Think global, spend local: Public deals shielded amid pandemic
Skip to main content
  • Home
  • Economy
  • Stocks
  • Analysis
  • World+Biz
  • Sports
  • Splash
  • Features
  • Videos
  • Long Read
  • Games
  • Epaper
  • More
    • COVID-19
    • Bangladesh
    • Infograph
    • Interviews
    • Offbeat
    • Thoughts
    • Podcast
    • Quiz
    • Tech
    • Subscribe
    • Archive
    • Trial By Trivia
    • Magazine
    • Supplement
  • বাংলা
The Business Standard
WEDNESDAY, MAY 25, 2022
WEDNESDAY, MAY 25, 2022
  • Home
  • Economy
  • Stocks
  • Analysis
  • World+Biz
  • Sports
  • Splash
  • Features
  • Videos
  • Long Read
  • Games
  • Epaper
  • More
    • COVID-19
    • Bangladesh
    • Infograph
    • Interviews
    • Offbeat
    • Thoughts
    • Podcast
    • Quiz
    • Tech
    • Subscribe
    • Archive
    • Trial By Trivia
    • Magazine
    • Supplement
  • বাংলা
Think global, spend local: Public deals shielded amid pandemic

Analysis

Reuters
04 August, 2021, 02:25 pm
Last modified: 04 August, 2021, 02:29 pm

Related News

  • US economy is doomed without stronger consumer spending
  • Industrial CEOs are still in the mood to spend
  • Millennials are finally spending like grownups
  • Now time to spend more and get same yield
  • Bidenomics risks inflation push with spend-now, pay-later draft

Think global, spend local: Public deals shielded amid pandemic

As governments and local authorities look to spend trillions on post-pandemic recoveries - and as western suspicion of China grows - many are taking an even more protectionist stance to ensure the funds are spent locally to create or protect jobs

Reuters
04 August, 2021, 02:25 pm
Last modified: 04 August, 2021, 02:29 pm
Illustration: TBS
Illustration: TBS

Governments and local authorities around the world have for decades put domestic companies first in the massive public procurement decisions they make with taxpayer money.

But as they look to spend trillions on post-pandemic recoveries - and as western suspicion of China grows - many are taking an even more protectionist stance to ensure the funds are spent locally to create or protect jobs.

Here are the main developments and some of the implications.

WHAT ARE THE RULES?

The World Trade Organization's 164 members commit to provide trade on the same terms with other partners and treat imported and locally produced goods equally, but are largely left to their own devices on public procurement.

Although some legal challenges have questioned the role of state-owned firms, this means national, regional and local authorities can effectively set their own terms.

SO THESE MARKETS ARE CLOSED?

Not quite. 48 WTO members, mostly developed countries and not including China, are signatories to the Agreement on General Procurement (GPA), hatched in 1994 and revised in 2012.

This provides a partial liberalisation, with its backers filing "coverage schedules" that spell out what levels of government will open up and to what extent.

In the case of the United States, its schedule only covers 37 states, a third of which exclude purchases of construction steel, vehicles and coal, while at the federal level, there are extensive carve-outs of Department of Defense purchases, as well as for aeronautics and mass transit.

Beijing has submitted offers to join, but the current members have not deemed them sufficient to let China in.

HOW BIG IS THE MARKET GLOBALLY?

Public procurement accounts for 15-20% of global gross domestic product and GPA commitments represent around 1.3 trillion euros ($1.54 trillion) in business opportunities, according to European Commission data.

'BUY AMERICAN'?

The United States passed the Buy American Act in 1933, setting a preference for US products in federal procurements, spurring demand for US-made construction materials used in the massive New Deal public works spending.

Buy American provisions have since seeped into state and local procurement laws.

The act was excluded from the GPA, although automatic waivers are supposed to apply for suppliers from GPA partners for procurement covered by the agreement. There are also exemptions, such as if the product is not sufficiently available domestically or the cost unreasonable.

US President Joe Biden, days after entering office, signed an executive order aimed at closing loopholes in provisions, which apply to about a third of the $600 billion in goods and services federal government buys per year. read more

Biden's order also calls for increases in the minimum US content for manufactured goods bought with taxpayer dollars under "Buy American" laws. Both the European Union and Canada have raised concerns. read more

WHAT OF CHINA'S POSITION?

Three US-based sources told Reuters that Beijing quietly issued new procurement guidelines in May that require up to 100% local content on hundreds of items including X-ray machines and magnetic resonance imaging equipment. read more

So-called Document 551 was issued to state buyers by the Chinese Ministry of Finance and the Ministry of Industry and Information Technology (MIIT) but not released publicly, a former US government official said.

MIIT did not respond to queries about it.

The guidelines affect a wide range of goods, including medical devices, which Beijing agreed to buy more of under the terms of the Phase 1 trade deal. For example, magnetic resonance imaging equipment, a key US export in the past, would face a 100% local content requirement, the ex-official said.

IS EUROPE GETTING TOUGHER?

For years, the European Union has had a more open policy on public procurement. Free trading nations such as the Netherlands and the Nordics countries insist this is the best way to ensure value for money for taxpayers. But the tide has shifted as China, the chief beneficiary, is viewed more suspiciously.

The result is the International Procurement Instrument, a set of measures designed to promote reciprocity that was blocked for nine years by some EU countries, but which is now likely to be passed by the end of 2021.

Under the proposal, the European Commission, which oversees EU trade policy, would investigate cases of discrimination against EU companies in third countries and seek, through discussions, to remedy them.

If none is found, the EU could apply a penalty to companies from that country, such as adding as much as 20% to the price of the bid during the selection process.

This would give bids from the EU or non-targeted countries an advantage. In some cases, the EU could even exclude bids from particular countries.

Top News / World+Biz / Global Economy

Public deals / Spending / domestic companies / Public Procurement

Comments

While most comments will be posted if they are on-topic and not abusive, moderation decisions are subjective. Published comments are readers’ own views and The Business Standard does not endorse any of the readers’ comments.

Top Stories

  • Photo: Collected
    Bangladesh among top 20 prospective solar farm capacity nations
  • Bangladesh Bank to sit with ABB, BAFEDA Thursday
    Bangladesh Bank to sit with ABB, BAFEDA Thursday
  • A man counts Pakistani banknotes along a roadside in Islamabad, Pakistan, November 16, 2017. REUTERS/Faisal Mahmood
    Pakistani rupee nosedives against US dollar as political crisis deepens

MOST VIEWED

  • Model of petrol pump is seen in front of Ukraine and Russian flag colors in this illustration taken March 25, 2022. REUTERS/Dado Ruvic/Illustration/File Photo
    Russian oil's Achilles' heel: Insurance
  • U.S. one dollar banknotes are seen in this illustration taken February 8, 2021. REUTERS/Dado Ruvic/Illustration/File Photo/File Photo
    As US economy's exceptionalism fades, so does the dollar
  • Underlying problems such as school dropouts need to be addressed first before taking a legal route to stop child labour. Photo: Reuters
    ‘Child labour in a country like Bangladesh is primarily a development issue, not so much of enforcement’
  • FILE PHOTO: U.S. President Joe Biden and South Korean President Yoon Suk-yeol arrive for a state dinner at the National Museum of Korea, in Seoul, South Korea, May 21, 2022. Lee Jin-man/Pool via REUTERS
    S Korea uses Biden summit as springboard for global agenda as China looms
  • Gautam Adani, right, talking with Neeta Ambani, the wife of his rival Mukesh Ambani.Photographer: PRAKASH SINGH/AFP
    India’s billionaire race sees one tycoon pulling away
  • US President Joe Biden meets with Chinese President Xi Jinping during a virtual summit from the Roosevelt Room of the White House in Washington on Nov. 15, 2021. MANDEL NGAN/AFP VIA GETTY IMAGES/Foreign Policy
    Is Biden missing a chance to engage China?

Related News

  • US economy is doomed without stronger consumer spending
  • Industrial CEOs are still in the mood to spend
  • Millennials are finally spending like grownups
  • Now time to spend more and get same yield
  • Bidenomics risks inflation push with spend-now, pay-later draft

Features

Psycure has received various awards for their extraordinary contributions to promoting Sustainable Development Goals. Photo: Courtesy

Psycure: Meet the organisation serving the underserved university students (and beyond) with mental healthcare 

11h | Panorama
Underlying problems such as school dropouts need to be addressed first before taking a legal route to stop child labour. Photo: Reuters

‘Child labour in a country like Bangladesh is primarily a development issue, not so much of enforcement’

13h | Panorama
The balcony railings of the Boro Sardar Bari in Sonargaon. Made of cast iron, these railings feature vertical posts with intricate designs on top. Photo: Noor-A-Alam

The evolution of railing and grille designs

1d | Habitat
A Russian army service member fires a howitzer during drills at the Kuzminsky range in the southern Rostov region, Russia January 26, 2022. REUTERS/Sergey Pivovarov/File Photo

3 months of Ukraine war : Miscalculations, resistance and redirected focus

1d | Analysis

More Videos from TBS

Where the people have more weapons than military

Where the people have more weapons than military

36m | Videos
Govt plans to amnesty in the offing to bring back laundered money to meet dollar crises

Govt plans to amnesty in the offing to bring back laundered money to meet dollar crises

3h | Videos
Poet Nazrul Islam’s 123rd birth anniversary observed

Poet Nazrul Islam’s 123rd birth anniversary observed

3h | Videos
Soaring commodity prices put pressure on budget

Soaring commodity prices put pressure on budget

7h | Videos

Most Read

1
Tk100 for bike, Tk2,400 for bus to cross Padma Bridge
Bangladesh

Tk100 for bike, Tk2,400 for bus to cross Padma Bridge

2
Bangladesh at risk of losing ownership of Banglar Samriddhi
Bangladesh

Bangladesh at risk of losing ownership of Banglar Samriddhi

3
BSEC launches probe against Abul Khayer Hero and allies
Stocks

BSEC launches probe against Abul Khayer Hero and allies

4
Photo: Courtesy
Panorama

Misfit Technologies: A Singaporean startup rooted firmly in Bangladesh

5
Illustration: TBS
Banking

Let taka slide

6
Photo: Collected
Industry

Spanish recycled cotton producer opens new facility in Bangladesh

The Business Standard
Top
  • Home
  • Entertainment
  • Sports
  • About Us
  • Bangladesh
  • International
  • Privacy Policy
  • Comment Policy
  • Contact Us
  • Economy
  • Sitemap
  • RSS

Contact Us

The Business Standard

Main Office -4/A, Eskaton Garden, Dhaka- 1000

Phone: +8801847 416158 - 59

Send Opinion articles to - oped.tbs@gmail.com

For advertisement- sales@tbsnews.net

Copyright © 2022 THE BUSINESS STANDARD All rights reserved. Technical Partner: RSI Lab