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The New WTO Government Procurement Agreement – Its Impact

on World Procurement Markets

The George Washington University Law School

13 May 2014

Jean Heilman GrierPrincipal Consultant on Trade

Djaghe, LLC

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Introduction

Work programs

Arbitration process

Expansion of market access under revised GPA

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Work Programs

Work Program on Small and Medium-sized Enterprises (SMEs)

Work Program on the Collection and Reporting of Statistical Data

Work Program on Sustainable Procurement

Work Program on Exclusions and Restrictions in Parties’ Annexes

Work Program on Safety Standards in International Procurement

For more information, see Work Programs for Unfinished Business in Revision of GPA, Trade Blog: http://trade.djaghe.com

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GPA Arbitration Process

New approach to facilitate resolution of disputes over whether a Party should be allowed to withdraw an entity from coverage

Will be implemented after WTO Committee on Government Procurement adopts:

Arbitration procedures

Indicative criteria that demonstrate effective elimination of government control or influence over an entity's covered procurement

For more information, see Need to Initiate GPA Arbitration Process , Trade blog: http://trade.djaghe.com

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Covered Procurement under Revised GPA

Incorporates concept of covered procurement to simplify references to procurement covered under the GPA

Means procurement for government purposes:

Of goods and services as specified in each Party’s annexes to Appendix I and not for commercial sale or resale

By any contractual means, including purchase, lease, and rental or hire purchase, with or without option to buy

For which the value is estimated to equal or exceed relevant threshold

By a procuring entity (an entity covered under Party’s annexes)

Not otherwise excluded from coverage.

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Thresholds under GPA

Annex 1: Central government goods and services 130,000 SDRs (before some reductions in revised GPA)

Annex 2: Sub-central government goods and services  Most Parties: 200,000 SDRs Canada and United States: 355,000 SDRs; Israel: 250,000 SDRs

Annex 3: Other entities goods and services Most Parties: 400,000 SDRs U.S.: $250,000 threshold for federal government enterprises

Construction services procured by all entities Most Parties: 5,000,000 SDRs Japan & Korea: 15,000,000 (for Annexes 2 & 3); Israel: 8,500,000 SDRs

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Thresholds Reducedunder Revised GPA

Israel: Will lower central government threshold for construction services from 8,500,000 SDRs to 5,000,000 SDRs in 2019

Japan and Netherlands with Respect to Aruba: Reduced central government threshold for goods and services from 130,000 SDRs to 100,000 SDRs

Aruba: Reduced central government threshold for construction services from 5,000,000 to 4,000,000 SDRs

Korea: Reduced Annex 3 threshold for goods and services from 450,000 SDRs to 400,000 SDRs

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Annex 1: Central GovernmentScope of Coverage

Annex 1 coverage based on: Positive lists (most Parties specify entities covered) Description/category coverage

Executive/administrative entities: Parties cover all or most central government entities

Judiciary: Several Parties cover courts

Legislature: Several Parties cover legislatures

Coverage varies based on governmental system

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Expansion of Central Government Coverage under Revised GPA

European Union: Added 1 EU-wide entity - the European External Action Service plus Member State entities

Hong Kong China: Added Chief Executive’s Office and Secretariat, Commissioner on Interception of Communications and Surveillance

Israel: Added 5 central government entities, including Small and Medium Business Agency; and removed several product exclusions for Ministry of Health

Korea: Added 8 entities, including National Emergency Management Agency, Defense Acquisition Program Administration, Korea Communications Commission and Fair Trade Commission

Liechtenstein: Added courts and Parliament

Aruba: Added 9 entities, including Parliament

Switzerland: Added federal judicial and criminal prosecution authorities, including Federal Supreme Court, Federal Criminal Court, Federal Administrative Court, Federal Patent Court and the Office of the Attorney General; and 3 federal assembly entities:  National Council, Council of States and Parliamentary Services

United States: Added 11 federal entities, including Social Security Administration, Federal Energy Regulatory Commission and Millennium Challenge Corporation; covered Transportation Security Administration

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EU “Catch-all” Central Government Coverage for Member States

Offers comprehensive “catch all” coverage of all central government entities of its Member States – both existing and future entities

Only provides comprehensive coverage to 5 Parties: Iceland, Aruba, Norway, Liechtenstein and Switzerland

Gives Israel 2nd best coverage: access to all listed entities (not future entities)

Provides 3rd level of coverage (all listed entities, except those marked by asterisk) to 8 Parties, including Armenia and U.S. 

Refined its coverage with 4th category for U.S., Japan and Chinese Taipei: access to entities marked by double asterisk

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Annex 2: Approaches to Sub-central Coverage

All GPA Parties cover their sub-central entities

Two approaches to coverage of sub-central entities

Positive list of specific entities, used by Armenia, Canada, Israel, Japan, Korea, Switzerland and United States

Coverage by description or definition (may include partial list of entities), includes EU, Iceland, Liechtenstein and Norway

Type of coverage depends on governmental structure

Centralized procurement systems, such as EU

Federal systems such as U.S.

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Expansion of Sub-central Coverage under Revised GPA

Canada: Extended to all Parties (except Iceland &Liechtenstein) coverage of provinces & territories that it had provided to U.S. in 2010

Japan: Added 7 designated cities: Saitama-shi, Shizuoka-shi, Sakai-shi, Niigata-shi, Hamamatsu-shi, Okayama-shi and Sagamihara-shi

Korea: Added Ulsan Metropolitan City and local governments entities in 3 metropolitan cities: Seoul (25 local governments); Busan (16 local governments); and Incheon (10 local governments)

Chinese Taipei: Added bureau-Level administrative units of Kaohsiung County Government, which merged with Kaohsiung City Government

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Annex 3: Coverage of Government Enterprises and Other Entities

Coverage includes utilities, government enterprises, state-owned entities, state-invested entities and other entities where government has control or influence

Coverage of specific entities

Canada, Hong Kong China, Israel, Japan, Korea, Netherlands with respect to Aruba, Singapore, Chinese Taipei and the United States

Coverage by sectors or general categories

Armenia, EU, Iceland, Liechtenstein, Norway and Switzerland

Sectors covered include electricity, urban transport, airports, ports and water

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Expansion of Annex 3 Coverage under Revised GPA

Israel: Added 9 government enterprises, including Environmental Services

Co. and three development companies

Japan: Added Japan Alcohol Corporation

Korea: Added Korean Rail Network Authority

Chinese Taipei: Added National Taiwan College of Physical Education

United States: Added financing of telecommunications projects by Rural Utilities Service (waived “buy American” requirement)

Aruba: Withdrew all Annex 3 entities due to privatization

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Annex 4: Expansion of Goods Coverage under Revised GPA

Annex 4 (Goods Annex) added

Israel: Removed exclusions for several goods procured by its Ministry of Health

United States: Removed exclusion of Transportation Security Administration, except for textile and apparel goods

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Annex 5: Coverage of Services

Positive list of services and construction services

Access provided only to listed services

Used by all Parties except United States

Negative list of services and construction services

Provides access to all services except those listed

Covers new services that are created

Only used by the United States

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Expansion of Services Coverage under Revised GPA

Telecommunication services: EU, Hong Kong China, Iceland, Aruba, Liechtenstein, Norway and Switzerland expanded partial coverage of telecommunications services to all of sector

Hong Kong China: Added 5 services categories

Israel: Added 6 categories of services, including commercial courier services, financial services (insurance, banking & investment) and armored car services.

Japan: Added 18 service categories, but only for its central government entities; New services include management consulting services and packaging services

Korea: Added 5 service categories, including computer services

Aruba: Added 12 categories of services, including all services related to management consulting, accounting, auditing and bookkeeping service and market research and opinion polling services

Singapore: Added executive search services.

Switzerland: Added more than 10 services, including certain legal advisory and taxation services

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Annex 6: Coverage of Construction Services

Positive list of construction services

Access provided only to listed services

Used by all Parties except United States

Negative list: U.S. uses

Parties cover all construction services, except for U.S. exclusion of dredging

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Expansion of Construction Services Coverage under Revised GPA

EU Covered works concessions contracts under national treatment regime

when the contracts are awarded by central or sub-central government entities covered under the GPA

Limited access to Iceland, Liechtenstein, Norway, Aruba and Switzerland

Japan: Extended coverage to procurement based on its Private Finance Initiative

Korea: Covered build-operate-transfer contracts

Liechtenstein: Added several construction services so that it now covers all construction services

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Offsets Commitments under Revised GPA

Israel: Commitment to end its use of offsets

Will not apply offsets for procurement below 3,000,000 SDRs

Will phase-out use of offsets over a 15-year period by progressively reducing

Number of entities that apply offsets Level of offsets from the current 20% level to zero

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Contact Information

Jean Heilman GrierPrincipal Consultant on TradeDjaghe, LLCjhgrier@djaghe.comWebsite: www.djaghe.com

Trade Blog: http://trade.djaghe.com

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