Transparency In Government Essay Example for Free

Transparency In Government Essay Introduction. Government organs and state owned enterprises are major buyers and sellers having a great impact on international trade. According to an OECD estimates, the total government procurement worldwide was estimated to be roughly equivalent to 82.3% of world merchandise and commercial services exports in 1998 alone[1]. Such public spending is essential in running government welfare programs such as, health, education, and pension and managing the infrastructure for future development. In order to obtain cost effective prices for contracting the services to run these projects, an efficient public procurement policy that incorporates elements of transparency and competition needs to be established to ensure that the tendering process is open to all interested parties. Besides, knowledge about a country’s contestable shares is important not only for investors, but also governments and trade negotiators. The Chairman of the WTO Working Group on Transparency in Government Procurement Practices, established after the 1996 WTO Ministerial Conference in Singapore, identified Transparency in Government Procurement as one of the twelve issues around which discussions on procurement matters at the WTO have been organized. This paper analyses in depth this issue with a view to improving market access and national welfare. For this purpose, we present the following structure. (SECTION II) The relationship between public procurement, market access and national welfare: Traditionally, public procurement is viewed as a sovereign domain of governments except when it is relinquished in favour of international trade agreements such as the WTO Agreement on Government Procurement. Though it’s easy to agree on a policy for ensuring transparency in Public Procurements, the implementation of such a policy depends on, among other factors, whether such an agreement will improve market access for suppliers at the same time cater for the county’s national welfare. Hence the main objective of this paper is to answer the question on whether transparency in Public Procurement can achieve both objectives. Here, we confirm that lack of transparency in PP reduces market access and national welfare only in the short run where the government’s demand is initially more than the total domestic supply but does not affect prices in the long run under perfect market conditions. {Baldwin and Richardson (1972)} at the same time, we examine the trade impact of transparent procurement policy and support the view that non-preferential procurement policy results in huge gains in national welfare. {Lowinger (1976) and Deardorff and Stern (1979)} (Section III) Actual data on the size of government procurement practices: Though the Data on government procurement markets are both scarce and non-standardized, we intend to measure the quantity of government procurements markets in the international trade. We shall also analyze the methodology used in collection and calculation of data from various countries with emphasis on SNA, WTO notifications, EC study based on EU official journal and the â€Å"bottom up approach[2]† The role of the OECD Trade Committee in respect of its analysis of government procurement practices shall also be examined.[3]. Section IV Rationale for discriminative practices: Cost effectiveness, geographical proximity especially for non-tradable goods[4] nationalism, corruption,[5] and protectionalism are some of the rationales that we shall discuss. We shall review the Keynesian theory associating procurement discrimination to macroeconomic development. Some projects that are prone to preferential treatment such as the aviation industry and defence contracts are also discussed. forms of discrimination such as the â€Å"outright exclusion† in which foreign bidders are excluded from tendering process, â€Å"preferential price margin† in which local bidders are preferred as long s the price difference doesn’t exceed specific margin and the concept of   â€Å"domestic content requirement† in which foreign suppliers are automatically disqualified from bidding unless they commit to purchase some components from domestic firms[6] have been reviewed. Section V Summary of the effect of preferential treatment: We present that procurement policies favouring domestic firms and products can impede international commerce especially when there is an outright ban for foreign suppliers. But at the same time local firms will greatly benefit thereby boosting national income. A liberalized policy on the other hand may achieve the WTO aim of market access, which in turn will positively affect national welfare, but transparency reform need not improve market access and welfare simultaneously[7]. We shall also highlight the importance of transparency in PP to global trade initiatives. Section VI Measures to improve transparency in procurement policies: We shall review reform initiatives and the factors aiding or hindering such reforms. International commitment in improving market access and national welfare shall also be discussed. We shall provide an overview of the achievements and failures of the following agreements in this regard. GATT 1947 The Tokyo round 1979 The Uruguay round 1994 The Singapore ministerial conference (1996) The Doha ministerial declaration (2001) Beyond the Cancun collapse The concluding remarks are given in section VII.   ACRONYMS OECD WTO World Trade Organisation SNA EC European Commission EU European Union PP Public Procurement GATT General Agreement on Trade and Tariffs. [1] OECD, The Size of Government Procurement Markets 11-Feb-2002, Available at http://www.oecd.org/dataoecd/34/14/1845927.pdf [2] This is a method of gathering national data on procurement expenditure directly from the national procurement agencies of various countries. [3] Please study OECD Draft instrument on Government Purchasing Policies, Procidures and Practices forwarded to GATT in 1976 for better understanding. [4] Breton and Salmon, (1995) [5] Corrupt officials expand expenditures (Hines, 1997). For a detailed political economy rationale for reform see Hoekman (1998) [6] OECD, The Size of Government Procurement Markets 11-Feb-2002, Available at http://www.oecd.org/dataoecd/34/14/1845927.pdf [7] Government procurement: market access, transparency, and multilateral trade rules Simon J. Evenett, Bernard M. Hoekman