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ITU-WTO WORKSHOP ON TELECOM & ICT REGULATION

AGREEMENT ON GOVERNMENT PROCUREMENT (GPA)

Roger KampfWTO Secretariat

Geneva, 2 December 2004

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I. Government Procurement in General

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What Is “Government Procurement” ?

• Key elements (c.f. the definitions in Arts. III.8 and XVII of the GATT 1947 and Art. XIII.1 of the GATS):– Procurement– By governmental agencies – Of products or services– For governmental purposes (and not with a

view to commercial resale or use in the production of goods for commercial sale)

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GP and General Policies

Competition

– Maximization of competition

– Advantages:

• Better quality

• Lower prices

• Efficiency of public expenditure

Preferential policies

– Reduction of competition

– Direct assistance to certain domestic enterprises/industries

– Types : Price preference margins, offsets, set-asides

• Good governance, optimal use of resources, domestic policy issues• Transparency, fair and equitable procedures• International trade aspects• In general, two major principles in conflict:

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II. Overview of WTO Work in the field of Government Procurement

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Government Procurement and the Multilateral Trading System

• Government procurement historically excluded from key principles of multilateral trade agreements:

- Goods (1947) : GATT Articles III:8 and XVII:2

- Services (1994) : GATS Article XIII:1

• But growing awareness of (i) need to have sound national procurement systems in place, and (ii) trade restrictive effects of discriminatory procurement policies (such as preferences, offsets, set-asides)

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WTO Work on Government Procurement

GOVERNMENT PROCUREMENT

AGREEMENT

WORKING GROUP ON TRANSPARENCY IN

GOVERNMENT PROCUREMENT

GENERAL AGREEMENT ON

TRADE IN SERVICES

Work • existing agreement• ongoing review• negotiations on coverage and non-discriminatory treatment

studiesand elaboration of elements

for inclusion in an agreement

No negotiations under way

Negotiations based on Article XIII:2 of GATS

Participation plurilateral multilateral multilateral

Principles transparency andnon-discrimination

transparency only(market access excluded)

transparency and possiblynon-discrimination

Coverage goods, services and construction services

Goods and possibly services limited to services

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III. Plurilateral Agreement on Government Procurement (“GPA”)

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Nature and Membership

• Plurilateral - not all WTO Members bound• 13 Members (counting EC with its 25 member

States as one member)– All traditional developed countries except

Australia and New Zealand– PLUS Israel; Hong Kong, China; Korea;

Singapore• Countries acceding to the WTO

– Regularly requested to seek accession to GPA as condition of accession to WTO

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Structure

• Text of Agreement : Article I - XXIV• Appendix I

– Entities (Annexes 1 - 3)– Services, construction services (Annexes 4-5)– General Notes

• Appendix II to IV : Publications for – Intended Procurement/Post-award Notices– Permanent List of Qualified Suppliers in

case of Selective Tendering Procedures– Laws, regulations etc.

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Main Principles

• National Treatment / treatment no less favourable than that accorded to any other Party

• Basic transparency obligations (publication of laws, regulations, etc)

• Provisions to ensure fair and transparent procedures• Exceptions

– General exceptions (Article XXIII)– Derogations from Article III (General Notes)– Developing countries (Article V)– Offsets (Article XVI)

• Special and Differential Treatment

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Enforcement: Key Features

• Core principles for mandatory domestic bid challenge system:– non-discriminatory, timely, transparent and

effective procedures– review body– interim measures– Corrections

• Application of WTO Dispute Settlement, supplemented by some specific rules due to plurilateral nature of GPA

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Ongoing Work

• Negotiations under way since 1997– Revision of the text to introduce

improvements (simplify it and facilitate the accession of new members)

• Negotiations commencing in 2004– Extension of coverage among all Parties on

the basis of mutual reciprocity – Eliminating any remaining discriminatory

measures and practices

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IV. Transparency in Government Procurement

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Mandates

Singapore 1996, para. 21 Doha 2001, para. 26

Study Reference to negotiations

Development of elements for inclusion in a future agreement

Decision on modalities of negotiation at 5th Min. Conf.

No reference to the development dimension

Priority to development, technical assistance, capacity-building

No previous studies Basis: progress achieved in the Working Group

Limited to transparency? Limited to transparency!

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Post Cancún: “July 2004 Package”

• No substantive results at MC in Cancún• Three options for Singapore issues:

– Negotiations,– Studies, or– Cessation of work

• Option selected: transparency in government procurement (and competition and investment) no longer forms part of the Doha Work Programme. Consequently, no work towards negotiations within the WTO during the Doha Round.

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V. Government Procurement

and the GATS

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GATS Negotiations: Basic Elements

• Basic transparency obligation in GATS Art. III applies

• No market access or non-discrimination obligations (cf. GATS Art. XIII:1), except for financial services for members having adhered to the Understanding on Commitments in Financial Services (cf Section B.2.)

• Mandate in GATS Art. XIII:2 to hold multilateral negotiations

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GATS Negotiations: State of Play

• Dealt with by Working Party on GATS Rules established by the Council for Trade in Services

• Interlinked with other topics (i.e. emergency safeguards and subsidies) covered by WPGR

• Scope of the mandate (coverage of market access ?)

• Potential overlap with WG on Transparency no longer exists

• Several proposals made to define modalities how to cover GP in GATS schedules

• Limited Progress to date

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VI. Telecommunications and the

Plurilateral GPA

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Coverage of Telecom Operators (1)

• Only few GPA members cover telecom operators:– Nippon Telegraph and Telephone Co (not for

procurement of public electrical telecom equipment and of services related to operational safety of telecommunications)

– Korea Telecom (except purchases of common telecom commodity products and telecom network equipment)

– Bezek (Israel): limited to US goods and services, but willing to negotiate opening of telecom sector with other GPA members on reciprocal basis

• Example of broader coverage under bilateral agreements: EU-Switzerland

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Coverage of Telecom Operators (2)

• Withdrawal of NTT and Korea Telecom from GPA proposed, but pending because of objection by other GPA members

• Basic question = definition of “effective elimination of government control or influence” in Article XXIV:6(b) GPA:– ownership– legal status– exposure to effective de jure/de facto competition ?

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Coverage of Telecommunications Services (1)

• Legal basis: Appendix I, Annex 4 of the GPA• Details of coverage:

– Canada: electronic/voice mail, on-line information and data base retrieval, electronic data interchange, fax services

– EC, Iceland, Liechtenstein, Norway, Switzerland : telecommunication services, except voice telephony, telex, radiotelephony, paging and satellite services

– Hong Kong, China: value-added telecom services, basic telecom services, telecom-related services. But: subject to exclusive license

– Japan: limited to electronic/voice mail, on-line information and data base retrieval, electronic data interchange, fax services, code and protocol conversion, on-line information and/or data processing

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Coverage of Telecommunications Services (2)

• Details of coverage (cont’d):

– Korea: limited to on-line information and data base retrieval, electronic data interchange, fax services

– Singapore: limited to electronic/voice mail, on-line information and data base retrieval, electronic data interchange

– US (only country following negative list approach): enhanced (value-added) telecommunications services

• No specific comments undertaken by:

– Israel

– Netherlands for Aruba

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Exceptions in General Notes

• Canada: non-application to EU• EC, Iceland, Liechtenstein, Norway, Switzerland: application on

reciprocal basis only; exclusion of contracts awarded by covered central and sub-central entities in connection with activities in the field of telecommunications

• Hong Kong, China: commitments on telecommunications services subject to terms of licence held by Hong Kong Telecommunications International Ltd until 30 September 2006 for certain exclusive services

• Japan: non-application to Canada for procurement by sub-central and other entities

• Korea: non-application to Canada for procurement by sub-central and other entities; reciprocal coverage of telecom services

• US: reciprocal coverage of telecom services

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Thresholds Applying to Procurement of Goods and Services (Except Construction Services)

• Central entities: 130.000 SDR• Sub-central entities: 200.000 SDR, except for:

– Israel (250.000 SDR)– Canada and US (355.000 SDR)

• Other entities: 400.000 SDR, except for:– Canada, Israel (355.000 SDR)– Japan (130.000 SDR)– Korea (450.000 SDR)

• Possibility to apply discriminatory sanctions for procurement below thresholds – example: in 1993, US bars EU suppliers from bidding for contracts concerning purchase of telecom equipment below thresholds, EU applies counter-sanctions

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Summary Overview: Coverage of telecommunications under the GPA

• Purchase by entities listed in Appendix I, Annexes 1 to 3 (central, sub-central and other entities)

• Of telecom equipment and telecom services, to the extent listed in Annex 4 (services) and not otherwise excluded

• Subject to the application of reciprocity / exclusive licensing / non-application clauses contained in Notes to Annexes and General Notes

• Above thresholds fixed individually by each GPA member

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Link between GPA and GATS

• Basis: broad coverage of telecommunication services under GPA

• Reality: access to government markets often limited because of general restrictions applying to the supply of services maintained under GATS

• Reflected explicitly in certain GPA members’ notes to Annex 4 or in their General Notes

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Negotiations on Coverageand Discriminatory Measures

• Handling of pending notifications proposing withdrawal of telecom operators ?

• Inclusion of new entities ?

• Extension of coverage in relation to telecommunication services ?