Regional Trade Agreements and EU Trade Policy CETA and Public Procurement

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Regional Trade Agreements and EU Trade
PolicyCETA and Public Procurement

• Prof. Dr. Marc Bungenberg, LL.M.
• University of Siegen / visiting Professor
  University of Lausanne

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Outline

• Figures/Statistics/Size of Procurement Markets
• Basics on EU Public Procurement Regulation
• Background Single Market Act
• Openess for Non EU Tenders
• Third Market Access Regulation
• A Comparison Access to the Canadian Procurement
  Market
• Internationalization of Procurement Law via WTO
  Law
• GPA
• Transparency
• GATS
• CETA Chapter on Government Procurement
• Economic impact assessment
• CETA-Procurement Chapter
• Outlook
• A possible connection between ISDS and
  Procurement?
• Public Procurement in TTIP negotiations

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Size of general government procurement as a
percentage of GDP (2006 and 2008)Source OECD
National Accounts Statistics, http//dx.doi.org/10
.1787/88893239103
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EU Public Procurement Regulation

• Background Single Market Act
• Create a more level playing field in the EU PP
  market
• Basic Principles
• Non discrimination
• Transparency
• Competition
• Efficiency
• value for money
• One internal market
• Openness of the internal market
  promote/strengthen competition
• See whitebook on internal market

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EU Public Procurement Regulation

• Opening of PP markets can be beneficial for the
  following reasons
• Enhances government abilities to obtain better
  value for money
• Increases efficient use of public resources
• Powerful tool to fight corrupt practices
• Increases transparency and legal certainty
• Protectionist policies outside EU in procurement
  markets
• Buy X policies
• Stimulus plans in economic crisis
• Use of state aids

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EU Public Procurement Regulation

• Background Single Market Act
• Openess for Non EU Tenders
• Important public contracts awarded to Non-EU
  companies
• No Fortresse Europe in Public Procurement
• German Procurement Market Open since 1960ies
• Example
• Highway construction by Chinese companies
• No Protectionism Policy

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International PP

• Internationalization of Procurement Law via WTO
  Law
• Public Procurement is exempted from GATT
• Public Procurement is exempted from GATS
• But in WTO-Context
• Agreement on Government Procurement
• Working Group on Transparency in Government
  Procurement
• GATS negotiations on Government Procurement

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International PP

• Agreement on Government Procurement
• 15 parties comprising 43 WTO members
• revised version entered into force 2014
• Principles of Transparency and Non Discrimination
  comparable to for Example EU unikateral
  regulation of PP
• Problem Scope of Application
• Different scope of application via Annexes
• Leads to uneven opening of PP marekts

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GPA Commitments
Parties Central Sub-Central/Local Other Entities
Canada YES NO NO
EU YES YES YES

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Resulting Problems

• Negative impact on internationalisation of EU
  SMEs
• Loss of competition
• Loss of competitiveness

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• Un-balanced market access commitments
• Gap between EEU unilateral commitments and under
  GPA and limited commitment of key trading
  partners
• Consequence
• Limited access to EU market via Third Market
  Access Regulation
• Or
• Multilateral Liberalization of Public Procurement
• Or
• Opening up of Canadian Procurement Market via
  FTAs/CETA Chapter

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Bilateral EU Approach

• Provisions covering PP have already been included
  in FTAs with
• Mexico, Chile, Colombia, Peru, Central America,
  Korea
• Negotiations are ongoing with
• Armenia, Canada, Gerorgia, India, Japan,
  Malaysia, Mercosur, Moldova, Morocco, Singapore,
  United States, Vietnam
• WTO approach with GPA members
• Based on GPA
• Extension of scope of application

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CETA objectives

• Better access of EU and Canadian enterprises to
  each others procurement markets
• Extent scope of application
• Inspire future international PP regulation
• _______________
• Pressure from Canadas trading partners is
  supported by their own suppliers who want access
  to the entire Canadian procurement market

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CETA Results

• 25 pages of text on PP
• 19 articles
• Comparable to GPA language
• Basic principles Transparency and
  non-discrimination
• Extension of scope of application in comparison
  to GPA
• Opening up EU is open, thus CETA PP brings
  more benefits to Canada

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CETA Results

• Commitment to create a single point of electronic
  access to procurement opportunities within 5
  years of entry into force
• Detailed requirements on the Notices of Intended
  Procurements
• Non-Discrimination Canadian and sub-federal
  procuring entities must provide treatment no less
  favourable to European suppliers and
  goods/services than that provided to domestic
  suppliers

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CETA Results

• Prohibits discrimination against locally
  established suppliers based on foreign ownership
  or links with foreign supply
• Ability to choose form of procurement (open or
  selective ) or negotiate with potential suppliers
  based on criteria in the WTO Agreement
• .
• Domestic Review Procedures!!!
• Timely, effective, transparent and
  non-discriminatory administrative or judicial
  review procedure to challenge the award or
  process

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• Secondary objectives in PP?
• Social and environmental criteria?
• Still possible, but only in a non-discriminatory
  manner
• See EU internal market/jurisprudence of CJEU

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• Québec
• This Annex covers all
• (i) departments, governmental agencies and
• (ii) para-public organizations.
• Governmental agencies means the bodies set out
  in subparagraphs (2) through (4) of the first
  paragraph of section 4 of the Act Respecting
  Contracting by Public Bodies (R.S.Q., c.C-65.1),
  including the Agence du revenu du Québec, and the
  persons set out in the second paragraph of that
  section, with the exception of the bodies and
  persons mentioned in section 5 of the Act.

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• Québec
• Para-public organizations means the
  municipalities, the municipal organizations, and
  the bodies set out in subparagraphs (5) and (6)
  of the first paragraph of section 4 of the Act
  Respecting Contracting by Public Bodies,
  including the legal persons or other entities
  owned or controlled by one or several para-public
  organizations.

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• Above 355.000 SDR services and goods/5000000 SDR
  construction
• Québec
• This Annex covers government enterprises and
  legal persons or other entities that are owned or
  controlled by one or several of these
  enterprises, which are not in competition with
  the private sector.
• Government enterprise means a body set out in
  section 7 of the Act Respecting Contracting by
  Public Bodies.

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• Broad coverage and federal, provincial and
  municipal entities
• Municipal, Academia, School Boards, Hospitals
• Unprecedented Mass transit by all provinces and
  territories

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• Maintain ability to five preferences to domestic
  companies for
• Procurements below thresholds
• Excluded procurements
• Health care services
• Research and development procurements
• Public private partnerships for services and
  Utilities
• Sensitive goods when procured by security
  mandated police forces and related services
• Canadian airport authorities and Canadian Port
  Authorities
• In-house procurements

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• Commission
• European businesses will be the first foreign
  companies to get that level of access to Canadian
  public procurement markets.
• No other international agreement concluded by
  Canada offers similar opportunities.

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Outlook

• Does Canada want liberalisation of PP markets?
• Connect future of PP with ISDS?

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Outlook - TTIP

• The Agreement shall aim for the maximum ambition,
  complementing the outcome of the negotiations of
  the revised Government Procurement Agreement in
  terms of coverage (procurement entities, sectors,
  thresholds and services contracts, including in
  particular public construction). The Agreement
  will aim at enhanced mutual access to public
  procurement markets at all administrative levels
  (national, regional and local), and in the fields
  of public utilities, covering relevant operations
  of undertakings operating in this field and
  ensuring treatment no less favourable than that
  accorded to locally established suppliers. The
  Agreement shall also include rules and
  disciplines to address barriers having a negative
  impact on each others' public procurement
  markets, including local content or local
  production requirements, in particular Buy
  America(n) provisions, and those applying to
  tendering procedures, technical specifications,
  remedy procedures and existing carve-outs,
  including for small and medium-sized enterprises,
  with a view to increasing market access, and
  where appropriate, streamlining, simplifying and
  increasing transparency of procedures.

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• Thank you for your attention!!!!