Bridges Weekly Trade News DigestVolume 15Number 40 • 23rd November 2011

WTO Govt Procurement Talks Continue; New Draft Decisions Tabled for Ministerial


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With the WTO Ministerial Conference less than four weeks away, delegations are making a concerted push to finalise a plurilateral agreement that would liberalise access to billions of dollars worth of public procurement contracts for 42 countries. Meanwhile, three draft decisions - two on intellectual property issues, one on least developed country accessions - for the December ministerial gathering have also seen progress in recent weeks.

December goal for government procurement deal still likely, but ‘not guaranteed’

Recent weeks have seen multiple meetings of the heads of delegation (HOD) of the countries involved in the Government Procurement Agreement (GPA) negotiations. Trade sources told Bridges that the negotiating parties - which include the 27-member EU bloc and the US - are still aiming to conclude the talks in time for the December ministerial, the biennial event that brings together the WTO’s entire membership.

While the GPA would not be a ministerial decision item, given that the agreement only involves 42 of the WTO’s 153 members, the goal for December is to have a ministerial level meeting of the Committee on Government Procurement, which is the body tasked with renegotiating the GPA.

At the meeting, ministers would recognise the results of the GPA negotiations and put together a process for setting the agreement into effect. Geneva-based trade officials told Bridges that parties are “hopeful” that the GPA renegotiation process will be complete by the December ministerial; however, they added that this was still “not guaranteed.”

The GPA seeks to establish international rules for the non-discriminatory purchasing of goods and services by governments, with due consideration for countries’ diverse levels of economic development.

The agreement promotes efficiency and transparency in the use of public funds, and has been the source of some controversy, as governments have traditionally used government procurement to protect and promote local industries and businesses.

The GPA commits parties to certain core disciplines regarding transparency, competition, and good governance, covering the procurement of goods, services, and capital infrastructure by public authorities.

An earlier version of the agreement took effect in 1996, and was negotiated during the Uruguay Round of trade talks; the current talks seek to renegotiate the 1996 GPA, while negotiating accession for new potential parties.

The actual revised text for the Agreement has been mostly complete since December 2006; however, parties to the pact still need to finalise plans for expanding coverage. Coverage, in GPA parlance, involves what range of government procurements - in terms of the entities or sectors covered - are subject to the rules of the Agreement.

Acceding to the GPA means governments have to relinquish the ability to direct certain types of purchases to domestic firms - a mechanism that is otherwise used to promote particular economic sectors. In return for giving up this option, these countries’ companies are allowed access to the public tenders covered by the GPA in all countries that are parties to the agreement.

The GPA does not cover all types of public procurement, however. Each participating party, in signing on to the agreement, makes a detailed offer that outlines which public purchases of goods and services will be available for competition from other GPA parties.

EU disagreements with US, Japan remain

While 95 percent of the negotiating pairs in the GPA are either at agreement or close, trade sources note that differences between the EU, the US, and Japan on the coverage of the GPA still remain. This long sought-after settlement between the EU-US, EU-Japan negotiating pairs is “central to the whole [GPA process],” a Geneva-based trade official explained.

The EU has traditionally had difficulty in finding agreement with the US and Japan on these two countries’ proposals for coverage of future commitments on liberalised public procurement, and the US and Japan have had difficulties with the EU’s proposal.

Recent bilateral talks between the EU and US, and those between the EU and Japan, have reportedly made progress. All sides are “very actively engaged and trying to come to an accommodation,” the official added.

Government Procurement Committee Chair Nicholas Niggli, a senior Swiss trade diplomat, confirmed in a briefing yesterday morning that there continues to be a lot of contact between the US, EU, and Japan delegations, but that these parties are still searching for balance. Niggli added that he was confident that parties will reach the necessary balance.

Noting that expectations for deliverables from the December ministerial are already low, Niggli also urged delegations to continue pushing for the finalisation of the GPA renegotiation by December.

Another closely-watched issue in the GPA process is the accession of new members, particularly China. In the case of China, trade officials still anticipate the submission of a second “robust, revised offer” by year’s end that would outline which Chinese government agencies would be covered under the agreement, what thresholds would apply, and other coverage-related details.

China has submitted two earlier offers to the committee - one in 2008 and the other in 2010 - and both times received written requests from various parties requesting improvements.

The Committee on Government Procurement, in its 16 November report for the General Council, noted that the second revised offer by China is expected to “fulfil the commitments to include sub-central entities… and second, address a number of other requests that had been made by Parties, which include reduction in thresholds, expansion of services coverage, and the removal of general restrictive notes.”

Draft decisions for ministerial on LDC, IP issues

In other ministerial-related news, delegates from a representative group of WTO members have agreed in principle on a draft decision regarding least developed country (LDC) accession. The decision was made during a private consultation today, and will be put to the LDC subcommittee for consideration next week.

Under the proposed draft decision, Ministers would direct the LDC subcommittee to develop recommendations to “further strengthen, streamline, and operationalise” the 2002 guidelines for LDC accession to the global trade body, according to a text of the proposed draft decision seen by Bridges. This would include benchmarks in the area of goods tariffs, and potentially services as well.

The text of the proposed draft decision adds that “S&D (special and differential) provisions, as stipulated in the 2002 guidelines, shall be applicable to all acceding LDCs”; requests for additional transitional periods would also be considered in the context of the individual development needs of LDCs.

The LDC subcommittee would be asked to complete this and related work, with the goal of making recommendations to the General Council - the WTO’s highest-decision making body outside of the ministerial conferences - by July 2012.

At the December gathering, trade ministers from the WTO’s 153 member countries are also expected to ask the Council on Trade-Related Aspects of Intellectual Property Rights (TRIPS Council) to consider extending the mid-2013 deadline for least developed countries to comply with the TRIPS Agreement.

The original deadline for LDCs to comply with the TRIPS Agreement was set for 2005, but was extended in that same year to 1 July 2013 (see Bridges Weekly, 30 November 2005). The 2005 extension required, among other things, that LDCs identify their priorities for financial and technical assistance in intellectual property (IP) protection.

The extension agreed upon in 2005 exempted LDCs from protecting trademarks, patent, copyright, and other types of intellectual property. However, in cases where LDCs do have some IP protections in place, then those protections must comply with the non-discrimination clauses of the WTO agreement.

Bangladesh, which is the coordinator of the LDC group, and Angola, which is the group’s TRIPS coordinator, both noted in presenting the new extension proposal that only six countries - Bangladesh, Rwanda, Senegal, Sierra Leone, Tanzania, and Uganda - have submitted their priority needs to date. In that light, the proposal requests additional assistance so that more countries can identify such needs.

The draft, which was the result of informal consultations among a small group of countries, reads: “Ministers invite the TRIPS Council to give full consideration to a duly motivated request from Least Developed Country Members for an extension of their transition period under Article 66.1 of the TRIPS Agreement, and report thereon to the WTO Ninth Ministerial Conference.”

Ministers meeting in Geneva in December are also expected to agree that WTO members will continue to refrain from bringing TRIPS non-violation cases to the dispute settlement system for two more years.

TRIPS non-violation complaints concern whether countries should be allowed to bring WTO disputes on the grounds that the spirit of the organisation’s intellectual property rules have been breached, rather than just the letter of the TRIPS agreement. A five-year prohibition on such complaints was put in place at the WTO’s founding in 1995, and has been extended repeatedly at ministerial conferences ever since.

ICTSD reporting.

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