Trump may pull out from $1.7tn WTO global pact

Muscat Daily - - BUSINESS -

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

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