads the delegation to the multilateral trading body’s headquarters in Geneva, Switzerland, joined by top officials from different government agencies.