September 21, 2011
Participation in the Trans-Pacific Partnership (TPP) free-trade pact will likely require Japan to release its government procurement market to foreign companies, leading to a decline in jobs for domestic small- and medium-sized companies.
Government procurement refers to purchasing of goods and services by national and local governments from private bodies as well as their offering of contracts for public works projects.
On April 12, a month after the major earthquake hit Japan, the House of Councilors Economy and Industry Committee held a meeting and deliberated the TPP’s impact potential on the domestic government procurement market. Nakayama Yoshikatsu, parliamentary secretary of economy and industry, expressed the government’s intention to make available public purchases and orders to foreign capital, including ones related to post-disaster reconstruction.
Japan has already opened part of its market for government procurement to foreign businesses based on agreements of the World Trade Organization (WTO) which it entered into in 1995. The WTO requires member states to treat domestic and foreign companies equally when they buy goods or order public works that amount to more than WTO-set costs. To give priority to domestic firms as means to stimulate the economy is regarded as “discrimination” against foreign businesses.
The set costs under the WTO guidelines are: more than 19 million yen for national government purchases of goods and more than 690 million yen for its order of construction work; more than 30 million yen for local government purchases of goods and more than 2.3 billion yen for their orders for construction work.
Although details of ongoing negotiations in the TPP, which involve nine countries, are kept secret, this multinational free-trade agreement is expected to impose further deregulations on domestic government procurement than the WTO at present requires.
(To be continued)
Government procurement refers to purchasing of goods and services by national and local governments from private bodies as well as their offering of contracts for public works projects.
On April 12, a month after the major earthquake hit Japan, the House of Councilors Economy and Industry Committee held a meeting and deliberated the TPP’s impact potential on the domestic government procurement market. Nakayama Yoshikatsu, parliamentary secretary of economy and industry, expressed the government’s intention to make available public purchases and orders to foreign capital, including ones related to post-disaster reconstruction.
Japan has already opened part of its market for government procurement to foreign businesses based on agreements of the World Trade Organization (WTO) which it entered into in 1995. The WTO requires member states to treat domestic and foreign companies equally when they buy goods or order public works that amount to more than WTO-set costs. To give priority to domestic firms as means to stimulate the economy is regarded as “discrimination” against foreign businesses.
The set costs under the WTO guidelines are: more than 19 million yen for national government purchases of goods and more than 690 million yen for its order of construction work; more than 30 million yen for local government purchases of goods and more than 2.3 billion yen for their orders for construction work.
Although details of ongoing negotiations in the TPP, which involve nine countries, are kept secret, this multinational free-trade agreement is expected to impose further deregulations on domestic government procurement than the WTO at present requires.
(To be continued)
