Theresa May, U.K. prime minister, left, reacts as she walks with Jean-Claude Juncker, president of the European Commission, during a meeting ahead of Brexit negotiations in the Berlaymont building in Brussels, Belgium. (Photographer: Jasper Juinen/Bloomberg)

U.K.'s Other Brexit Fight May Bar It From $1.7 Trillion WTO Deal

(Bloomberg) -- U.K. businesses stand to lose access to a $1.7 trillion public procurement market if signatories to a World Trade Organization accord this week block Britain’s application for membership, which will lapse after it leaves the European Union in March.

On Nov. 27, the U.K. will seek admission to the 46-nation Government Procurement Agreement in Geneva. Failure to rejoin the pact could prevent U.K. companies from bidding on government contracts in member nations, including the $837 billion U.S. market. Each member has the power to block admittance.

“Going through an accession does mean in theory a country -- any country -- can veto,” the U.K. Ambassador to the WTO Julian Braithwaite told lawmakers in London this month. “If we don’t get their agreement we don’t become a member of the GPA.”

A half dozen nations including the U.S. and Japan blocked a U.K. application last month, with some saying the British offer was based on a set of outdated and incomplete commitments. While all members want to retain access to the U.K.’s 67 billion-pound ($76 billion) marketplace, they’re still willing to use the opportunity to squeeze some concessions, with some eying projects such as Britain’s high-speed railways or a Heathrow airport expansion.

Rejected Bid

The purpose of the GPA is to open up, in a reciprocal manner, government procurement markets to foreign competition, and help make public purchasing more transparent among the GPA’s members.

British officials argue that the U.K. should receive expedited approval to the accord because it’s already a GPA member by virtue of its status in the EU, and can simply replicate its current commitments without upsetting any trade partners.

But last month, members rejected a separate U.K. bid, with some saying the application simply replicated the terms of the EU’s 2004 GPA. They said the offer didn’t take into account British agencies that have emerged since 2004, like the Department for International Trade and the Department for Exiting the European Union.

Braithwaite said the U.K. has offered to accommodate American demands by revising its schedule -- but only after the U.S. agrees to let the U.K. rejoin the pact.

Moldova’s Block

A spokeswoman for the office of the U.S. Trade Representative said more information on the U.S. position will be made available in the coming days.

Braithwaite told parliamentarians that if the U.S. accepts Britain’s offer it would “change the dynamic quite significantly” for other opponents of the U.K. GPA bid -- which includes Canada, Israel, Japan, Moldova, New Zealand, South Korea, and Ukraine.

But the U.K. will have to contend with the demands of 45 other nations aside from the U.S. Moldova, for one, has said that it’s concerned that the U.K. has a “burdensome visa application process” that doesn’t allow Moldova’s citizens to partake in the same reciprocal benefits from market access in the GPA, according to an Oct. 17 statement delivered to the GPA committee by the Moldovan delegation.

Braithwaite said that if the U.K. were to lose access to the accord it might only affect about 800 million pounds worth of annual procurement opportunities for local companies. But in Braithwaite’s comments to Parliament, he seemed sanguine that a resolution could be reached.

“They are not going to want to have a situation where their access to this valuable market is called into question,” Braithwaite said to lawmakers. “Now that doesn’t mean everything will come together magically in time,” he said. “There are risks, clearly. But there are a lot of interests towards maintaining the status quo.”

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