Performance Under Pressure: Japan and the GPA

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Performance Under PressureJapan and the GPA

• Simon J. Evenett and Anirudh Shingal
• World Trade Institute
• University of Bern

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The issues

• How effective has the URs Agreement of
  Government Procurement been?
• Metrics?
• Improved resource allocation/welfare
• Improved market access
• Preserved market access under pressure
• What is the relative importance of different
  means to exclude firms from state procurement?

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The point of departure

• Very small economic literature on size of
  procurement markets (Hoekman, 1997, OECD, 2002)
• Small number of statistical studies on effects of
  procurement discrimination on trade flows
  (Evenett, 1997, and Trionfetti, 2000)
• Why so little research?
• Lack of data

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Data submissions to WTO

• Required of members of the UR GPA
• Through late 1990s four nations supplied data
  electronically. Before that more nations
  submitted data in written form.
• Since UR no one has assembled this data
• Before UR, Hoekman did.
• This paper helps remedy the gap for Japan

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Finding 1 Snap shot of 1998-9

• Annual reported procurement 36 bn SDRs
• 65.9 below GPA-specified thresholds
• 25.0 above thresholds and not subject to limited
  tenderingmeasure of market size available to
  foreign competition
• Contracts awarded to foreigners
• 1.39 services
• 13.41 goods

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Finding 2 More below threshold contracts 1997 to
1999

• Percentage of contracts above threshold and not
  using limited tendering
• 1997 26.6
• 1999 24.4
• Is this peanuts? Not in dollar terms.
• Amounts to 0.8bn SDRsor over a billion US dollars

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Finding 3 Fewer contracts are awarded to
foreigners

• Proportion of contracts awarded to foreigners (by
  number)
• 1990-1 26
• 1998-9 24
• Proportion of contracts that are available for
  international competition
• 1990-1 91
• 1998-9 86

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Finding 4 Market access would have been 25
larger

• Reported foreign contracts 1998-9 769m
• Additional contracts in absence of
• Falling share of above threshold contracts
  131.6m
• Falling probability of foreigners winning a
  contract 61.1m
• Total reduction 192.7m
• 25 of reported foreign contracts

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Interpretation

• Notions of market access
• Legal rights
• Economic outcomes
• On latter, GPA has not prevented an erosion of
  foreign market access in Japan
• Political economy implications
• Implications for Doha Round