Government Procurement

Negotiations

NORBERTO IANELLILAURA ROJAS

Trade, Integration and Hemispheric Issues Division

BID

DEVELOPMENT OF INTERNATIONAL DISCIPLINES FUNDAMENTAL DISCIPLINES MARKET ACCESS / SCOPE AND APLICATION

Agenda

Development of International Disciplines

Development of International Disciplines

Gatt 1947 excluded Disciplines on GP Art. III:8(a) allows favoring nationals if procurement is for government own use, not for inputs or `commercial resale

Art. XVII requires state trading enterprises to buy competitively and to import without discriminating among foreign suppliers

Plurilateral was signed in the Tokyo Round in 1979 New plurilateral was signed in the Ronda Uruguay in 1996.

28 countries are members.

History

Agreements and Negotiations

SubregionalAgreements

• Norte America (NAFTA) 1994

• Mexico – Colombia – Venezuela (G-3 )

1995• Andean C.

(services) 2002

Negotiations

• CAFTA• Free Trade Area of the Americas

(FTAA) • WTO

Bilateral Agreements

• Mexico – Bolivia 1995

• Mexico – Costa Rica 1995

• Mexico – Nicaragua2001

. Chile – Central America

2002• Panama – Central

America 2002. Dominican Republic – Central America 1998

Chile - USA 2003

CANADA – United States Free Trade Agreement 1993

Fundamental Disciplines in GP

Agreements

FundamentalDisciplines

Disciplines wich impact on laws and regulaciones related to GP as well procurement practices and procedures for public entities covered by the agreement.

Non-discriminationNational Treatment (NT)Most Favored Nation (MFN)

TransparencyDue Process

Special and Differential TreatmentRecognition of the differences in the level of size and development of the economies.

Principles/Treatment

Special and Differential Treatment

Transitory Measures. Examples Global reserve for Mexico: procurement will no be over $1 billion until 31/12/2003. Progresive coverage: 10 years for energy firms and for construction services in

the non-energy sector. In NAFTA, G-3, Mexico-Bolivia.

Permanent Measures. Examples Mexico may apply offsets to encourage domestic content in “turn-key”contracts.

40% to labor-intensive projects 25% to capital-intensive projects

Provisions on Transparency

Publication of laws and regulationsPublicity of invitation for tender participationTender Requirements/Specifications Time limits for tender participationLimited use of non-open tendering proceduresEvaluation Criteria and Award of the Contracts.

Contratcs shall be awarded according to the evaluation criteria set forth in the tender documentation.

Principles/TreatmentTransparency

Transparency

Entities Obligations : NAFTA vs. Centra America Model

detailed procedures for all phases of the tendering process

or

flexibility: application of national laws.

Transparency

Party Obligations. Publication of laws and regulations. Supervision of entities in the application of principles. Information Requirements on specific procurement process (Nafta, G-3

and bilaterals with Mexico) Time limits for maintaining documentation (Nafta, G-3 and bilaterals

with Mexico) Statistical Information Requirements (Nafta, G-3 and bilaterals with

Mexico)

Review and Challenge Mechanisms

To establish bid protest or challenge procedures under and independent authority or application of national laws.

Complemented by the WTO’s multilateral dispute settlement process.

Principles/Treatment

Due Proccess

Market AccessScope and Coverage

What to Include in A Market Access Offer

Entities at distinct levels of government that purchase with an obligation not to discriminate against suppliers, goods, and services.

Goods, services, construction services/public works that will not be discriminated against

What to Include in A Market Access Offer

The value of purchases from which there will not be discrimination: thresholds

Exceptions to the obligation of non-discrimination

Treatment of the differences in the levels of development and size of the economies.

FormatsPositive Lists, Negative Lists Positive Lists:

Countries offer what is specified in their lists.

Only those entities-goods-services listed will be subject to the provisions of the agreement.

Negative Lists:

Countries offer everything.

Only those entities-goods-services listed remain exempt from the obligation of non-discrimination

Scope and Coverage

Purchasing Modalities Entities – Level of Government Products (goods/services/construction Thresholds General Exceptions Exclusions/Reservations/qualifications to coverage

Central government entities are included in all Agreements

Levels of GovernmentCoverage shows concessions reached by each

Party to the agreement

Independent entities, utilities and state enterprises:

Excluded in Chile-CA, except for El Salvador. Costa Rica, Bolivia and Nicaragua include them with Mexico but do

not do it in other agreements. USA and Mexico include them but not for Canada. Panama excludes the procurement of the Panama Canal Authority

in regional agreements.

Sub-Central entities including Departaments or State Governments, Municipalities and other forms of local government.

Excluded from Chile-CA. Included in Chile - USA Bolivia, Costa Rica and Nicaragua include them in Mexico

bilaterals, but Mexico does not. Excluded in G-3. NAFTA has a provision for future negotiations. It is a conditionality

to grant Canada NT in American and Mexican electric utilities.

Niveles de governmentcoverage shows concessions reached by each

Party to the agreement

Thresholds

GPA NAFTA G-3 MexicoBilaterals

Central America Bilaterals

Central Government

goods 177 50(1) 50 50 NationalLegislation

services 177 50 (1) 50 50 NationalLegislation

construction 6800 6500 6500 6500 NationalLegislation

Enterprises

goods 545 (2) 250 250 250 NationalLegislation

services 545 250 250 250 NationalLegislation

construction

6800 8500 8500 8500 NationalLegislation

000 $ through March 2002

Thresholds

GPA NAFTA G-3Mexico

bilaterals

CentralAmerica

bilateralsSub-

centralgoods 483 50 (3) National

Legislation

services 483 50 (3) NationalLegislation

construction

6800 6500 (3) NationalLegislation

000 $ through March 2002

(1) US and Canada have a $25,000 threshold(2) EEUU applies a $250,000 thresholld(3) Applied to Nicaragua and Bolivia, not for Mexico

Principles/Treatment

National TreatmentGeneral Exceptions to the Chapter . National defense (buying of arms, ammunitions or war material), protection of public

morals, human, animal or plant life or intellectual property.

Chile and Central America refer to the FTA general exceptions.

Partial application of NT in GP Agreements :

General Exclusions to Coverage (entities, goods, services, levels of government, thresholds).

Negotiated Exclusions to Market Access Commitments: what discriminatory measures are countries allowed to apply and to whom they are applied are found in the national lists.

Exclusions/Reserva

tionsReservations Programs for Small and Medium Firms (NAFTA, G-3 and

bilaterals with Mexico. USA also excluded programs for minority business.

Social Programs (Venezuela) Farm Support and Food programs (NAFTA, G-3 and bilaterals with

Mexico) Gobal Reservations: % of total purchases (Mexico, Colombia,

Venezuela, Nicaragua, Bolivia)

Excluded goods (Examples) Ship building and manteinance, railroad and urban

transportation (NAFTA)

Exclusions/Reservat

ionsServices (Examples)

Utilities except electricity; telecomunications, research and development, professionals; architecture. (NAFTA)

Financial (Chile – CA, NAFTA and bilaterals with Mexico). Transportation, linked to the purchase of goods (NAFTA, G-3

and bilaterals with Mexico)