MASTER

THESIS
DEFENSE

Major: International Trade Policy and Law

Student: Le Thi Hong Loan

SUPERVISOR: Dr. VU THI HIEN

Rationale
- GP continuously
account for high
proportion of national
GDP: 15-20% (EC)..
- Needs of public
infrastructure
investment, esp. in
emerging economies.
- 2008-09 crisis
economic stipulating
packages.
- Unfinished discussion
on multilateral
regulations on GP.
- On-going negotiations

- GP as a policy tool for

socio-economic
objectives & domestic
strategic sectors & gov.
intervention in economy.

National

Internation
al

- GP as a exclusion in all
WTO multilateral
agreements

- Join GPA: opening GP

market
- Most GPA signatories
are developed countries
highly competitve.
- GPA accession
procedure could be
burdensome and costly.
GPA membership:
benefits or
challenges???

Objectives
cost-benefit &
impact analysis of
GPA accession
review countries GP
policies
review countries
GPA accession
experience
compare Vietnam's
and WTO's GP rules
implications
withdrawn from
countries

Via experience of
Korea and China

recommendations
to improve
government
procurement
policies toward
integration

Chapter I: Introduction to the GPA

Chapter II: Experience of Korea as a signatory

to the GPA
Chapter III: Chinas experience in negotiating
accession to the GPA

Chapter IV: Lessons for Vietnam in seeking

accession to the GPA

201
4
201
0

effect
3rd revised
nd
2offer
revised
list
st
1offer
revised
list
offer
list
1st offer list

Revised GPA
1994

GPL 2003

200
0
199
4
199
0

198
0

GPA 1994

Revised 1979
Code

Tokyo Round
Code

194
9

GPA effective
1st dispute
e-GP launched

BL 2013
GPA Observer
TPP/BTA
negotiations
BL 2005

WTO
membership
BL 1999
1st rule on GP
Market
economy
X US
embargo
Doi Moi

Signed GPA

2nd accession
US-BTA

1st accession
failed

1st law in GP

GPA

KOREA

CHINA

VIETNAM

Share of ADB procurement contracts by origin (Source:

ADB, 2014)
2012

Item

2013

Unit: mil
USD

Cumulative (1966-2013)

Vietnam

Korea

China

Vietnam

Korea

China

Vietnam

Korea

China

231,64

233,19

1.673,10

500,38

465,37

1.375,47

3.437,67

6.769,72

20.948,14

in %

3,06%

3,08%

22,07%

7,61%

7,08%

20,92%

2,71%

5,34%

16,54%

Consulting
Services

12,32

45,53

10,67

14,59

8,57

17,83

90,93

163,26

108,94

in %

2,11%

7,81%

1,83%

2,89%

1,70%

3,53%

0,97%

1,74%

1,16%

Goods,
Works and
Related
Services

Share of WB contract award by countries and origin, 2000-2014

(Source: WB, 2014)
No. of contract
awarded by
countries

Contract award
value by
countries (mil
USD)

No. of contract awarded by supplier origin

Consultants

Goods and
Works

Sub-total

Value of
contract
awarded by
origin (mil USD)

% to WB
cumulative
200031/Aug/2014

Vietnam

7.552

3.872.668,19

483

5.770

6.253

2.442.173,23

1,68%

China

6.091

16.404.310,53

466

6107

6.573

24.743.587,14

17,05%

Korea

31

28,67

97

155

252

1.767.009,47

1,22%

Total

13.674

20.277.007,39

1.046

12.032

13.078

28.952.769,84

Principal cost-benefit of GPA

accession
Competitive capacity
Internal reforms level
Counter-balance of negotiating power
Intl cooperation/assistance/technology
transfer

Direct market access &

potential export gains

Direct negotiating
costs

Strengthening
competition and
promoting good
governance

Legislative &
institutional change
costs

Economic efficiency, or
best value for money
Others: policy
harmonization; criteria
in attracting FDI;
opportunities to
participate & influence
GPAs evolution

Adverse impacts on
local suppliers

Chapter I: Introduction to the GPA

Chapter II: Experience of Korea as a signatory

to the GPA
Chapter III: Chinas experience in negotiating
accession to the GPA

Chapter IV: Lessons for Vietnam in seeking

accession to the GPA

2. Koreas accession to
the GPA
Preparati
on
1979-1980-1982: 3 unsuccessful
attempts
1989-90: preparation for resubmission
Working Group on Offer List Preparation
& Working Group on Systemic Revision:
(i) Review economic impacts of
accession
(ii) Collect statistics related to GP
(iii) Prepare offer list
(iv) Prepare future works regard to
changes in GP system

Negotiatio
n
3 offer lists 3 years
Covered entities: 42 (/total 45)
central gov. entities, 15 local gov.
entities, & 23 public corp.
Threshold: SDR 130.000 for goods &
services, SDR 5 million for construction
in central government;
SDR 200.000 for goods & services,
SDR 15 mill for construction in local
entities;
SDR 450.000 for goods and SDR 15
mill for only construction of public corp.

Implemen
tation
Signed in April 1994, effective in
1997 .
(i) ratification of the agreement
in national legislative body
(ii) changes to national GP
legislation;
(iii) set up procedures and
statistical data collecting &
reporting system;
(iv) train personnel

4. Implications from Koreas

GPA accession
Challenges to future development of government
procurement in Korea

Internal
Future of the
system: separation
of 2 markets
(domestic vs. Intl
procurement)

Externa
l
The GPAs built-in
agenda for renegotiation
promised changes
to some extent

4. Implications from Koreas GPA

accession Koreas
GPA
accession
Preparation for accession
1 - Cost-benefit/economic impact analysis
worth conducted, even positive/negative
outcome..
2- Careful considerations on what to put in the
offer list (IIA/KOACA case)

Accession negotiation
1 Negotiating strategies: reasonably minimum
offer list adjusted according to negotiators response.
2- Necessity to collect info & assess expectations by
existing parties
3- Revision of offer list should reflect common concerns

Implementation
Could start even before official
accession early commitments
and strong interest
By early reforms (e-GP)

4. Implications from Koreas GPA

accession
Whats more? Not to fear of negative
outcomes
Negative cost-benefit assessment?
Benefited by gained understanding of
own procurement market, the GPA &
other intl instruments
Initial negotiation failed?
Experience

Chapter I: Introduction to the GPA

Chapter II: Experience of Korea as a signatory

to the GPA
Chapter III: Chinas experience in negotiating
accession to the GPA

Chapter IV: Lessons for Vietnam in seeking

accession to the GPA

Chinas Government Procurement of Goods &

Services (2005-2010)

Source: American Chamber of Commerce in

China, 2013

1. China Public
Procurement/Legislation

China Public Procurement Features

Fragmentation
Protectionism
Roles of SOE
procurement
Indigenous
Innovation
Centralized
Procurement
Catalogue (CPC)
Domestic product
preference
Buy National
required

Huge state sector

main industries large
procurement value
Several regulations by
Ministries & SOEs
Special-purpose SOEs
for GP

Favorable
treatments
for FIEs to
attract FDI
Domestic
protection
ism

Local
protection
ism

State
sectors

WTO Plus
obligatio
ns

WTO +: MFN
applied in GP by
Chinas gov. &
public entities at
all levels

2. Chinas GPA accession

Coverage

- 8/30 provinces, 13
SOEs
- No sub-central
entities,
subordinates,
successors.. added
- Limited services
list, important sector
excluded
(transportation,
energy & power,
telecom)

Jul 2010:
revised
offer list

Nov 2011:
2nd
revised
offer list

- Construction at
central level:
50m SDR -1st&2nd
years 35m 3rd
year 25m 4rd
year
Sub-central level:
1st year: 100m
2nd year: 80m
3rd year: 50m
4th year: 40m
+ 5 transitional

Nov 2012:
3rd revised
offer list

- No public works
included

Other
limitations

Dec 2007:
offer list

Threshold

2001:
GPA
Commitme
nt

- Arbitrarily general
exception: ability to
deviate from the
principle of national
treatment on caseby-case basis
Exception for
domestic content,
offsets, tech.
transfer
(developing country
position)

3. Potential consequences &

impacts
Domestically

Unified GP
legislative &
institutional
system

Higher
transparency,
lowered
corruption &
unilateral
acts

Broader
coverage of
government
procurement,
including or
not SOEs &
public
services

Elimination of
buynational/local

Higher
competition
in national
procurement,
more foreign
participants
in the GP
market

Secured
access to
other GPA
parties
market on
reciprocal
basis

Internationally

4. Challenges
- Under-developed GP
regime
- Trade partners resort to
Chinas WTO
commitment in GP to
urge GP market opening

- Under-prepared for GPA

accession, lack of
motivation
- GP as a tool to achieve
socio-economic
objectives, foster
industries costly to
give up

4. & Implications
Unifying & rationalizing

A matter of time

Increasing liberalization &

opening

Promoting political
momentum
By more convincing study
outcomes on the positive
impacts

Academic & public involvement

Academia: more on economic than
technical aspects longer time to collect
info & knowledge
Public concerns: directly affected by
inefficient & deficient GP regime

Symbolized
expansion of the
GPA to
developing
country group
reinforce GPA
roles as an
initiative for the
liberalization of
GP

Chapter I: Introduction to the GPA

Chapter II: Experience of Korea as a signatory

to the GPA
Chapter III: Chinas experience in negotiating
accession to the GPA

Chapter IV: Lessons for Vietnam in seeking

accession to the GPA

- ~12% of total GDP

- 2014: revised
regulations
- Advancing: Pilot &
PPP projects on e-GP
- PPA (MPI)- leading
roles + MPI, MoF, MoH,
MoIT, MOLISA, MoC
technical aspect. Other
agencies capable of
detailng the rules
- SOEs account for
main economic
sectors, Ruled under
Bidding Law (GP),
ministries decrees and
own procurement

- GP negotiation under
TPP (2009), EFTA
(2012), EVFTA (2012)

International

National

Vietnam GP system

- Observer to the GPA

since 2012

VN vs. GPA
Category

GPA

Bidding Law 2013

Coverag
e

by Gov. entities not for resale

covered item by procuring entities
above threshold
bilateral negotiating defined exceptions for national security, IP or
public interest

State funded, SOEs, drugs & medical

supplies, PPP, petro

Threshol
d

Goods &services 130.000 SDR,

construction 5m SDR at central
level
Goods &services 200-350.000SDR,
construction 5m SDR at subcentral

% or VND 500 billions (around SDR

15 million)
Higher, equivalent to threshold for
construction at sub-central & utilities
level

S&D

Domestic preference : forbidden

Except for DCs & LDCs transitional
measures

25% domestic content for

preferential treatment

Publicity

Similar: procurement plan, content, selection method, evaluation criteria,

contact

Selection
methods
&procedu

No specific procedure
3 methods: open (competitive),
selective & limited tendering

4 procedures
7 methods: 2 competitive, 4 limited,
1 special

Recommendations
Improving GP legal framework:
predictability & accountability
Consistent enforcement mechanism:
leading roles governance HR
Continuing the GP modernizing
Strengthen competitive capacity of
domestic bidders in ICB

Study the likely impacts/costbenefits

Understanding the agreement,
parties & theirs expectations
Know the accession mechanism &
elements
Enforcement mechanism:
monitoring, statistics & report, bid
challenges, remedies
Develop future plan for accession
(offer list drafting,

Internal
enhancing
national GP
system

Potential
accession to
the
GPA/integratio
n

THANK YOU FOR YOUR

ATTENTION!