Academic journal article Asia Pacific Law Review

Selective Adaptation in Treaty Compliance: The Implications of Japan's Implementation of the World Trade Organization's Agreement on Government Procurement

Academic journal article Asia Pacific Law Review

Selective Adaptation in Treaty Compliance: The Implications of Japan's Implementation of the World Trade Organization's Agreement on Government Procurement

Article excerpt

I. Introduction

As the world's third largest economic power, Japan depends heavily on international trade. Japan is not only a long-time member of the World Trade Organization (WTO), but also a founding member of the WTO's Agreement on Government Procurement (GPA). Based on the economic theory of comparative advantage,1 the goals of the WTO are 'raising standards of living' by promoting free trade through the 'substantial reduction' of trade barriers and the 'elimination of discriminatory treatment'.2 Transparency3 and non-discrimination are identified as the 'core principles' of the WTO and its agreements4 which are intended to achieve these goals. For instance, the WTO's principle of non-discrimination, as featured by the Most Favored Nation clause (MFN)5 and the National Treatment clause,6 'has been conceived to be the GATT-means to liberalise trade'.7

Similar to the GATT and other WTO agreements, the GPA is based on the principles of transparency and national treatment.8 The GPA is aimed at facilitating competition and transparency in government procurement, so that the government can achieve the goal of 'value for money' in its procurement.9 Extensive research has been carried out on the GPA, but this study does not attempt to review this literature in detail.10 As a result of the Uruguay round negotiation, the GPA is the most important plurilateral trade agreement among the developed countries of the WTO. Unlike multilateral trade agreements, such as the GATT and GATS, which are binding on all of the WTO 'members', plurilateral agreements, such as the GPA, are only applicable to the 'parties' to the agreement. A very important feature of the GPA is its binding force. The enforcement of the GPA is, similar as other agreements, facilitated by the WTO's Dispute Settlement Mechanism (DSM). This is a distinctive feature of the GPA that is different from another major international set of procurement rules - The UNCITRAL Model Law on the Procurement of Goods, Construction and Services, which is designed to 'help states reform or develop their national public procurement laws, and also to promote open international markets' while there is no actual obligation created to the states because it is simply a 'recommendation'.11

WTO membership not only provides a huge international market for a member country's industries, but it also serves a country's internal reform agenda, because the WTO membership gives 'extra leverage to force through difficult changes in the domestic economic system'.12 The WTO is widely seen as a way to promote good governance through the spread of its core principles of transparency and rule of law, and the GPA is expected to be an even stronger driving force for the promotion of good governance, for the following reasons: '(The GPA) is consistent with and reinforces the objectives of national reforms aimed at promoting competition, transparency, and enhanced value for money in national procurement regimes. In this regard, the GPA should not be seen solely in terms of facilitating international market access, the agreement can also make an important contribution to good governance'.13

Good governance, as defined by the World Bank, is 'epitomised by predictable, open and enlightened policy-making; a bureaucracy imbued with professional ethos; an executive arm of government accountable for its actions; ... and all behaving under the rule of law'.14 According to Arrowsmith, 'an effective public procurement system has been seen as an important aspect of this good governance'.15

As an active member of the WTO, Japan is known for its strict compliance with WTO multilateral rules and its aggressive use of the WTO's enforcement mechanism, the Dispute Settlement Mechanism (DSM), to defend its trade policies and interests. This is described as 'aggressive legalism'.16 However, Japan's use of 'aggressive legalism' in the arena of international trade is not reflected in its domestic legal system. …

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