International Protection of Free Trade in Procurement Under NAFTA’s Chapter 10 on Public Procurement: The Pathway from NAFTA to WTO Government Procurement Agreement to a Potential European-US Transatlantic Trade and Investment Partnership

The North American Free Trade Agreement (NAFTA), which entered into force on 1 January 1994, is an agreement between Mexico, Canada and the United States to ensure that covered goods and services fall under a comprehensive free trade agreement among the three countries. NAFTA included, in Chapter 10, provisions opening up many aspects of the parties’ procurement markets. As a practical matter, however, NAFTA’s procurement-related provisions have largely been overshadowed by the World Trade Organization (WTO) Agreement on Government Procurement (GPA), which includes the United States, Canada, and many other member parties, but not Mexico. Perhaps in part because Canada has a long history of integration with the U.S. industrial base for defense production, with regard to public procurement the United States’ trading relationship with Canada under the GPA has played a more prominent role. The importance of the GPA in framing future procurement agreements is being borne out in current negotiations, between the European Union and the United States, on a comprehensive free trade agreement, known as the Transatlantic Trade & Investment Partnership (T-TIP). European negotiators have made it clear that their negotiations with the United States will be based on the GPA – in fact, that the T-TIP agreement may set a benchmark for future changes to the GPA, which is rapidly becoming the central agreement in international efforts to promote free trade in procurement. In the process, the procurement provisions of NAFTA are proving less important, as cooperation in trade and procurement regulation centers on the much more broadly adopted GPA. Whether through the T-TIP agreement (known as “TTIP” in Europe), or through the GPA, the international free trade agreements are likely to ease cross-border cooperation in framing procurement law. Part II of this chapter reviews NAFTA’s procurement-related provisions in detail, and discusses some of the protections built into that agreement. Part III describes the launch of the T-TIP negotiations between the European Union and the United States, and notes that those negotiations – based not on NAFTA, but on the GPA – demonstrate that the GPA has become an important instrument (more important than NAFTA) in framing free trade agreements in procurement. Part III describes how the T-TIP agreement might be used to open greater European access to public procurement markets in the United States, especially at the sub-central (state) level. Part III also discusses one option to open that access – to require states, when spending the billions of dollars of federal grants distributed every year, to afford European vendors the same “national treatment” they afford U.S. vendors – and describes some of the hurdles that face that approach. Finally, Part III discusses how the T-TIP agreement could be used to establish an ongoing mechanism -- specifically, an administrative structure to coordinate European and U.S. federal procurement regulations -- for the “transnationalization” of public procurement law.