Saudi Arabias Potential Accession to the WTOs Agreement on Government Procurement - Essay Example

SAUDI ARABIA’S POTENTIAL ACCESSION TO THE WTO’s AGREEMENT ON GOVERNMENT PROCUREMENT (The Legal Requirements for Saudi Arabia’s Procurement System to accede - Comparative Study) Prepared by: Moudhi Bin Jumah I-Introduction: In light of the big changes that have recently been witnessed by the world at the economic and legal level, many countries in the world apply the principles of free market economy and liberalization of the foreign trade. This led to the subsequent establishment of the International Monetary Fund, the International Bank for Reconstruction and Development, and finally the establishment of the World Trade Organization that through the Agreement on Government Procurement “GPA” has to ability of achieving these goals. However, many developing countries are reluctant to accede to the Agreement on Government Procurement”GPA”, because of the fear of the impact of trade liberalization on the national economy. Many of these countries fear that accession to the GPA will lead to the collapse of its national industry. The trade liberalization may also lead to lower revenues of the customs tariff to these countries. Saudi Arabia as one of the developing countries affected by these new variables either negatively or positively, and especially because it is the largest oil exporter in the world, making it an important and active participant in the global trade scene. The Saudi’s development reliance on oil revenues throughout most of the past years has led to a steady increase in the Saudi’s imports of goods and raw materials. In addition, it has been helped to this result through the continuing government efforts to transform the Saudi economy to a diversified economy that relies on renewable resources to ensure the sustainable development in the manufacturing and petrochemical industries, as well as agriculture and services sectors. Moreover, it is indisputable that the Saudi’s accession to the GPA holds gains in any way. In addition to these economic impacts, there are positive legal impacts and advantages such as the more available options of goods and services at lower prices and higher quality, increase the confidence in the available goods that will be limited by the commercial fraud, counterfeiting and price manipulation, since the local and foreign goods will be subject to strict rules and controls as a result of this accession. This is what I will explain in the study. II-The Important of the Study: The study derives its importance due to the following considerations: 1. Joining the Agreement of Government Procurement (GPA) is of the most urgent necessities of the various countries. 2. There are different views about the effects and dimensions of the States adherence to the GPA. The importance of this study is to examine these different trends in relation to Saudi Arabia. 3. Trying to assist the competent authorities such as the Saudi’s Ministry of Commerce and Industry, in the formulation of strategies and plans that will help in achieving the objective of the research. 4. It is hoped that this study will contribute to the development of new topics related to Saudi Arabia’s accession to the GPA, and also enrich the Saudi Arabian literature and fill the gap in the legal scholarly research. 5. Bringing more openness to the Saudi market for foreign goods and services would promote competition environment that improves productivity, lowers prices and reduces the administrative and financial corruption, to comply with the UNCAC which constitutes one of the main important goal of the GPA. 6. The Saudi’s accession to the GPA will improve the investment field and support the economic reform program, which is currently being implemented by the Saudi government. The accession obligates Saudi Arabia to apply the principles of the GPA, the United Nations Commission on International Trade” UNICTRAL,” and the United Nations Convention Against Corruption “UNCAC”, including the principle of transparency, clarity of regulations and procedures, and provide the necessary protection. 7. The applied significance of the results and recommendations of this study. III-Problems Addressed by the Study: The WTO Agreement on Government Procurement (GPA) is a plurilateral agreement, which means that it is binding only on those WTO Members that have accepted to be bound by it.1 The Completion of the accession process involves two key elements. These are: Conformity of the acceding Members domestic legislation with the requirements of the GPA, pursuant to Article XXII:4 of the revised GPA;2 Agreement with the existing Parties on a mutually satisfactory coverage offer.3 Since Saudi Arabia has an observer status in the GPA Committee which gives it an opportunity to become acquainted with and learn more about the GPA without incurring any obligation.4 The problem of this study can be formulated in the following main question: What are the Legal Requirements for Saudi Arabia’s Procurement System to accede the Agreement on Government Procurement, and the related benefits? To help provide a solution to the issue, the discussion is based on Saudi’s perspective on the information sought in GPA/35 that falls under the following general headings:5 The domestic legal framework regarding government procurement;6 Scope and coverage of the domestic legislation;7 Application of the non-discrimination principles;8 Information on transparency, procedural rules and other relevant aspects of the domestic legislation;9 Information on domestic review procedures regarding supplier challenges;10 Other relevant matters, such as any contact point or website address for further information.11 Moreover, the problem of this study lies on the benefits resulting from Saudi’s accession to the Agreement of Government Procurement (GPA). A key issue includes increased commodities prices as a result of the abolition of government support for the local products. There is also the possibility of dumping the national markets with foreign products at competitive prices, leading to the weakening of national industries. The tariff reduction may lead to a decrease in customs revenue and thus lower economic growth rates. IV-QUESTIONS AND HYPOTHESES OF THE DISSERTATION: 1- What are the potential legal dimensions of Saudi Arabia’s accession to the GPA as a result of multilateral agreements in regard of the trade in goods and services, the convention on intellectual property rights, and the convention against corruption? 2- What are the methods and legal procedures that enhance the gains and mitigate the costs resulting from the Saudi Arabias accession to the GPA? 3- When Saudi Arabia acceded to the Agreement on Government Procurement (GPA), several opportunities and challenges and questions resulted. Is Saudi Arabia ready to accede, what are the weaknesses and strengths, does the Saudi’s Government Procurement Law has a message and vision fit with the strengths and weaknesses that it has? V-Objectives of the Study: The primary goal of the study is analysing the Saudi’s Government Procurement Law, confront its weaknesses and improve it, highlight its strengths, take advantage of opportunities arising from Saudi Arabias accession to the Agreement on Government Procurement, and to develop recommendations that enables the responsible Saudi’s ministries to do their role and eliminate difficulties. Thus, the objectives of the study are summarized as follows: 1. Clarify the Agreement on Government Procurement (GPA), which involves the steps and legal stages required by Saudi Arabia to join the GPA. 2. Identify the potential legal dimensions of Saudi Arabia’s accession to the GPA as a result of multilateral agreements in regard of the trade in goods and services, the convention on intellectual property rights, and the convention against corruption. 3. Identify the methods and legal procedures that enhance the gains and mitigate the costs resulting from the Saudi Arabias accession to the GPA. VI-Research Methodology: At the beginning of each chapter in the dissertation I will write an introduction which includes two parts: 1)-Remind the reader about the problem of the study and the study’s question linked to the new chapter (Research Methodology). 2)-Explain the components of this chapter (a summary of what will be addressed in the chapter). a) Analytical Method: I will adopt this approach to analyze and discuss the legal requirements to accede to the GPA, analyse and study the GPA text requirements, and draw conclusions from this study whether and how far these requirements are already reflected in Saudi’s Government Procurement Law. In addition, I will clarify the Saudi’s government entities such as ministries, departments, and agencies that could usefully and appropriately be brought under the coverage of the GPA. Furthermore, I will follow these certain methods to collect and analyze the data: 1.Reading and Analysis of Documents: I will read the books and legal articles and reports in the field of this dissertation and analysis the information to answer the research questions. 2. Interviews: In order to get accurate information that will make it easier to suggest good recommendations that help to achieve a great benefit from this research, I will interview officials at the World Trade Organization and in Saudi Arabia “especially officials in the Saudi’s Ministry of Commerce and Industry who are responsible for overseeing the Saudi technical team in the government procurement agreement under the World Trade Organization”. 3. Conferences and symposiums: I will attend conferences, seminars, and symposiums held for this purpose at the World Trade Organization, Saudi Arabia, or anywhere else. I will also attend the negotiations that take place between Saudi Arabia and the existing Agreement on Government Procurement’s Parties and learn about the latest developments. b) Comparative Method: I will essentially rely upon this approach in this dissertation to make a comparison between the legal requirements that Saudi Arabia should follow to accede the GPA, and the legal processes followed by the other existing GPA Parties e.g. United States and European Union with regards to the GPA, and the coverage that is provided by those countries. In addition, the UNICTRAL Model will be applied in the research as a model for comparison between its rules and the Government Tenders and Procurement law of Saudi Arabia, which was enacted by the Royal Decree No. M/58 dated 27 September 2006. The law would undoubtedly enrich this study. VII-Conclusion: Government procurement market is one of the largest markets in the world where countries spent billions of dollars annually in order to meet the needs in the various sectors of; health, educational and municipal services, communications, and technology. It is thus not surprising that the subject of government procurement obtains great attention and consideration locally and internationally. Government Contract is an important and most successful method used by the government to achieve its requirements and ensure the regularity of the public utilities. In consideration of the importance of government procurement law, many local and international organizations and conventions consider the importance of government procurement liberalization and its contracting procedures. One of these organizations is the World Trade Organization “WTO” through “The Agreement on Government Procurement”GPA”. The GPA aims at urging only the countries party to the agreement to reconsider their local laws that organize the government procurement that has uncertainty, insufficient clarity, weak transparency, and avoids the participation of the foreign contractors in the markets. Moreover, the Saudi’s consumer will be taking advantage of this accession. The consumers will be benefit from the more available options of goods and services at lower prices and higher quality. Furthermore, it will increase the confidence in the available goods. This is because of limited commercial fraud, counterfeiting and price manipulation, since the local and foreign goods will be subject to strict rules and controls. Read More