The means and mechanisms through which official government agencies purchase goods and services. Government procurement policies and practices may be considered to be non-tariff barriers to trade, involving the discriminatory purchase by official government agencies of goods and services from domestic suppliers, despite their higher prices or inferior quality as compared with competitive goods that could be imported.
The United States pressed for an international agreement during the Tokyo Round (of the General Agreement on Tariffs and Trade, GATT) to ensure that government purchase of goods entering into international trade should be based on specific published regulations that prescribe open procedures for submitting bids, as had been the traditional practice in the United States. Most governments had traditionally awarded such contracts on the basis of bids solicited from selected domestic suppliers, or through private negotiations with suppliers that involved little, if any, competition. Other countries, including the United States, gave domestic suppliers a specified preferential margin, as compared with foreign suppliers. The Government Procurement Code negotiated during the Tokyo Round sought to reduce, if not eliminate, the “Buy National” bias underlying such practices by improving transparency and equity in national procurement practices and by ensuring effective recourse to dispute settlement procedures. The Code became effective Jan. l, 1981.
See General Agreement on Tariffs and Trade; Tokyo Round, World Trade Organization (WTO).