After Lula’s criticism, government blocks process to open public purchases to other countries By Reuters

2023-05-31 02:30:22

SAO PAULO (Reuters) – The federal government officially communicated this Tuesday that it withdrew the offer of access, by other countries, to Brazilian government hiring, after President Luiz Inácio Lula da Silva said last week that the country would not cede the government purchases in trade negotiations with Europe.

In a press release on Tuesday night, the Ministry of Foreign Affairs informed that the country communicated to the members of the Government Procurement Agreement (GPA (BVMF)) of the World Trade Organization (WTO) that it withdrew the market access offer presented in the process of joining that agreement.

GPA establishes common rules for the acquisition of goods and services in bidding procedures. In practice, by adhering to the agreement, Brazil would allow the participation of companies from foreign countries in national bids — something that has always been viewed with reservations by the PT governments.

Last Thursday, during an Industry Day event promoted by the Federation of Industries of the State of São Paulo (Fiesp), Lula defended the Mercosur trade agreement with the European Union, but said that Brazil would not cede its government purchases.

Last Monday, after a meeting with the president of Venezuela, Nicolás Maduro, Lula again criticized the possibility of foreign companies participating in bids by the Brazilian government. “I held a meeting with industry and businessmen know that we cannot deliver government purchases,” he stated.

In this Tuesday’s note, the Ministry of Foreign Affairs stated that the terms of the agreement to participate in the GPA “would impose severe limits on the use of the government’s purchasing power as an instrument for inducing the country’s economic and social development, in particular policies public health services and the promotion of technology and innovation”.

In the Lula government’s view, government purchases are an important tool for inducing development, including through the acquisition of products and services from smaller companies.

Brazil had formalized its interest in participating in the GPA in May 2020, during the government of Jair Bolsonaro. In June 2022, the final offer for access to the national public procurement market was presented. This Tuesday’s action withdraws the offer presented by the previous government.

(By Fabrício de Castro)