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WTO Procurement Rules: In Particular the Government Procurement Agreement (GPA) and Services of General Interest

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Services of General Interest Beyond the Single Market

Part of the book series: Legal Issues of Services of General Interest ((LEGAL))

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Abstract

The global procurement rules have been revised in 2012. This chapter therefore addresses the impact of the new Government Procurement Agreement (GPA) on services of general interest. A detailed analysis of the GPA’s scope is given which delineates it from the purview of the GATT and the GATS as these agreements also address the issue of public procurement and provide useful guidance in the understanding of the new definition of covered procurement used in the new GPA 2012. Subsequently, the substantive and personal scope of the GPA rules is discussed in order to determine the relevance of GPA obligations to the provision of public services. The last section proceeds by considering the notion of government procurement in order to establish whether specific regimes used in the procurement of public services, such as concession contracts and in-house procurement, are covered by GPA rules.

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Notes

  1. 1.

    See WTO Committee on Government Procurement, Adoption of the results of the negotiations under Article XXIV:7 of the Agreement on Government Procurement , GPA/113, 2 April 2012.

  2. 2.

    See WTO Committee on Government Procurement, Revision of the Agreement on Government Procurement of 8 December 2006, prepared by the Secretariat, GPA/W/297, 11 December 2006.

  3. 3.

    Offsets are banned under the GPA 2012, see Article IV:6.

  4. 4.

    See also Arrowsmith 2002, p. 761.

  5. 5.

    Adlung 2006, p. 456.

  6. 6.

    A specific exclusion from the GATS is provided for in para 1 lit. (b) and (c) of the Annex on Financial Services concerning “activities forming part of a statutory system of social security or public retirement plans” as long as they are not conducted in competition of a public entity or a financial service supplier. Lack of competition is the decisive criterion here; Marchetti and Mavroidis 2004, p. 534.

  7. 7.

    See for example Protocol (No 26) on services of general interest, OJ 2010 C 83/308.

  8. 8.

    Compare the definition by the European Commission given in its Communication: A Quality Framework for Services of General Interest in Europe, COM(2011) 900 final, 20 December 2011, p. 3.

  9. 9.

    For an overview of developments under EU law cf. Krajewski et al. 2009.

  10. 10.

    Even though Article III:8 GATT explicitly only excludes national treatment, and not most-favoured nation treatment, the reference in Article I GATT to Article III:2 and 4 GATT also leads to the exclusion of Article I obligation, as confirmed by practice, see European Communities—Measures Affecting Trade in Commercial Vessels, Report of the Panel, WT/DS301/R, paras 7.85–90; Arrowsmith 2003, pp. 61–63; Dischendorfer 2000, pp. 15–17; Jackson 1997, p. 225. Contra Reich 1997, p. 142 et seq. Another argument reads that MFN obligation does not cover procurement as procurement is not mentioned there, see Trepte 2005, p. 1126. See also Article XVII:2 GATT according to which the obligation of state trading enterprises to respect the non-discrimination obligation (which includes the MFN obligation of Article I GATT, see Korea—Measures Affecting Imports of Fresh, Chilled and Frozen Beef, Report of the Panel, WT/DS161/R, WT/DS169/R, para 753) does not apply to imports of products for immediate or ultimate consumption in governmental use. In this respect, only the requirement of a fair and equitable treatment of the trade of other WTO members exists which does, however, not impose any specific obligation; see Dischendorfer 2000, p. 17.

  11. 11.

    Instead, Article XIII:2 GATS provides for multilateral negotiations on services procurement which take place in the multilateral Working Party on GATS Rules (WPGR), established by the Services Trade Council in 1995.

  12. 12.

    See Zacharias 2008, para 1 et seq.

  13. 13.

    Mavroidis 2012, p. 799.

  14. 14.

    “and not otherwise for resale or use in the production of goods for sale”.

  15. 15.

    Canada—Certain Measures Affecting the Renewable Energy Generation Sector, Canada—Measures Relating to the Feed-In Tariff Program, Report of the Appellate Body, WT/DS412/AB/R, WT/DS426/AB/R, para 5.61, according to which the term “governmental agency” “refers to those entities acting for or on behalf of government in the public realm within the competences that have been conferred on them to discharge governmental functions. “This further confirms our understanding that a governmental agency is an entity acting for or on behalf of government and performing governmental functions within the competences conferred to it”.

  16. 16.

    Dischendorfer 2000, p. 17.

  17. 17.

    Mattoo 1998, p. 51.

  18. 18.

    The telecommunication rules, however, go beyond Article VIII GATS; see Mattoo 1998, p. 55 et seq.

  19. 19.

    Reich 2009, p. 1006.

  20. 20.

    Reich 2009, p. 1006. Contra Wang 2007, pp. 895, 905; Wang 2009, p. 682.

  21. 21.

    See Reich 2009, p. 1006.

  22. 22.

    See Wang 2009, p. 682 with fn. 62 for references.

  23. 23.

    See Canada’s General Notes on its annexes. This extract is quoted from Wang 2007, p. 894, fn. 23.

  24. 24.

    Reich 2009, p. 1006.

  25. 25.

    See the notes on Annex 3 of the European Union, Committee on Government Procurement, Adoption of the results of the negotiations under Article XXIV:7 of the Agreement on Government Procurement , GPA/113, 2 April 2012, p. 188.

  26. 26.

    Note 4, Annex 7 to Canada’s Appendix I to the GPA 2012, GPA/113 (above note 1), p. 62.

  27. 27.

    Wang et al. 2011, p. 271.

  28. 28.

    See Anderson and Osei-Lah 2011a, p. 84.

  29. 29.

    See, for example, Wang 2007, pp. 905–910.

  30. 30.

    See Wang 2007, pp. 894, 898.

  31. 31.

    An interpretive issue not further addressed here is the question of what kinds of procured goods/services are “for use in the production or supply”, and what is meant by “use”. Does this only encompass commodities and other starting material which is directly used for production, or also manufacturing equipment or energy used/consumed during the production process? Does it also cover the purchase of computers used for management and not for mere production purposes?

  32. 32.

    Wang 2007, p. 910.

  33. 33.

    Canada—Certain Measures Affecting the Renewable Energy Generation Sector, Canada—Measures Relating to the Feed-In Tariff Program, Report of the Appellate Body, WT/DS412/AB/R, WT/DS426/AB/R, para 5.69.

  34. 34.

    See Krajewski 2003, p. 73.

  35. 35.

    Krajewski 2011, p. 459.

  36. 36.

    Canada—Certain Measures Affecting the Renewable Energy Generation Sector, Canada—Measures Relating to the Feed-In Tariff Program, Report of the Appellate Body, WT/DS412/AB/R, WT/DS426/AB/R, paras 5.68, 5.74.

  37. 37.

    Wang 2007, pp. 906–907.

  38. 38.

    Jackson 1997, p. 225.

  39. 39.

    Canada—Certain Measures Affecting the Renewable Energy Generation Sector, Canada—Measures Relating to the Feed-In Tariff Program, Report of the Appellate Body, WT/DS412/AB/R, WT/DS426/AB/R, para 5.67.

  40. 40.

    See WTO 1995, Analytical Index: Guide to GATT Law and Practice, pp. 122–123.

  41. 41.

    Canada—Certain Measures Affecting the Renewable Energy Generation Sector, Canada—Measures Relating to the Feed-In Tariff Program, Report of the Appellate Body, WT/DS412/AB/R, WT/DS426/AB/R, para 5.71. The Appellate Body did not need to make a conclusive statement about the notion of the term “with a view to commercial resale”; see ibid. para 5.84 et seq.

  42. 42.

    Adlung 2006, p. 466, fn. 28.

  43. 43.

    Such tax financed national health services are excluded a priori from the scope of GATS disciplines by virtue of Article I:3 lit. (c) GATS; see Krajewski 2011, p. 459.

  44. 44.

    Likewise, the CJEU will then assess the activities of social insurance systems as not being of commercial character so that EU competition rules will not be applied; cf. CJEU, Case C-244/94 Fédération francaise des sociétés d’assurance a.o. v. Ministère de l'Agriculture et de la Pêche [1995] ECR I-4013, para 17; CJEU, Joined Cases C-264/01, C-306/01, C-354/01 and C-355/01 AOK Bundesverband a.o. v. Ichthyol-Gesellschaft Cordes, Hermani & Co. a.o. [2004] ECR I-2493, paras 52–54.

  45. 45.

    Canada—Certain Measures Affecting the Renewable Energy Generation Sector, Canada—Measures Relating to the Feed-In Tariff Program, Report of the Appellate Body, WT/DS412/AB/R, WT/DS426/AB/R, para 5.68, fn. 514.

  46. 46.

    This is a residual category titled “all other entities whose procurement is covered by this Agreement”; see Article I:1, fn. 1 GPA 1994 and Article II:4 lit. (c) GPA 2012. This formula reflects the difficulty negotiators to have with common definition of entities such as public enterprises or public utilities; Dischendorfer 2000, p. 22.

  47. 47.

    Williams 2013, p. NA 94.

  48. 48.

    WTO, The re-negotiation of the Agreement on Government Procurement (GPA), available at: http://www.wto.org/english/tratop_e/gproc_e/negotiations_e.htm.

  49. 49.

    With regard to the GPA 1994; see De e Silva 2008, pp. 64, 74.

  50. 50.

    See, for example, Note 6 on Annex 3 to the GPA 2012 Appendix I of the European Union according to which certain services are not covered by the GPA “until such time, the EU has accepted that the parties concerned provide satisfactory reciprocal access to EU goods, suppliers, services and service providers to their own procurement markets”, GPA/113 (above note 1), p. 190.

  51. 51.

    Wang 2007, p. 893.

  52. 52.

    Trepte and De Graaf 1994, p. CS 71.

  53. 53.

    Dischendorfer 2000, p. 33.

  54. 54.

    Wang 2007, p. 895.

  55. 55.

    Korea—Measures Affecting Government Procurement, Report of the Panel, WT/DS163/R, para 7.59.

  56. 56.

    Wang 2009, p. 681.

  57. 57.

    Trepte 2005, p. 1139, fn. 77.

  58. 58.

    See Annex 3 of the Republic of Armenia, GPA/113 (above note 1), p. 43.

  59. 59.

    As is the case with China, currently a non-member of the GPA which is negotiating its accession to the GPA, Wang 2009, p. 680.

  60. 60.

    GPA/113 (above note 1), p. 152.

  61. 61.

    Williams 2013, p. NA 94.

  62. 62.

    Trepte and De Graaf 1994, p. CS 71.

  63. 63.

    Williams 2010, p. NA 41.

  64. 64.

    See Note 3 lit. (b) on Annex 5 to Canada’s Appendix I to the GPA 2012, GPA/113 (above note 1), 2 April 2012, p. 60 and Annex 5 to the USA’s Appendix I to the GPA 2012, GPA/113 (above note 1), p. 431.

  65. 65.

    See Trepte and De Graaf 1994, p. CS 72.

  66. 66.

    See Trepte and De Graaf 1994, p. CS 71.

  67. 67.

    Anderson 2012, p. 85.

  68. 68.

    See Note 2 on Annex 5 of Canada’s Appendix I to the GPA 2012, GPA/113 (above note 1), p. 60, and Annex 5 to the USA’s Appendix I to the GPA 2012, GPA/113 (above note 1), p. 431.

  69. 69.

    See also WTO Working Group on Transparency in Government Procurement, Work of the working group on the matters related to the items I-V of the list of the issues raised and points made, Note by the Secretariat, WT/WGTGP/W/32, 23 May 2002, para 13.

  70. 70.

    Arrowsmith 2002, p. 784.

  71. 71.

    Arrowsmith 2002, p. 785.

  72. 72.

    See Articles 17 and 18 of Directive 2004/18/EC of the European Parliament and of the Council of 31 March 2004 on the coordination of procedures for the award of public work contracts, public supply contracts and public service contracts, OJ 2004 L 134/114 and of Directive 2004/17/EC of the European Parliament and of the Council of 31 March 2004 coordinating the procurement procedures of entities operating in the water, energy, transport and postal services sectors, OJ 2004 L134/1.

  73. 73.

    Zacharias 2008, para 16; see also Reich 2009, p. 1007.

  74. 74.

    Anderson and Arrowsmith 2011, p. 51.

  75. 75.

    Arrowsmith 2002, p. 785.

  76. 76.

    Compare Adlung 2006, pp. 466–467, with regard to Article I:3 GATS.

  77. 77.

    Reich 2009, p. 1001.

  78. 78.

    Cf. Trepte 2005, p. 1139; Anderson and Osei-Lah 2011b, p. 156.

  79. 79.

    See again Reich 2009, p. 1007, fn. 85.

  80. 80.

    Anderson and Arrowsmith 2011, p. 50; Arrowsmith 2002, p. 784.

  81. 81.

    See United Nations Commission on International Trade Law (UNCITRAL), Model Legislative Provisions on Privately Financed Infrastructure Projects (2003), available at: http://www.uncitral.org/pdf/english/texts/procurem/pfip/model/03-90621_Ebook.pdf. For an analysis see S. Son, Legal Analysis on Public-Private Partnerships regarding Model PPP Rules. http://www.uncitral.org/pdf/english/colloquia/public-private-partnerships-2013/20120704_Report_on_PPP_legal_IssuesSon_Seungwoover.11.pdf. June 2012. Accessed 12 December 2013.

  82. 82.

    Reich 2009, p. 1007; see also Anderson and Arrowsmith 2011, p. 49.

  83. 83.

    See Annex 6 of the EU’s Appendix I to the GPA 2012, GPA/113 (above note 1), p. 250: “Works concessions contracts, when awarded by Annex 1 and 2 entities, are included under the national treatment regime for the construction service providers of Iceland, Liechtenstein, the Netherlands on behalf of Aruba and Switzerland … and for construction service providers of Korea.” The relevant thresholds are SDR 5 million or SDR15 million.

  84. 84.

    See Korea’s Annex 6, according to which construction services contracts include BOT contracts. The annex gives a definition of BOT contracts. The threshold is SDR 5 million or SDR 15 million. See GPA/113 (above note 1), p. 319.

  85. 85.

    The Note on Japan’s Annex 6 provides that procurement with regard to a construction project based on the Act on Promotion of Private Finance Initiative 2011 is covered, GPA/113 (above note 1), p. 306.

  86. 86.

    Anderson and Arrowsmith 2011, pp. 51–52.

  87. 87.

    Anderson and Arrowsmith 2011, p. 52; Arrowsmith 2002, p. 785.

  88. 88.

    Wang et al. 2011, pp. 273–274.

  89. 89.

    See General Note 4, Annex 7, GPA/113 (above note 1), p. 62.

  90. 90.

    Cf. Wang 2009, p. 683.

  91. 91.

    Arrowsmith 2002, p. 785.

  92. 92.

    Wang 2007, p. 910.

  93. 93.

    See also Wang et al. 2011, p. 274.

  94. 94.

    For an analysis see Wang et al. 2011, pp. 256–263.

  95. 95.

    Wang et al. 2011, p. 277.

  96. 96.

    See Notes 4 and 5 on Annex 3 of the EU’s Appendix I to the GPA 2012, GPA/113 (above note 1), pp. 188–189.

  97. 97.

    Wang 2007, p. 910.

  98. 98.

    See also the explicit exclusion from the GPA coverage of cooperative agreements in Article II:3 lit. (b) GPA 2012.

  99. 99.

    Arrowsmith 2002, p. 785.

  100. 100.

    See Wang et al. 2011, p. 279.

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  1. European and Public International Law, German University of Administrative Sciences Speyer, Speyer, Germany

    Wolfgang Weiß

  2. Oxford Brookes University, Oxford, UK

    Wolfgang Weiß

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    Markus Krajewski

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Weiß, W. (2015). WTO Procurement Rules: In Particular the Government Procurement Agreement (GPA) and Services of General Interest. In: Krajewski, M. (eds) Services of General Interest Beyond the Single Market. Legal Issues of Services of General Interest. T.M.C. Asser Press, The Hague. https://doi.org/10.1007/978-94-6265-063-3_3

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