TWN Info Service on WTO and Trade Issues (May19/10)
17 May 2019
Third World Network

Gender and Trade Coalition – Third World Network

Issue Brief
Why Government Procurement Liberalisation is Contradictory to a
Gender-Just Trade Policy in the South (1)

Trade and investment policies have been growing in depth and coverage worldwide and are legally bound through an increasing number of agreements such as the WTO, the Free Trade Agreements (FTAs), various issue specific plurilateral agreements, and investment agreements. Such trade and investment policies, and liberalisation thereof, has created enormous impacts globally, cutting across economic, social, and environmental spheres. There has also been differential impact across countries, sectors, and constituencies.

The adverse impact of trade liberalisation on women, exacerbated by historically unequal social relations, has long been advanced as an area of concern by feminists and women’s rights groups. But the recent resurgence of discussions on the gender impacts of trade at the WTO, with its overwhelming emphasis on woman entrepreneurs, has focused a lot of attention on two so called ‘new issues’: liberalisation of e-commerce and government procurement (GP). This is premised on the argument that these will be of major benefit to women in general and will provide a major boost to women who engage in trade. However, given the sensitivity of most developing countries to these issues, and the fact that liberalisation of GP was a Singapore Issue (not allowed for negotiations in the WTO Doha Development Round to protect developing country interests), a closer examination of whether GP liberalisation under a multilateral framework such as the WTO will actually be of benefit to women in developing countries is necessary. This brief summarises a set of arguments to show GP liberalisation is not of clear and necessary benefit to women in developing countries; in fact, the opposite may be true.

Government or public procurement (GP) refers to government contracts that involve purchases by government department and agencies of goods and services, including construction and public works. In developing countries, this market is a substantial and lucrative one at 15-30% of the total market. Not surprisingly, this has been a target of trade liberalisation efforts for some time, and chapters on GP are increasingly included in FTAs, especially North-South FTAs. However, since GP is a Singapore Issue, the WTO has a plurilateral agreement called the ‘Government Procurement Agreement’ (GPA) which has only 47 members including the EU Member States.

Many developing countries use the GP markets as a preferential tool to address inequity and development concerns by promoting domestic industries, small and medium sized enterprises (SMEs), cottage industries as well as economically and socially marginalised constituencies such as women, indigenous communities, backward castes and so on. Access to domestic GP markets is clearly a very useful tool for providing market and economic opportunities for women. Many governments, both developed and developing, already practice this, even though implementation levels vary quite a lot across the globe and women still face many barriers in practice, and transparency issues, which need to be addressed.

This is the reason most developing countries have been hesitant to join the GPA or include market access in GP under FTAs (even if they agree to transparency and information sharing), because it can take away vital policy space for development, as they need to specifically negotiate for carve-outs, or else, give full access to companies from other countries. Preferences may even need to be given at par for trade partners (to all SMEs, all women and so on). As such, when GP markets are liberalised, it is much more complex, both because of the opening of markets to foreign and often more powerful companies, and the constraints it places on domestic policy space. The potential impacts on vulnerable constituencies, such as women, is even more significant.

GP Liberalisation and Gender-Just Policy
The following arguments explain why the liberalisation of GP markets, as envisaged under the WTO or seen so far under the GPA, cannot benefit women in developing countries.

  • The current arguments in this discussion tend to assume the same conditions for domestic and global GP markets whereas in reality, they are quite different. Countries (and their women entrepreneurs) participating in the global market are of very different economic strengths, ranging from LDCs to very rich countries. Women in developing countries often cannot access their own markets very easily, so accessing foreign markets is even more difficult and unrealistic, most often due to high and even irrational standards and technical barriers, especially in advanced countries.
  • All women producers do not have the same economic power just because they are women. Triggering competition between a small woman producer in a developing or least developed country and a women entrepreneur based in a developed country is unfair and irrational. Even if reservations were made for women, it can unleash a competition between very unequal players.
  • In fact, liberalisation of GP can threaten the preferential access to domestic markets currently offered by many developing countries for constituencies such as women, indigenous peoples and so on. This is because such preferences have to be separately negotiated for each trade agreement. Even then, this may create an unequal playing field (see point above).
  • In sum, women producers in developing countries may actually end up losing market access even in their domestic GP markets and not gain anything in foreign markets, especially in developed countries. They, therefore, face the risk of being net losers, even with preferential treatment for women.
  • Developing countries have been rejecting GP liberalisation as they are adversely placed in such a competition, and their producers –especially SMEs, where most of their women entrepreneurs are likely to be– are even worse off. SMEs cannot meet the standards and other logistical and non-tariff barriers that global GP markets, especially in developed countries, pose. The same problems will be valid to an even greater extent for women producers in these countries.
  • Importantly, the GP markets in most developed countries are blocked off by a host of non-tariff barriers, due for example to language, laws, citizenship etc. Even GPA members can hardly access each other’s markets. For example, of the 2088 billion Euro GP market in the EU, only 309 billion or 3.5-4.2% (2007) is accessible to non-EU suppliers, of which the US claims the largest chunk, leaving very little for all non-US non-EU countries, even GPA members. Similarly, only 5% of Japan’s GP market is catered by foreign countries. Given this reality, the idea that small women entrepreneurs in developing countries could access GP markets in rich countries, even with preferences, is a myth.
  • The economic empowerment of women in developing and LDCs cannot be achieved if it is disconnected from their broader national development context. The WTO is attempting to replace special and differential treatment for developing countries with horizontal preferences for groups such as women and SMEs. Women cannot benefit or get empowered by trade policy if their countries cannot pursue development objectives related to food security or public health, for example, due to trade liberalisation commitments under the FTAs or WTO. The current approach in the WTO first needs to be examined in terms of being able to benefit women’s general economic and social conditions. Women’s empowerment needs to go hand in hand with the broad economic and social development objectives of their countries and not get usurped into replacing these objectives. Moreover, this cannot be achieved through artificially constructed gender chapters or carve-outs.
  • Most of the ideas circulating in the WTO, though so far not very concrete, talk about increasing access for women in global GP markets by promoting GP liberalisation, possibly through a multilateral agreement under the WTO on GP or by promoting the GPA in addition to GP liberalisation through the FTAs. However, the GPA does not yet provide special access for women. But some of these ideas seem to hint towards special treatment for women to be protected or given a waiver from the provisions. If they need a waiver or protection from the agreement, then the rationale to broaden such agreements in the name of women is not plausible.
  • New instruments like GP liberalisation are clearly constraining the policy space in much deeper ways than traditional liberalisation. They have direct impacts on developing country governments’ ability to pursue domestically suited development policy objectives to, for example, conserve natural resources, protect public health objectives, and pursue necessary regulations including to protect women’s welfare. While much remains to be done in developing countries towards achieving women’s economic empowerment and rights, liberalisation of government procurement poses new regulatory and economic challenges to their women and men, especially small scale, producers.

In sum, a gender argument is being used to push presumably for a multilateral liberalisation of GP markets, which is a ‘new issue’ and is not mandated for negotiations at the WTO. However, the arguments for women’s access to domestic markets do not automatically extend to a global GP market and therefore does not rationalise the case for GP liberalisation. When even the benefit for other players in developing and least developed countries is not established, it is unlikely this liberalisation will work for women who suffer from unequal access to economic, social, and political resources. Even with preferential treatment, the reality does not favour women players in poorer countries and may even make them worse off.

As such, while preferences for women in domestic GP market is a clear and desirable development policy objective, the same is not true of liberalisation of GP markets, so a clear analytical distinction must be made between the two. Obscuring this distinction will work against women, especially in the developing south. At the same time, governments in developing countries need to engage more with women’s groups to analyse and implement policy reforms to secure more access for women in domestic GP markets

(1) Prepared by Ranja Sengupta, Third World Network, member of the Gender and Trade Coalition.