Think globally,buy locally: International agreements and government procurement

Do international treaties constrain national governments? The answer appears to be “yes” when it comes to the use of traditional barriers to trade, such as tariffs. Yet, while many governments have cut tariffs to comply with international agreements, they have often raised non-tariff barriers in their place. One increasingly prominent non-tariff barrier is discrimination in public procurement. Governments frequently discriminate against foreign suppliers in favor of domestic ones when buying goods and services. In an attempt to reduce procurement discrimination, international organizations, such as the World Trade Organization, have devoted ever more attention to members’ procurement practices. Additionally, a growing number of preferential trade agreements seek to regulate public procurement. It remains unclear, however, whether international rules are effective in changing governments’ purchasing behavior. Using original data, we find that neither multilateral nor preferential procurement agreements substantially reduce governments’ propensity to “buy national.” These results illustrate the difficulty of regulating non-transparent policy areas via international treaties.