Trump may pull out from $1.7tn WTO global pact
Washington, US - The US is mulling a plan to withdraw from a global pact worth US$1.7tn in government contracts, a person familiar with the matter said, in a move that may anger close allies during a delicate moment for trade.
Officials in President Donald Trump’s administration are circulating a draft executive order that would trigger a US exit from the World Trade Organization’s (WTO) Government Procurement Agreement, or GPA, if the pact isn’t reformed in line with American views, according to the person, who asked not to be identified because discussions are ongoing.
A spokesman at the office of the US Trade Representative didn’t immediately respond to emails seeking comment.
The purpose of the GPA is to open government procurement markets to foreign competition, and to help make public purchasing more transparent. An American withdrawal would create chaos for foreign companies that bid for access to the US’s US$837bn public procurement market and complicate nascent trade talks Washington is planning with the UK and European Union.
It could also pose problems for Canadian Prime Minister Justin Trudeau, who still needs to broker deals with his political rivals to ensure ratification of the US-Mexico-Canada Agreement; Canada is the only signatory of the updated Nafta deal that still needs to ratify the freetrade accord. Procurement was a contentious issue in USMCA.
A US withdrawal from the GPA would mean members including the UK, Japan, South Korea, Canada and the EU will lose their preferential access to US public procurement tenders. GPA members would instead become subject to the Buy American Act, which bars most foreign access to the US government contracts without a specific waiver. The law does not apply to foreign procurement of US public services contracts.
It’s not the first time the Trump administration has called attention to the GPA. In an executive order issued just three months after Trump took office in 2017, the Commerce Department and USTR were given 150 days to assess the impacts of all US trade agreements and the GPA on the operation of socalled Buy American laws.
If acted upon, the US move would fit Trump’s pattern of threatening to exit international pacts in order to increase leverage in negotiations, even when the party across the table is a close ally. Washington claims it scored a win using a similar approach with the Universal Postal Union, led by White House trade adviser Peter Navarro.
US President Donald Trump delivers his State of the Union address at the US Capitol in Washington, DC, on Tuesday