Trade Effects of Rules on Procurement for Commonwealth ACP Members

image of Trade Effects of Rules on Procurement for Commonwealth ACP Members

This Economic Paper assesses the potential trade effects of rules on procurement policies in Commonwealth ACP countries. It provides a practical guide for policymakers and negotiators to determine the impact of government procurement rules and policies taken at the national level or negotiated in trade agreements.



Potential Trade Effects

Trade effects or, more precisely, procurement-related actions which affect trade are quite often identified and considered from a narrow perspective, notably in the context of procurement actions which might have a discriminatory trade effect. This includes such things as domestic preferences, which provide a price or purchase73 preference for goods and services that are produced domestically or contain a defined level of domestic content or use of domestic labour. Similar effects are also attributed to other mechanisms such as ‘set-asides’ which set aside all or a given percentage of contracts for regional or even national firms, effectively excluding foreign competition for those contracts. The same discriminatory effect may be sought through what is, in effect, a procurement ban, where international competition is requested (or permitted) only where there is insufficient domestic supply.


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