RECOMMENDATION on the draft Council decision on the conclusion of the Protocol Amending the Agreement on Government Procurement

21.10.2013 - (07917/2013 – C7‑0180/2013 – 2013/0086(NLE)) - ***

Committee on International Trade
Rapporteur: Helmut Scholz

DRAFT EUROPEAN PARLIAMENT LEGISLATIVE RESOLUTION

on the draft Council decision on the conclusion of the Protocol Amending the Agreement on Government Procurement

(07917/2013 – C7‑0180/2013 – 2013/0086(NLE))

(Consent)

The European Parliament,

–   having regard to the draft Council decision (07917/2013),

–   having regard to the draft Protocol Amending the Agreement on Government Procurement (07918/2013),

–   having regard to the request for consent submitted by the Council in accordance with Article 207(4), first subparagraph, in conjunction with Article 218(6), second subparagraph, point (a)(v) of the Treaty on the Functioning of the European Union (C7‑0180/2013),

–   having regard to Rules 81 and 90(7) of its Rules of Procedure,

–   having regard to the recommendation of the Committee on International Trade and the opinion of the Committee on Development (A7-0339/2013),

1.  Consents to the conclusion of the Protocol;

2.  Instructs its President to forward its position to the Council, the Commission and the governments and parliaments of the Member States.

EXPLANATORY STATEMENT

Nature and structure of the Agreement on Government Procurement

The Agreement on Government Procurement (GPA) is a legally binding international agreement on access to government procurement markets, to which some WTO Members are Parties. This plurilateral treaty, which was negotiated in parallel with the Uruguay Round in 1994, entered into force on 1 January 1996. It consists of two parts:

·  The core text, which defines the tender rules and guarantees transparency of the procedures and equal treatment of bidders;

·  The coverage that is composed of market access annexes, where Parties specify what part of their procurement market they open for international competition (so-called "covered procurement"). When tendering within the domain of covered procurement, Parties cannot discriminate between domestic and other GPA bidders.

Regarding enforcement of its legally binding nature, State-to-state disputes pursuant to the GPA are subject to the WTO dispute settlement system.

The GPA is currently composed of 15 Parties, almost only developed countries: Armenia, Canada, EU (with regard to its 27 Member States), Hong Kong, Iceland, Israel, Japan, Korea, Lichtenstein, Norway, Singapore, Switzerland, Taiwan, and United States of America. 27 Parties have observer status[1]^, whereby the following observer 10 countries are in the process of negotiating accession: Albania, China, Georgia, Kyrgyz Republic, Moldova, New Zealand, Oman, Panama and Ukraine.

As opposed to bilateral agreements, the GPA established common rules for a larger group of countries. However, the agreement of 1996 was apparently unattractive to the vast majority of WTO members. Change was needed, also in the light of developments in the overall trading environment.

Negotiations

The GPA has contained a built-in review clause, which commits the Parties to negotiate both on the rules and the coverage of the agreement. This provided the background for the launch of negotiations in 1999. In December 2006 GPA Parties reached an understanding on the revision of the core text defining the rules.

For the EU, negotiations have been conducted by the Commission. During the negotiations the Lisbon Treaty entered into force, which requires establishing the consent of the European Parliament and the Council in order to ratify the agreement. However, the procedure does not enable the European Parliament and your rapporteur to amend certain parts of the agreement. Parliament can only say yes or no to the entire package. Thus Parliament has the task to evaluate whether the advantages of the agreement outweigh possible negative aspects, and whether the agreement trespasses red lines defined in previous decisions of the European Parliament.

The European Parliament has been regularly informed via the INTA Committee in writing on the negotiations.

On 30 March 2012, the GPA Parties reached a political agreement on the overall agreement - including the coverage. This final agreement needs to be ratified by all Parties.

Amending procedure

In order to ratify the amended GPA, the Commission has proposed a Council decision on the conclusion of the Protocol Amending the GPA on the basis of Article 207 (4) on 22 March 2013 subject to the consent of the European Parliament. On 14 June 2013, the Council sent its official referral to the Parliament. The Council needs to adopt the decision, once the Parliament has given its consent. It will then be deposited at the WTO Secretariat. The amended GPA will enter into force, once 2/3 of the Parties have concluded its ratification procedure.

Interest of the EU in improving the scope of the GPA

In many countries the government, and the agencies it controls, are together the biggest purchasers of goods of all kinds, ranging from basic commodities to high-technology equipment.

The EU has a de-jure open public procurement market with European contracting authorities giving access to foreign bidders beyond the GPA covered public procurement. Many countries, however, run preferential schemes for domestic suppliers. GPA provides EU companies with legal certainty to access foreign markets.

Furthermore, the EU has set up common rules for tendering of public contracts under its legislation for public procurement in the EU internal market. Part of this legislation is currently being revised[2]. The EU has put in place a set of rules, which increase transparency and promote state-of-the art tendering practises such as electronic procurement. Increasing transparency along the lines of EU public procurement rules increases legal certainty and contributes to fight corruption and bribery in third countries.

Ensuring the provision of services of general interest to the population, in particular access to essential services like water, shelter, waste management, health, education and culture, remains one of the most important tasks for every government. Different countries pursue different approaches in balancing this task with the needs for efficient spending of scarce public resources and the striving for best value and quality of services and goods purchased. In many countries, public procurement serves also as an essential tool to stimulate employment and economic activity in a region and to promote high standards with regard to environmental protection and decent working conditions. Differences exist also concerning the administrative levels of procuring entities. The difficult task of a Procurement Agreement lies therefore in establishing a fair level playing field while at the same time providing sufficient space for political decisions and diversity. The GPA tries to address this in some explicit provisions addressing environmental protection goals and in the relatively high threshold of 5 million USD for building contracts.

Impact on labour, social and environmental aspects within the EU

The revised GPA does not affect the status of labour, social and environmental law in the EU: The issue to what extent EU contracting authorities might ask for compliance with labour and environmental law of the host Member State is governed by EU public procurement Directives currently under revision. However, the GPA obliges to apply these social and environmental rules to all bidders irrespective of the fact that they are from the EU or from countries being Party to the GPA.

The characteristics of the amended GPA

The revision of the GPA improves the core text, which defines the tender rules, by providing a higher level of clarity and transparency.

As regards the improved rules, the EU sought during the negotiations to re-structure the text of the new GPA, in order to follow the sequential order of a procurement procedure. The new rules contain a number of new features:

·  It contains the possibility to use electronic auctions with additional flexibility for Parties' procurement authorities, for example in the form of shorter notice periods when electronic tools are used;

·  A free of charge and centralised electronic database will have to be set up by the GAP Parties, which will include procurement notices published by Ministries and other central procurement entities. These obligations are largely inspired by the EU model, the so-called Tender Electronic Daily- TED single data base;

·  Similarly to the EU system, the revised rules on selection will ensure that companies that have been found guilty of serious crimes, or other serious offences or professional misconduct can be excluded from the procurement process;

·  The revised GPA includes new provisions for developing countries wishing to join the GPA. Developing countries that have started their accession process to the Agreement may benefit from a set of transitional measures: They include: i) price preferences; (ii) offsets; (iii) phased-in addition of specific entities and sectors; and (iv) thresholds that are initially set higher than their permanent level. Provision has also been introduced for delaying the application of any specific obligation contained in the GPA, other than the requirement to provide equivalent treatment to the goods, services and suppliers of all other Parties to the Agreement, for a period of five years following accession to the Agreement for Least Developed Countries (LDCs) or up to three years for other developing countries. This period can be further extended;

·  A reference has been made in the revised rules - along line the EU Directives on Public procurement - on technical specifications allowing contracting authorities to take into account environmental considerations in the technical specifications;

·  In addition, the EU has obtained that the current obligations regarding statistical reporting are simplified. This includes a limitation of the number of data to be provided, the possibility to provide estimates, and the introduction of a waiver of the obligations for the Parties (like the EU) who maintain a centralised database.

As regards the enlarged coverage, the package of additions to market access entailed by the conclusion comprises:

·  Coverage by the Parties of (at a minimum) more than 200 additional central, local and other government agencies under the Agreement;

·  The coverage by Korea, for the first time, of build-operate-transfer contracts;

·  Coverage of additional services by almost all of the Parties, for example in the area of telecommunications services;

·  Some improvements in the coverage of goods;

·  The coverage by all Parties, for the first time, of the full range of construction services, subject to relevant thresholds;

·  Downward adjustments in the thresholds applied under the Agreement by a few Parties, notably Israel, Japan, Korea and the Netherlands with respect to Aruba;

·  Extended coverage of Private Finance Initiative by Japan;

·  The phase out by Israel of its offsets regime (currently at 20% for each procurement awarded to a foreign bidder);

·  The removal from the US of Buy America provisions from procurements funded by the Rural Utilities Service.

In general, the EU achieved market opportunities in terms of enlarging the entity coverage (notably by EEA countries, Canada, South Korea, United States, Israel, Taiwan, Hong Kong (China)), in terms of coverage of goods and services, as well as in terms of thresholds of covered goods and services (notably by Japan, Korea and Israel). This amounts to securing the EU roughly 30 billion EURO of additional market access opportunities.

In exchange, EU made offers in terms of extended coverage of entities for EEA countries, Switzerland, Taiwan, Japan and the US. It also offered work concession to Korea, EEA countries and Switzerland, provided a reciprocal partial opening of the railway sector to Japan, and of sub-central level procurement to Canada.

• [1]  Albania, Argentina, Australia, Bahrain, Cameroon, Chile, China, Colombia, Croatia, Georgia, India, Indonesia, Jordan, Kyrgyz Republic, Malaysia, Moldova, Mongolia, Montenegro, New Zealand, Oman, Panama, Russian Federation, Saudi Arabia, Sri Lanka, Turkey, Ukraine, Viet Nam.
• [2]  Negotiators of the Parliament and the Council have reached a political agreement on the final text in July.

OPINION of the Committee on Development (17.9.2013)

for the Committee on International Trade

on the draft Council decision on the conclusion of the Protocol Amending the Agreement on Government Procurement
(07917/2013 – C7‑0180/2013 – 2013/0086(NLE))

Rapporteur: Filip Kaczmarek

SHORT JUSTIFICATION

The 1994 Government Procurement Agreement (GPA) has a limited number of members, most of them being developed economies. One of the objectives of the revised GPA is to expand the current membership. It therefore provides incentives for developing countries, such as the possibility of temporarily applying higher thresholds and phasing in of entities and sectors, aiming to facilitate an opening-up to foreign competition.

It is not clear, however, whether the revised special and differential treatment clause for developing countries improves the rules currently applicable. The new text allows for additional protection on a transitional basis of the markets of developing countries, whereas currently exemptions can be negotiated without them being limited in time. On the other hand, the new text does not offer developing countries significant improved access to the markets of other GPA parties.

In spite of the overall positive improvements with regard to tendering procedures and transparency, it cannot be expected that countries will sign-up to this Agreement without it being demonstrated that the benefits would exceed the costs - such as administrative costs related to the accession process and social and economic costs resulting from losses of procurement markets by domestic companies - and without the creation of safety nets necessary to minimise the effects of such losses.

The long-term effects of the liberalisation of national procurement markets and the resulting increased market access are positive, in spite of the above-mentioned flaws in the revised text.

*******

The Committee on Development calls on the Committee on International Trade, as the committee responsible, to propose that Parliament give its consent.

RESULT OF FINAL VOTE IN COMMITTEE

Date adopted	17.9.2013
Result of final vote	+: –: 0:	17 6 0
Members present for the final vote	Thijs Berman, Michael Cashman, Ricardo Cortés Lastra, Corina Creţu, Leonidas Donskis, Mikael Gustafsson, Filip Kaczmarek, Miguel Angel Martínez Martínez, Gay Mitchell, Norbert Neuser, Maurice Ponga, Jean Roatta, Birgit Schnieber-Jastram, Michèle Striffler, Keith Taylor, Patrice Tirolien, Ivo Vajgl
Substitute(s) present for the final vote	Philippe Boulland, Edvard Kožušník, Isabella Lövin, Judith Sargentini
Substitute(s) under Rule 187(2) present for the final vote	Emma McClarkin, Elżbieta Katarzyna Łukacijewska

RESULT OF FINAL VOTE IN COMMITTEE ()

Date adopted	14.10.2013
Result of final vote	+: –: 0:	21 0 2
Members present for the final vote	Laima Liucija Andrikienė, Maria Badia i Cutchet, Nora Berra, Daniel Caspary, María Auxiliadora Correa Zamora, Andrea Cozzolino, George Sabin Cutaş, Marielle de Sarnez, Christofer Fjellner, Yannick Jadot, Franziska Keller, Bernd Lange, Vital Moreira, Paul Murphy, Niccolò Rinaldi, Peter Šťastný, Robert Sturdy, Jan Zahradil
Substitute(s) present for the final vote	Jarosław Leszek Wałęsa
Substitute(s) under Rule 187(2) present for the final vote	Elisabeth Jeggle, Krzysztof Lisek, Iosif Matula, Catherine Stihler