EU procurement: WTO GPA standards

Public procurement within the European Community (European Union) has international dimensions through the plurilateral Agreement on Government Procurement (GPA), negotiated in parallel with the Uruguay Round negotiations leading to the establishment of the World Trade Organisation (WTO).

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Background on WTO GPA

General information about the Government Procurement Agreement can be found on the WTO’s web page:

http://www.wto.org/english/tratop_e/gproc_e/gp_gpa_e.htm

The GPA entered into force on 1 January 1996. The EC and all the 27 member states of the European Community are bound by the agreement, Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxemburg, the Netherlands, Portugal, Spain, Sweden and the United Kingdom (EU-15) from the beginning, the ten accession countries Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Romania, Slovak Republic and Slovenia since 1 May 2004 and the latest EU-entrants Bulgaria and Romania since 1 January 2007.

The other GPA states are Canada, Hong Kong (China), Iceland, Israel, Japan, Korea, Liechenstein, the Netherlands with respect to Aruba, Norway, Singapore, Switzerland and the United States.

Although the GPA covers only a fraction of the WTO members, it includes many of the most important states in world trade terms. From an EU viewpoint it can be noted that the members of the European Economic Area (EEA), namely Iceland, Liechtenstein and Norway are parties to the GPA, as well as Switzerland surrounded by EU member states.

The WTO offers an overview of the Government Procurement Agreement on:

http://www.wto.org/english/tratop_e/gproc_e/gpa_overview_e.htm

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European Union and GPA

The European Community approved, among other things, the Government Procurement Agreement by Council Decision 94/800/EC of 22 December 1994 concerning the conclusion on behalf of the European Community, as regards matters within its competence, of the agreements reached in the Uruguay Round multilateral negotiations (1986-1994) (published on the Official Journal 23.12.2994 L 336/1).
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Procurement Directive and GPA

The relationship between the Procurement Directive 2004/18/EC and the WTO Government Procurement Agreement is explained in Directive Recital 7. The Recital refers to the Council Decision and it states that the GPA does not have direct effect.

The Procurement Directive has been drafted with the GPA in mind. The contracting authorities applying the Procurement Directive should therefore be in conformity with the GPA.

What about the opposite? The last sentence of Recital 7 brings a lingering doubt to the fore: What if the GPA is more favourable to tenderers from third countries than the Procurement Directive?

Recital 7 wants to prevent cases of reverse discrimination, stating that the coordinating provisions should guarantee for Community economic operators conditions for participation in public procurement which are just as favourable as those reserved for economic operators of third countries which are signatories to the Agreement:


Recital 7 (WTO GPA)



(7) Council Decision 94/800/EC of 22 December 1994 concerning the conclusion on behalf of the European Community, as regards matters within its competence, of the Agreements reached in the Uruguay Round multilateral negotiations (1986 to 1994), approved in particular the WTO Agreement on Government Procurement, hereinafter referred to as the ‘Agreement’, the aim of which is to establish a multilateral framework of balanced rights and obligations relating to public contracts with a view to achieving the liberalisation and expansion of world trade.

In view of the international rights and commitments devolving on the Community as a result of the acceptance of the Agreement, the arrangements to be applied to tenderers and products from signatory third countries are those defined by the Agreement. This Agreement does not have direct effect. The contracting authorities covered by the Agreement which comply with this Directive and which apply the latter to economic operators of third countries which are signatories to the Agreement should therefore be in conformity with the Agreement. It is also appropriate that those coordinating provisions should guarantee for Community economic operators conditions for participation in public procurement which are just as favourable as those reserved for economic operators of third countries which are signatories to the Agreement.


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Article 5 Procurement Directive

Article 5 of the Procurement Directive 2004/18/EC sets out the principle mentioned in Recital 7. The conditions between the EC (EU) member states shall be as favourable as with regard to economic operators from third countries under the GPA.

The member states shall consult (if problems occur) within the Advisory Committee for Public Contracts referred to in Article 77 on the measures to be taken:


(TITLE II
RULES ON PUBLIC CONTRACTS

CHAPTER I
General provisions)
Article 5
Conditions relating to agreements concluded within the World Trade Organisation

For the purposes of the award of contracts by contracting authorities, Member States shall apply in their relations conditions as favourable as those which they grant to economic operators of third countries in implementation of the Agreement on Government Procurement (hereinafter referred to as ‘the Agreement’), concluded in the framework of the Uruguay Round multilateral negotiations. Member States shall, to this end, consult one another within the Advisory Committee for Public Contracts referred to in Article 77 on the measures to be taken pursuant to the Agreement.


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Advisory Committee


Article 77 of the Procurement Directive is the basic provision on the Advisory Committee for Public Contracts:




Article 77
Advisory Committee

1. The Commission shall be assisted by the Advisory Committee for Public Contracts set up by Article 1 of Decision 71/306/EEC (1) (hereinafter referred to as ‘the Committee’).

2. Where reference is made to this paragraph, Articles 3 and 7 of Decision 1999/468/EC shall apply, in compliance with Article 8 thereof.

3. The Committee shall adopt its rules of procedure.


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Council Decision 71/306/EEC

The consolidated version (15 January 1977) of Council Decision 71/306/EEC of 26 July 1971 setting up an Advisory Committee for Public Works Contracts (OJ 16.8.1971 L 185/15) is found here:

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CONSLEG:1971D0306:19770115:EN:PDF

Since 1977 the Advisory Committee for Public Works Contracts is known as the Advisory Committee for Public Contracts.


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Council Decision 1999/468/EC

The consolidated version (23 July 2006) of Council Decision 1999/468/EC of 28 June 1999 laying down the procedures for the exercise of implementing powers conferred on the Commission (OJ 17.7.1999 L 184/23) is found here:

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CONSLEG:1999D0468:20060723:EN:PDF

Article 3 of the Decision sets out the rules concerning the advisory procedure (advisory committee), Article 7 general rules concerning implementing committees and Article 8 refers to implementing measures potentially exceeding the powers of the Commission.


Ralf Grahn

EU TFEU: Quantitative export restrictions

The provisions of the European Community (in the future the European Union) banning quantitative restrictions on imports and exports in the single market, and all measures having equivalent effect, look like mirror images (except for two commas).

Still, there is a difference, because barriers against imports inevitably raise the question of protectionist intentions, whereas member states generally look favourably on exports.

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In the Treaty of Lisbon (ToL) the intergovernmental conference (IGC 2007) observes silence between point 45 on Customs cooperation and point 46 on Agriculture and fisheries (OJ 17.12.2007 C 306/52-53). The annexed Tables of equivalences however give us an indication that there is a whole chapter to look at, brief but of fundamental importance to the internal market (OJ 17.12.2007 C 306/207).

We notice that Article 29 of the Treaty establishing the European Community (TEC) first becomes Article 29 of the Treaty on the Functioning of the European Union (TFEU) in the Lisbon Treaty version (ToL), later to be renumbered Article 35 TFEU in the coming consolidated versions.

We set the provision into its future context (from the Tables of equivalences) and present its contents (taken from the latest consolidated version of the current treaties, OJ 29.12.2006 C 321 E/53):

Part Three Policies and internal actions of the Union

Title I The internal market

Chapter 2 (renumbered Chapter 3) Prohibition of quantitative restrictions between Member States

Article 29 TFEU (ToL), renumbered Article 35 TFEU

Quantitative restrictions on exports, and all measures having equivalent effect, shall be prohibited between Member States.

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The European Convention proposed the following Article III-42 of the draft Treaty establishing a Constitution for Europe (OJ 18.7.2003 C 169/34):

Subsection 3
Prohibition of quantitative restrictions

Article III-42 Draft Constitution

Quantitative restrictions on imports and exports and all measures having equivalent effect shall be prohibited between Member States.

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The IGC 2004 took over the draft text ‘verbatim’ as you see in Article III-153 of the Treaty establishing a Constitution for Europe (OJ 16.12.2004 C 310/65):

Subsection 3
Prohibition of quantitative restrictions

Article III-153 Constitution

Quantitative restrictions on imports and exports and all measures having equivalent effect shall be prohibited between Member States.

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If we take a look at the following Articles of the current TEC and the proposed TFEU, we are able to see that they have separate provisions concerning quantitative restrictions on imports and on exports, whereas the draft Constitution and the Constitution shortened the text by merging the two.

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Restrictions on import as well as on exports can hinder the free flow of goods in the internal market. Article 29 TFEU (ToL; 35 TFEU) concerns trade between member states, and it is clear enough to be directly applicable, potentially striking down national provisions or practices with contrary effects. Restrictions in relation to third countries are dealt with under external trade provisions.

Examples of prohibited export restrictions include express export quotas, export bans and systematic controls on export goods.

Whereas restrictions on imports raise the presumption of protectionist motives, domestic practices concerning potential exports are less harshly judged. General national measures putting national potential exporters at a disadvantage (reverse discrimination) are tolerated to a certain extent. Examples include less favourable working hours in bakeries and restrictive opening hours for shops serving a cross-border clientele.

Grounds for justifiable domestic measures are found in the following Article 30 TEC and TFEU (ToL), renumbered Article 36 TFEU.

Article 296(1)(b) TEC and TFEU (ToL), renumbered Article 346 TFEU, contains a specific authorisation, on security grounds, of restrictions pertaining to the trade in arms, munitions and war material (but not to products not intended for specifically military purposes).


Ralf Grahn