Obama: China must reform purchasing

18 November 2011

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21 November 2011 | Adam Leach

US President Barack Obama has said China must reform public procurement in order to join the Trans Pacific Partnership (TPP).

He made the statement during a press conference in Australia with Prime Minister Julia Gillard as he discussed the trade agreement. The TPP will formalise trade and intellectual property policies between the US, Vietnam, Australia and other pacific states in order to stimulate trade between the countries.

Obama was asked whether fear over China’s growing economic power – particularly in the region where a number of other states have joined - had meant that it was be excluded from the agreement. Obama said they could join so long as they played by the same rules on issues such as public procurement and intellectual property. “What we have said is the future of this region depends on robust trade and commerce and the only way we're going to grow that trade is if we have a high-standards trade agreement where everybody is playing by the same rules.”

He added that success of the policy relied on there being “certain rules that we [parties to the TPP] abide by in terms of intellectual property rights protection or how we deal with government procurement”.

China’s regulations on public procurement, in particular its indigenous innovation policies, which give domestic and state-owned businesses preferential treatment, have long been a point of contention for the US. In June, China announced it would ditch three of the regulations, making it possible for government departments to award contracts irrespective of the supplier’s country of origin. 

However, according to a report by the US-China Economic and Security Review Commission, published last week, the changes are yet to have an impact. The report said: “Even when China makes a commitment to economic reform, the government reverts to its historical pattern of inadequate implementation.” It concluded: “Real change remains elusive, particularly among the provincial and local governments.”

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