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despite increasing liberalization, border measures like tariffs are not insignificant relative to procurement preference margins.  For instance, while the European Union granted a 3 per cent price preference to domestic firms, and the United States a preference of 6 to 12 per cent for non-defence related procurement, industrial countries import-weighted average bound tariffs on industrial products will be around 3.8 per cent even after the Uruguay Round results are implemented (Blackhurst et al., 1995).   

Trade restrictions are far more significant in the case of services than in the case of goods (see Low et al., 1996).  For instance, one of the most important services sectors in the context of government procurement is construction.  All signatories to the GPA have accepted its disciplines in this sector above a certain threshold value.  Yet in the GATS, Members have usually not bound themselves to grant market access to the supply of construction services through the presence of natural persons, except for certain limited categories of intra-corporate transferees.  The lack of assurance that workers can be moved to construction sites is an example of how limitations on market access may reduce the benefit of non-discriminatory government procurement.  The creation of genuine international competition for  procurement contracts thus depends crucially on the liberalization of trade.

IV.Agency problems in procurement

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