The Plurilateral Agreements of Annex 4

The limits of that exclusion were fixed against India. In India: Certain Measures Relating to Solar Cells and Solar Modules, WT/DS456/AB/R, adopted 14 October 2016, Facts. The National Solar Mission required developers selling power to government agencies to use Indian-made cells and modules, and the United States complained. Held. the requirement breached Article III:4 of GATT and Article 2.1 of the TRIMs Agreement, and the Article III:8(a) defence failed because the product discriminated against, cells and modules, was not the product procured, which was electricity. India lost. Why it matters here: the procurement freedom is real but narrow, and it protects only discrimination in respect of the very product the government is buying.

The Agreement on Trade in Civil Aircraft

It eliminates customs duties on civil aircraft, engines, parts and components and on flight simulators, and disciplines government support and procurement pressure in the sector. India is not a party.

Its practical importance to this paper is small but its existence is examinable, because a question on Annex 4 that names only government procurement is incomplete.

A worked example

A State government in India invites tenders for hospital equipment and reserves the contract to Indian suppliers. Ask whether any WTO obligation is engaged. The answer runs through three provisions and ends in Annex 4.

Article III:4 of GATT requires imported products to be given treatment no less favourable than like domestic products in respect of laws and regulations affecting internal sale and purchase. On its face the reservation offends it.

But Article III:8(a) excludes laws, regulations or requirements governing the procurement by governmental agencies of products purchased for governmental purposes and not with a view to commercial resale. Hospital equipment bought for a State hospital is squarely inside that derogation, so Article III does not apply.

Article XIII of GATS does the same for services: the most favoured nation, market access and national treatment obligations do not apply to laws, regulations or requirements governing procurement by governmental agencies of services purchased for governmental purposes.

So multilateral WTO law leaves government procurement almost entirely alone. That is not an oversight. It is the reason the discipline was put in Annex 4 as the Agreement on Government Procurement, which binds only its parties, sets thresholds above which covered entities must tender openly, and requires national treatment for the goods, services and suppliers of other parties.

India is not a party. It has been an observer since 2010 and has not acceded, because accession would open its central and State procurement, including public sector purchasing used as an instrument of industrial and social policy, to foreign suppliers.

Article II:3 of the Marrakesh Agreement states the rule: the Annex 4 agreements do not create either obligations or rights for members that have not accepted them. That single sentence is why the reservation stands.

What this does NOT mean

It does not mean plurilateral agreements outside Annex 4 are the same thing. The Information Technology Agreement is not an Annex 4 agreement at all: it is a set of tariff concessions made by a group of members and incorporated into their own GATT Schedules, so its benefits flow to every member by Article I. The Reference Paper on Services Domestic Regulation agreed by sixty seven participants in December 2021 works in a similar way, through additional commitments in their GATS Schedules under Article XVIII. Annex 4 is a container inside the treaty; those are commitments inside members' own schedules.

And it does not mean Annex 4 can grow easily. Article X:9 requires consensus of the whole membership to add an agreement, so members who would not accept an obligation can still refuse to let others take it on inside the organisation. Attempts to bring investment facilitation into Annex 4 have foundered on exactly that.

Quick revision

• Annex 4, the Plurilateral Trade Agreements, part of the Marrakesh Agreement only for members that accept them; Article II:3, no obligations and no rights for the rest.
• Four originally: Government Procurement, Civil Aircraft, International Dairy and International Bovine Meat; the last two terminated at the end of 1997.
• Addition or deletion is by the Ministerial Conference exclusively by consensus, Article X:9.
• GPA: national treatment and procedural disciplines in covered procurement, coverage fixed by each party's schedule of entities, goods, services and thresholds; revised text in force 6 April 2014.
• India is an observer, not a party, so the Public Procurement (Preference to Make in India) Order 2017 is lawful.
• The GATT counterpart is Article III:8(a), whose narrow limit was fixed in India: Solar Cells: the excluded discrimination must concern the product actually procured.
• The Information Technology Agreement and the 2021 Reference Paper are NOT Annex 4 agreements; they operate through members' own Schedules.

Test yourself

1. What is a Plurilateral Trade Agreement and how does it differ from a Multilateral Trade Agreement? A Plurilateral Trade Agreement is one of the agreements contained in Annex 4 to the Marrakesh Agreement. By Article II:3 such an agreement is part of the Marrakesh Agreement for those members that have accepted it and is binding on those members, and it creates neither obligations nor rights for members that have not accepted it. A Multilateral Trade Agreement, contained in Annexes 1, 2 or 3, is by Article II:2 an integral part of the Marrakesh Agreement binding on all members without exception, which is the single undertaking. The practical difference is that a member may join the WTO while declining the Annex 4 agreements, as India has declined the Agreement on Government Procurement, but may not join while declining GATT 1994, the GATS, TRIPS or the DSU. Annex 4 may be added to or subtracted from only by a decision of the Ministerial Conference taken exclusively by consensus under Article X:9, which is how the International Dairy Agreement and the International Bovine Meat Agreement were terminated at the end of 1997.

2. Explain India's position on government procurement under WTO law. India is not a party to the Agreement on Government Procurement and has been an observer to it since 2010, so by Article II:3 of the Marrakesh Agreement that Agreement creates neither obligations nor rights for India. India is therefore free of the national treatment and procedural disciplines the GPA imposes on covered procurement, and its policy of preferring domestic suppliers in public purchasing, expressed in the Public Procurement (Preference to Make in India) Order 2017, is lawful. The same result is supported on the GATT side by Article III:8(a), which excludes from national treatment the laws, regulations and requirements governing procurement by governmental agencies of products purchased for governmental purposes and not with a view to commercial resale. But the exclusion is narrower than it looks, and India discovered its limits in India: Certain Measures Relating to Solar Cells and Solar Modules, adopted 14 October 2016, where the domestic content requirement imposed on developers selling electricity to government agencies failed because the product discriminated against, solar cells and modules, was not the product being procured, which was electricity.

3. Are the Information Technology Agreement and similar arrangements plurilateral agreements in the Annex 4 sense? No, and the distinction is worth stating carefully because the word plurilateral is used loosely. The Information Technology Agreement is a declaration by a group of members to eliminate tariffs on listed products, and it takes legal effect through the modification of each participant's own Schedule of concessions under GATT. Because a Schedule commitment is subject to Article I, the resulting zero duties are extended to every member of the WTO, participant or not. The Reference Paper on Services Domestic Regulation, agreed by sixty seven participants in December 2021, works in the same way through additional commitments in their GATS Schedules under Article XVIII. An Annex 4 agreement is different in kind: it is a separate legal instrument contained in the Marrakesh Agreement itself, binding only its own parties, and expressly incapable of conferring rights on non-parties. So an ITA-style arrangement is plurilateral in negotiation and multilateral in effect, while an Annex 4 agreement is plurilateral in both.