ITU-WTO WORKSHOP ON TELECOM

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• ITU-WTO WORKSHOP ON TELECOM ICT REGULATION
• AGREEMENT ON GOVERNMENT PROCUREMENT (GPA)
• Roger Kampf
• WTO Secretariat
• Geneva, 2 December 2004

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• 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

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

• 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

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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 III8 and XVII2
• - Services (1994) GATS Article XIII1
• 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 XIII2 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. XIII1), except for
  financial services for members having adhered to
  the Understanding on Commitments in Financial
  Services (cf Section B.2.)
• Mandate in GATS Art. XIII2 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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• 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 XXIV6(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 (contd)
• 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 ?