U.K. Approved to Rejoin $1.7 Trillion WTO Procurement Deal

(Bloomberg) -- The United Kingdom won approval to remain in a key World Trade Organization agreement that governs $1.7 trillion worth of annual public procurement opportunities.

A group of 46 nations, including the U.S. and Japan, agreed on Wednesday to let Britain stay in the Government Procurement Agreement, according to a WTO statement.

Maintaining membership ensures that U.K.-based contractors will retain their preferential access to foreign public procurement opportunities if Britain leaves the European Union without a withdrawal accord. It also ensures that the GPA’s signatories will continue to have access to the U.K.’s 67 billion-pound ($89 billion) public procurement marketplace in the case of a no-deal Brexit.

“The agreement is another huge step in the U.K. establishing itself as an independent WTO member, continuing to bang the drum for free trade and U.K. business,” British International Trade Secretary Liam Fox said in a statement on Twitter.

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The purpose of the GPA is to open up, in a reciprocal manner, government procurement markets to foreign competition, and to help make public purchasing more transparent.
The U.K. currently participates in the GPA via the EU; Britain never independently ratified the agreement and must now rejoin as a member in its own right in order to ensure continuity following its planned departure from the bloc. The U.K.’s offer replicates its current GPA commitments as an EU member and does not increase or decrease access to its public procurement marketplace.

The agreement will now be laid before the U.K. Parliament for 21 sitting days to provide the opportunity to raise any objections to the accord. There is no indication that any members of Parliament intend to object to the deal.

The U.K.’s accession to the GPA will take effect 30 days after the U.K. government submits its instrument of acceptance to the WTO.

Regardless of Wednesday’s approval, the U.K. will remain a member of the GPA under its current terms if the British government approves a withdrawal agreement or extends its negotiations with the EU beyond the scheduled Brexit date of March 29.

Brexit Continuity

The decision marks a positive development in the U.K.’s effort to become an independent member of the WTO in preparation for its exit from the European trading bloc.

In October, several countries including the U.S., New Zealand and Moldova objected to the U.K.’s offer to rejoin the GPA because they said it was outdated and should include further concessions, like increased access to U.K. visas. The situation threatened to blow up the U.K.’s post-Brexit access to the $1.7 trillion deal since each member has a veto.

On Wednesday, the GPA parties acted "rationally and pragmatically," said Julian Braithwaite, the U.K.’s ambassador to the WTO. "The economic interest in providing continuity outweighed all the interests that have been raised that could have blocked our accession," Braithwaite told Bloomberg in a telephone interview.

The U.S. ambassador to the WTO, Dennis Shea, said that "keeping the U.K. in the GPA is very important for this agreement" and noted that the U.K. accounts for over a quarter of the EU’s total procurement covered by the GPA, according to a statement.

As part of Wednesday’s agreement, the U.K. will renegotiate certain aspects of its GPA membership over the next three months in order to account for certain government entities that did not exist before Brexit -- like the Department for International Trade.

Braithwaite said Britain won’t liberalize its current public procurement commitments, which restrict foreign access to the U.K. rail system and the National Health Service.

"We won’t change our market access," Braithwaite told Bloomberg. The U.K. is "already the most open and liberal European economy in the GPA."

To contact the reporter on this story: Bryce Baschuk in Geneva at bbaschuk2@bloomberg.net

To contact the editors responsible for this story: Richard Bravo at rbravo5@bloomberg.net, Jones Hayden, Emma Ross-Thomas

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