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Joining WTO GPA may open market of USD100 mlrd for Ukrainian companies

Kyiv. August 31, 2012

In case Ukraine joins the World Trade Organization (the WTO) Government Procurement Agreement, the GTA opens up for Ukrainian businesses tenders for foreign public procurement, which according to the WTO data amount to USD80-100 mlrd per year, says the Associate of Volkov and Partners Law Firm, Irina Polovets.
She expressed the opinion concerning Head of the Ministry of Economic Development and Trade (the MEDT), Petro Poroshenko’s outgiving on initiative of Ukraine’s accession to the WTO GTA; additionally, Ms. Polovets also emphasized that Ukraine undertook to become an observer, as well as to commence negotiation with the aim to join Government Procurement Agreement, since accession to the WTO in 2008, thus it would be incorrect to state that accession is being initiated just now.
"Besides access to other member’s market, joining the agreement shall lead to decline in corruption, increase in competition, effective and efficient management of public resources, and transparency of government decision making process on the whole. Strengthening openness and transparency, in its turn may favour investments and know-how to the country," stressed the lawyer.
Ms. Polovets also mentioned that the parties to the agreement are mostly economically developed countries; therefore national companies will face tough competition with more technically developed foreign businesses.
"A possible solution is to exclude sensitive sectors from the GPA’s scope or to set transition periods for them to adjust to new environment," considers Iryna Polovets.
According to Markian Malskyy, partner and head of the West Ukrainian Branch in Arzinger, WTO GPA has been signed by all members of the EU, as well as USA, Canada, China and some other.
"The GPA provides for national regime and non-discrimination for supplying states that are Parties to the Agreement, transparency in procurement ensuring competition of products, services, and suppliers, and transparency of information regarding procurement procedures. Disputes involving issues of government procurement will be handled according to the standard procedure, i.е., according to the terms and provisions of the WTO official documents on disputes resolution," explained Malskyy.
He also said that according to Article 5 of the Law "On Government Procurement" Ukraine provides equal participation in tenders for both national and foreign suppliers. However, in reality, at times suppliers from abroad suffer difficulties competing with Ukrainian suppliers resulting from undue access to the procurement information, corruption practices, etc.
Мr. Malskyy pays regard for government’s draft law No. 11100 registered on August 22, offering to add a requirement to have their own facilities and/or service centers within Ukraine as another the bids’ participants’ qualification criteria.
"In other words, foreign suppliers will be able to participate in bids only in case they are physically present in Ukraine. Ukrainian suppliers face the same situation abroad. In fact, joining the WTO GTA serves to solve the issues, as well as to offer effective and efficient way to settle possible disputes," said the lawyer.
Among plausible negative consequences arising from opening of procurement markets Mr. Malskyy named suppliers’ prices increase under certain condition, etc.
Reportedly, on Wednesday, Head of the MEDT, Petro Poroshenko told Ukraine intends to sign the WTO GPA.
According to the Minister, presently, a decree has been approved jointly by both the MEDT and Ministry of Foreign Affairs. It provides for specific actual support of Ukrainian companies in the foreign markets.
"We initiate respective computer and information environment for all bids procedures, which will take place in all countries where Ukraine has its representative offices, and provide national producers with respective bid documents,” he added.

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