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How new free trade agreements would
undermine local procurement

All across the country and around the world, local officials are using public procurement programs to benefit local economies. Bidding criteria in those programs help to ensure that local producers, small businesses and minority owned firms can sell their products to public institutions. Whether it's a farm to school program or requirements to use locally produced materials to build wind farms, these programs use taxpayer funds to create jobs and strengthen local economies.

In contrast, the U.S. and EU trade offices, as part of the Transatlantic Trade and Investment Partnership (TTIP), criticize local bidding preferences as "localization barriers to trade." The EU is using TTIP to create rules that would affect procurement rules for all goods on all levels of government, including public hospitals and higher education institutions. Such trade rules could impact transportation, renewable energy and other government programs that preference local sourcing. Banning public programs from favoring contracts with local producers would undermine local economies in both the U.S. and EU.

As a result of strong public pressure, it appears that farm to school programs funded by the USDA have been kept out of any procurement commitments in TPP and TTIP. For now. But provisions in TPP would require negotiations to be reopened, with the goal of binding state and local procurement, within the next three years. TPP's procurement chapter has been criticized as insufficiently clear about whether responsible bidding criteria, such as a requirement that a bidder not have outstanding environmental cleanup obligations, could be challenged as a barrier to trade. Much more information is needed on exactly which sectors are at stake in the TTIP negotiations and whether bidding criteria that include social, environmental and public health goals-such as living wage laws-could be threatened by trade commitments.

Programs like Buy America are criticized in free trade agreements as "barriers to trade" because they give preference to local producers and economies rather than the global supply chains of multinational corporations.

The EU is being asked to give up a lot under TTIP, including its restrictions on GMOs, beef produced with artificial hormones and chlorine rinsed chicken. It's asking for a lot from the U.S. in return by putting local procurement on the TTIP negotiating table. This is a relatively new focus in trade agreements. The EU would like to go beyond what's already been agreed to in the World Trade Organization Government Procurement Agreement (GPA). It wants EU companies to have access to all state-level procurement programs as well as procurement in all counties of over 500,000 people, universities with more than 10,000 students and even hospitals with more than 500 beds. EU firms would be treated the same as local companies, and even preferences for bids by small businesses could be eliminated.

Under potential agreements, it's not clear who would decide if a county hospital or a local school district would need to limit its procurement decisions this way. Some state legislatures are already demanding that governors consult them before agreeing to any such trade commitments are made.

Who Decides on Localization

Who Decides on Localization

Communities across the United States are working to revitalize and transform local economies so that they produce renewable energy and other goods and services on terms that benefit local producers and consumers. In many cases, they are utilizing public procurement programs to support those efforts, especially bidding preferences for healthy locally grown foods or energy or transportation programs that create local jobs and build ties between farmers and consumers.

When the U.S. joined the GPA in 1996, binding its procurement programs to trade rules, the U.S. Trade Representative recruited 37 state governors to sign up for the agreement, with very little pubic consultation on the potential impacts. The resulting controversy led to a strong public reaction. Several states later attempted to withdraw their approval, and six states passed laws requiring such procurement commitments be approved by the state legislature. In the bilateral trade deals that followed, fewer states consented to having their procurement programs bound by the trade rules, with just nineteen agreeing to commitments under CAFTA and eight agreeing to commitments under the U.S.-Colombia FTA, the most recent agreement.

None of those trade deals were as ambitious as the EU procurement agenda in TTIP or what might be included in future negotiations concerning local procurement required by TPP. And the process-who decides if a hospital or a school district should be included, for example-is a mystery.

Values in Public Procurement

Values in Public Procurement

In the U.S., Food Policy Councils are emerging to bring together farmers and gardeners, restaurateurs and wholesalers, food workers and local governments to generate locally focused policies for healthier, more sustainable foods. For example, the Los Angeles Food Policy Council's Good Foods Purchasing Pledge (GFPP) includes criteria on local economies, sustainability, workplace, animal welfare and nutrition. The City of Los Angeles and the Los Angeles Unified School District adopted the GFPP in October 2012. Their programs provide 750,000 meals a day. Similar initiatives are being considered in cities around the country. This holistic approach actively favors local producers who are trying to rebuild their food systems and their communities along lines that are more fair, sustainable and livable. While current trade deals exclude procurement programs funded by the USDA, it's not clear if locally funded programs funded by other agencies would also be included. This kind of program could be at risk if the new trade deal rules that they favor local values over international trade.

1.) Karen Hansen-Kuhn, Local Economies on the Table: TTIP Procurement Update, IATP, November 2014.

2.) See Los Angeles Food Policy Council website,

Background image (top) used under Creative Commons license from Flickr user madlyinlovewithlife.

Background image (center) used under Creative Commons license from StephenCurtin.

IATP Trade Secrets

Trade Secrets is a series on how the United States’ international agreements influence a wide range of policies, laws and corporate activities within our borders—and beyond. From food safety to climate change and from labor to consumer protection, trade has an enormous and often invisible pull on the actions governments take and the choices available to citizens. Trade laws often displace hard-won domestic policies.

This series is a collection of primers on trade agreements and how they shape our daily lives, our workplaces and our governments.

ARC 2020

Trade Secrets is a joint project between
ARC 2020 and
Institute for Agriculture and Trade Policy.

Institute for Agriculture and Trade Policy