America’s trading partners have walls keeping out U.S. businesses, while the U.S. government has an open door for foreign businesses.
American businesses can run up against these walls when trying to sell goods and services to foreign governments, which often prevent businesses from outside their own countries from taking part in government contracts, according to a new report from the Government Accountability Office.
By contrast, the U.S. government is far more open to allowing foreign businesses to receive government contracts, the GAO report said.
The U.S. government has opened about $837 billion in procurement contracts to foreign competition, more than twice the $381 billion reported by the next five largest signatories to a World Trade Organization agreement intended to open government contracts to foreign bidders. Those are the European Union, Japan, South Korea, Norway and Canada.
The size of the imbalance is even more remarkable because the total government procurement of those five is 32% larger than that of the U.S., according to the report.
Government procurement is a major market for international business, amounting to $4.4 trillion annually. The U.S. participates with 57 other countries in trade agreements that allow foreign firms to compete for government business.
The agreements are supposed to ensure fair and open competition on a reciprocal basis—but in practice have resulted in a strikingly unbalanced arrangement in which the U.S. government is far more open to doing business with foreign companies than foreign government are willing to do business with U.S. companies.
The GAO undertook the study at the request of the Office of the U.S. Trade Representative, which monitors U.S. trade under the WTO. Officials from the U.S.T.R. say that “government procurement markets are often closed to foreign competition,” according to the report.
The report also noted that flaws in the statistical reporting practices of governments make comparisons difficult and limit transparency—even though both are goals of many trade agreements. The U.S. government’s practices, for instance, create a six-year delay in reporting U.S. government procurement, which means the data in the GAO report is six years old.
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