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Agreement procures advantage on contracts

New Zealand has signed the ‘Government Procurement Agreement’ (GPA) with the World Trade Organisation, which according to Economic Development Minister Steven Joyce and Trade Minister Tim Groser, will accrue substantial benefits to the business community.

But the benefits would not be available for another two years, since the process has a number of formalities to be completed.

New Zealand must demonstrate to existing members that its own procurement rules comply with the Agreement. New Zealand is not required to include all government procurement in the agreement but can negotiate with existing members on what is in scope.

Forty-two countries, including the US, Canada, Korea, Japan and 27 countries of the European Union, currently belong to the agreement. It covers the purchase of a broad range of goods and services that government agencies buy from the private sector, including construction.

“Our businesses will get better access to an estimated US$1.6 trillion (2.64% of the world’s Gross Domestic Product) worth of overseas government contracts,” they said in a joint announcement made in Wellington on August 15, 2012.

Additional opportunities

According to Mr Joyce, the GPA would create additional opportunities to New Zealand businesses to export more products and services to more destinations.

Mr Groser said that the participating countries had agreed to revised coverage that would increase the amount by US 100 billion each year.

“The value will also go up as many countries including China, come on board. Under the Agreement, member countries are not allowed to discriminate against businesses from another country in their government procurement processes. They must also follow rules relating to competition and openness,” he said.

Mr Joyce said that the Agreement would not have a major impact on government

Agencies in New Zealand, since their procurement process is already in line with the fundamental principles of the Agreement.

“We already follow the rules, but just don’t get the benefit for our New Zealand exporters. Joining up to the GPA will improve all access and reduce costs for exporters,” he said.

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