Global Spotlight: New Zealand

For decades, the World Trade Organization’s Government Procurement Agreement (GPA) has promoted transparency and non-discrimination in government procurement activities. But New Zealand’s participation in the GPA — the newest nation to do so — highlights the WTO’s effect on promoting cross-border trade between government buyers and suppliers.

The Government Procurement Agreement

The Government Procurement Agreement was launched in 1981 with the aim of guiding government procurement practices to be fair, non-discriminatory and transparent. Over the years, more nations have joined the treaty, including the U.S., Israel and Switzerland when the GPA was revised in 1996. Last week, New Zealand became the latest country to join the GPA and the first to do so since its most recent revision last year.

According to the WTO, the GPA has led to an estimated $1.7 trillion worth of government offers to suppliers across the globe. Government buyers are required to clearly lay out their payment terms and instructions (whether paper or electronic), though the WTO itself adheres to a policy that pays suppliers via bank transfer within 30 days of receiving an invoice.

The nations that join the GPA are required to ensure that their federal laws comply with the WTO’s guidelines on fair procurement practices, according to reports.

While the WTO’s enforcement of fair procurement practices is seen by many as a benefit to the suppliers under participating governments, New Zealand’s entrance into the GPA highlights the World Trade Organization’s facilitation of cross-border trade through its fair procurement initiatives.

Kiwi Suppliers Rejoice

After two years of negotiations and an official agreement last year, New Zealand officials announced Thursday (Aug. 13) that the nation’s global procurement deal would officially take effect.

Economic Development Minister Steven Joyce has emerged as a public proponent of the effort, applauding New Zealand suppliers’ ability to compete for that $1.7 trillion worth of government contracts offered across 43 nations.

“Kiwi companies now have more opportunities to do business with governments internationally than ever before,” the official said in the announcement. He added that as the number of countries participating in the GPA increases, there will be “new opportunities for Kiwi businesses to export more products and services to more destinations.”

“Entering the GPA will be a big boost for New Zealand manufacturers and ICT exporters and will assist with the continuing diversification of the New Zealand economy,” Joyce added.

For New Zealand, participation in the GPA is also a significant step towards achieving the nation’s Business Growth Agenda goals, Joyce said, which include boosting the nation’s exports to account for 40 percent of GDP by 2025.

The ability of the WTO to promote cross-border trade through its GPA has emerged as a key instigator of government interest in the treaty. “At a time of sluggish growth across the world, such opportunities are more welcome than ever,” said WTO Director-General Roberto Azevêdo in the midst of New Zealand’s preparations to join the GPA. He added that the nation’s participation in the treaty means it “can benefit from greater competition in their own procurement markets and consequently from lower prices and a wider selection of goods and services from which to choose.”

In facilitating cross-border procurement, the GPA also helps suppliers more easily gain a competitive edge in the global market. According to Joyce, the GPA allows local suppliers to strike overseas deals, rather than be forced to establish offshore units to do business abroad. “The GPA will let kiwi companies run their businesses the way they want to, rather than establish ‘workarounds’ like they have to now,” he said.

Transparency in government procurement practices, experts say, is key to fueling suppliers’ growth. But New Zealand making its entrance into the GPA underlines the role of government procurement in fueling cross-border trade and aiding small suppliers in entering a previously unreachable global market.