GPA/126
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REPORT (2014) OF THE COMMITTEE ON GOVERNMENT PROCUREMENT
1INTRODUCTION
1.1.This report covers the period since the Committee's previous Annual Report[1], that is midOctober 2013 through November 2014. It is issued pursuant to ArticleXXIV:7(a) of the 1994 Agreement on Government Procurement ("the 1994 Agreement" or "the GPA 1994") and ArticleXXI:3 of the Agreement as amended by the Protocol Amending the Agreement on Government Procurement, done at Geneva on 30March 2012 (the "revised Agreement").[2] This reflects the entry into force of the revised Agreement on 6April 2014. The revised Agreement is now in force for 12 of the Agreement's 15 Parties.[3]
1.2.Since the date of circulation of its last Annual Report (24October 2013), the Committee has held five formal meetings in Geneva: on 20November 2013, on 12March 2014, on 25June 2014, on 29October2014, and on 25November 2014.[4] An additional formal meeting of the Committee was held at Ministerial level in Bali, Indonesia, on 3December 2013, on the margins of the WTO's Ninth Ministerial Conference (MC9).[5] The meetings were chaired by MrBruce Christie (Canada)[6] and, beginning on 1August 2014 and continuing through the rest of the year, by MrKrzysztof Trepczyński (Poland).[7]
1.3.The Committee has also held a series of informal meetings, also chaired by MrChristie and, subsequently, by MrTrepczyński, focusing on the entry into force of the revised Agreement, accessions to the Agreement; and other matters, in the weeks beginning 18November 2013, 10March 2014, 14April2014, 23June 2014, 28July 2014, and 27October2014, respectively.
1.4.The following WTO Members are covered by the Agreement: Armenia; Canada; the European Union, including its 28 member States; Hong Kong, China; Iceland; Israel; Japan; Korea; Liechtenstein; the Kingdom of the Netherlands with respect to Aruba; Norway; Singapore; Switzerland; the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu ("Chinese Taipei"); and the UnitedStates. The Committee is pleased to note that, during the period under review, Montenegro and NewZealand were invited to accede to the Agreement on Government Procurement. They will become Parties to the Agreement upon submission of instruments of accession incorporating the terms that have been agreed.[8]
1.5.Twenty-eight WTO Members have observer status in the Committee on Government Procurement: Albania, Argentina, Australia, Bahrain, Cameroon, Chile, China, Colombia, Georgia, India, Indonesia, Jordan, theKyrgyzRepublic, Malaysia, Moldova, Mongolia, Montenegro, NewZealand, Oman, Panama, the Russian Federation, Saudi Arabia, SriLanka, Tajikistan[9], the former Yugoslav Republic of Macedonia, Turkey, Ukraine and Viet Nam. Four intergovernmental organizations, namely the International Monetary Fund (IMF), International Trade Centre (ITC), the Organization for Economic Co-operation and Development (OECD) and the United Nations Conference on Trade And Development (UNCTAD), also have observer status.
1.6.The observership of Tajikistan was approved, on request by its delegation, during the reporting period, and was warmly welcomed by the Committee[10] as a first step toward its hoped-for eventual accession to the Agreement, pursuant to commitments made in its WTO accession protocol.[11]
1.7.The remaining sections of this Report deal with the work done by the Committee during the year, with particular reference to: (i) the Committee's Ministerial-level meeting in Bali and the subsequent entry into force of the revised Agreement on Government Procurement; (ii) accessions to the Agreement; and (iii) the implementation of the Agreement.
2MINISTERIAL-LEVEL MEETING OF THE COMMITTEE AND entry INTO force OF THE Revised AGREEMENT on government procurement
2.1.As set out in the Committee's 2012 Annual Report, on 15December 2011, just prior to the EighthWTO Ministerial Conference, the Parties to the GPA reached political agreement on the conclusion of the renegotiation of the Agreement that they had conducted over a period of more than a decade.[12] The results of the renegotiation comprised: (i) the revised text of the Agreement; (ii) a significant expansion of the Parties' market access commitments under the Agreement, valued at USD 80-100 billion annually[13]; and (iii) a set of agreed Work Programmes relating to the administration and possible further evolution of the Agreement, to be conducted by the WTO Committee on Government Procurement following the coming into force of the revised Agreement.[14]Subsequently, on 30March 2012, after the completion of a legal review and verification process, Parties formally adopted the results of the renegotiation.[15]
2.2.The entry into force of the revised Agreement, for which the submission of formal instruments of acceptance by two thirds of the Parties was required, was an important focus of the Committee during the reporting period. On 3December2013, at their formal meeting in Bali, Indonesia, GPA Ministers confirmed the Parties' shared objective of bringing the revised Agreement into force, pursuant to paragraph 3 of the Protocol Amending the Agreement, as soon as possible.[16] This resolution took account of the seven instruments accepting the Protocol that had been submitted at the time, and of assurances that other instruments of acceptance would be deposited shortly thereafter. In their statement adopted at the meeting, Ministers also recognized the crucial importance of government procurement as an element of economic activity and world trade and development; and the important role of the Agreement as an instrument of market access and good governance (see attachment A). In a related statement at the same meeting, the Director-General of the WTO, Mr Roberto Azevêdo, noted that the GPA is in the process of becoming a pillar of the global economy, responding directly to key challenges that WTO Members face concerning the maintenance of open markets and the promotion of good governance in the aftermath of the global economic crisis.
2.3.The revised Agreement entered into force on 6April 2014, 30 days after the submission of formal acceptances of the "Protocol Amending the Agreement on Government Procurement" by two thirds of the Parties to the Agreement.[17] Subsequently, two additional Parties have submitted their respective instruments of acceptance.[18]
2.4.At the Committee's formal meeting on 12March 2014, the then Chairman, MrBruceChristie of Canada, said that the timely coming into force of the revised Agreement demonstrated Parties' firm commitment to it and augured well for its future as an increasingly important element of the framework for global trade. It clearly fulfilled the call that Parties' Ministers had issued at Bali. At the same time, the coming into force of the revised Agreement represented a new beginning rather than an end. He reminded Parties, in that context, that a great deal of important work lay ahead, including with respect to the implementation of the revised Agreement and the Committee's agreed new Work Programmes, together with work on pending and future accessions of new Parties which was vital to the future of the Agreement. The WTO's wider membership was watching developments in the Committee, and this should not be overlooked.[19]
2.5.Subsequent to the formal coming into force of the revised Agreement, updated loose-leaf schedules were prepared for each of the Parties that have accepted it. The new loose-leaf schedules, which have been/are being certified pursuant to Article XIX of the revised Agreement, involved significant work by both the Parties and the Secretariat (see, for relevant details, Part 4 below).
2.6.In the course of the meetings held on 12March 2014, 25June2014, and 29October 2014, Parties sought to advance their work on the draft decisions on arbitration procedures and on indicative criteria relating to the elimination of government control over listed entities which are called for in the revised Agreement. Significant progress was achieved on the draft decision on arbitration procedures. With regard to the draft decision on indicative criteria, there seems to be a consensus that work on this issue in plurilateral format can be deferred for some time, while bilateral consultations will continue. In line with priorities set by the Committee in 2012, work on the Committee's mandate to develop for adoption a draft decision on criteria for compensatory adjustment will be taken up at a later stage.
2.7.In the course of the Committee's formal meeting on 25June 2014, the Chairman, on behalf of the Committee, noted for the record that the Decisions set out in Appendix 2 of the Committee's Decision of 30March 2012 on the Outcomes of the Negotiations[20] (regarding notification requirements under Articles XIX and XXII of the Agreement and the Committee's new Work Programmes) were in effect as of 6April 2014. He also noted that the Committee's agreed Work Programmes relating to the administration and possible further evolution of the Agreement, set out in Annexes C, D, E, F and G of Appendix 2 of the decision, had been formally initiated.[21]
2.8.In the course of the informal meetings held on 25June 2014, a first, organizational discussion took place on the new Work Programmes. On 29October 2014, a first substantive discussion took place. Exchanges were held on a number of aspects, with particular emphasis on the Work Programme on small and medium-sized enterprises (SMEs) and the Work Programme on Exclusions and Restrictions in Parties' Annexes. The Work Programmes are expected to be an important focus for the Committee in 2015 and subsequently.
3Accessions to the agreement
3.1.The Committee attaches considerable importance to its work on currently pending and future accessions to the Agreement, which it expects to further enhance both the extent of market access commitments under, and the systemic relevance of, the Agreement. Significant progress was made with respect to related work during the review period. Notable developments included: (i)the conclusion of Montenegro's accession negotiations; (ii) the conclusion of New Zealand's accession negotiations; (iii) further deliberations on China's accession; and (iv) ongoing discussions on the accessions of Moldova and Ukraine.
3.2.Overall, eight WTO Members are in the process of negotiating their accessions to the Agreement: Albania, China, Georgia, Jordan, the KyrgyzRepublic, Moldova, Oman and Ukraine. As already noted, the accession negotiations of Montenegro and New Zealand were concluded at the Committee's meeting of 29October 2014. Their status as Parties to the Agreement will become effective on the 30th day following the deposit of theirrespective instruments of accession, which are expected to be submitted to the WTO in the coming months.
3.3.A further five WTO Members have provisions regarding accession to the Agreement in their respective Protocols of Accession to the WTO: Mongolia[22], the Russian Federation[23], SaudiArabia[24], Tajikistan[25] and the former Yugoslav Republic of Macedonia.[26] The Committee notes that some of these commitments have been outstanding for a considerable period, and hopes to see an acceleration of work toward their fulfilment in 2015.
3.4.The following provides additional details regarding particular WTO Members whose accessions were the subject of substantive discussions or other developments during the year.
3.2The Accessions of Montenegro and New Zealand
3.2.1Montenegro
3.5.Montenegro submitted its application for accession and its Replies to the Checklist of Issues, together with additional documentation on its legislative framework, on 4October 2013.[27]The first discussion of its accession was held at the Committee's meeting on 9October 2013, in which Montenegro made a substantive statement regarding the reforms that have been made to its procurement system and the system's deliberate alignment with both the EU's relevant directives and the GPA.[28]
3.6.Montenegrocirculated its initial AppendixI offer on 4November 2013. Subsequently, its accession was discussed at the Committee's informal meetings on 20 November 2013 and at its Ministerial-level meeting on 3 December 2013. A first revised version of the offer was circulated on 27November 2013.[29]In a communication dated 23January 2014, Montenegro asked for Parties' comments on its offer.[30] Comments and questions were then submitted by Japan and the European Union, and Montenegro circulated its replies on 7March 2014.[31] Further discussions on theoffer were held at the Committee's informal meetings on 12March 2014.In the course of the discussions, Parties recognized the good quality of Montenegro's offer in terms of the overall breadth and scope of market access opportunities proposed. Nevertheless, some Parties signalled concerns of a systemic nature regarding the approach adopted by Montenegro in order to take account of its hoped-for future accession to the European Union. To address the concerns voiced by these Parties, Montenegro circulated its second revised coverage offer on 18June 2014[32], which eliminated the previous "two-stage" approach and approximated, as closely as possible, the coverage Montenegro would provide when it joined the European Union. This offer was subsequently discussed in the informal meeting on 25June 2014 and no Parties raised substantive outstanding issues.
3.7.On 18July 2014, Montenegro circulated its final offer.[33]This final offer received the support of all Parties at the Committee's meeting held on 31July 2014.[34]At the same time, the EuropeanUnion indicated that more time would be needed for internal consultations before formal assent could be given.With the finalisation of the EU's internal approval, the Committee, at its formal meeting on 29October 2014, adopted a draft decision on the terms of Montenegro's accession to the Agreement[35] and the negotiation was thus concluded. The formal decision was circulated on 3November 2014.[36]
3.2.2New Zealand
3.8.New Zealand applied for accession to the Agreement on 28September 2012.[37]Subsequently, in 2012 and 2013, discussions on New Zealand's accession took place in the Committee on multiple occasions based on: (i) its initial offer circulated on 1October2012[38]; (ii) its replies to the checklist of issues circulated on 4October2012[39]; and (iii) its first revised offer circulated on 24September2013.[40]
3.9.Dedicated discussions on NewZealand's accession were held at the Committee's Ministeriallevel meeting at Bali on 3December2013 and at the Committee's informal meetings on 20November2013, as well as on 12March2014 and 25June2014. In the course of the discussions, Parties recognized the overall high quality of the second revised offer in commercial terms. At the same time, several delegations expressed systemic concerns regarding NewZealand's proposed coverage of sub-central government entities and "other" entities in Annexes 2 and 3 of its offer.
3.10.In addressing these concerns, New Zealand emphasized what it believed to be an important distinguishing feature of its procurement system as compared to those of other Parties and accession candidates, namely the exceptional concentration of New Zealand's procurement activities at the central government level. It, nonetheless, outlined, at the informal meeting of 25June2014, a number of additional improvements that it was prepared to make to its proposed coverage offer to address the concerns that had been articulated. On this basis, the majority of Parties indicated at that meeting that they were ready, or close to being ready, to settle with NewZealand.[41] The Chairman encouraged Parties with remaining concerns to work intersessionally with New Zealand to settle the remaining issues.
3.11.On 21July 2014, New Zealand circulated its final offer.[42] Subsequently, at the Committee's meeting on 31July 2014, the majority of Parties confirmed their readiness to conclude New Zealand's accession on the basis of this final offer. The EU indicated that additional time would be needed both to clarify, in discussions with New Zealand, related terms to be applied by the EU and to carry out its relevant internal procedures. Switzerland also signalled a need for time for further reflection. Subsequently, the EU reached agreement with NewZealand on its own final terms vis-à-vis the latter's accession and completed the relevant internal procedures. Switzerland indicated that it could agree to New Zealand's accession on the basis of the terms proposed in its final offer, without related reservations.
3.12.Subsequently, at the Committee's meeting of 29October 2014, the Committee adopted a draft decision on the terms of New Zealand's accession to the Agreement[43] and the negotiation was thus concluded. The Committee's formal decision was circulated on 3November2014.[44]
3.2.3Significance of the two accessions
3.13.At the Committee's meeting of 29October 2014, WTO Deputy Director-General Yi congratulated both Montenegro and New Zealand, saying that the two accessions that had been gavelled that day highlighted both the growing interest in the GPA on the part of a diverse set of WTO Members, and the increasing importance of the Agreement as an underpinning of global trade and development.[45] The Chairman, Mr Trepczyński, also congratulated Montenegro and NewZealand, saying that each had shown courage, persistence and skill throughout the process. He predicted that other accessions to the Agreement will follow, noting that the GPA is increasingly at the centre of efforts to promote trade, value for money and fair competition in markets for the procurement of goods and services worldwide.
3.3China
3.14.China applied for accession to the GPA on 28December 2007 and its initial offer was circulated to Parties on 7January 2008.[46] Discussions dedicated to China's accession have taken place on multiple occasions since then.[47]
3.15.With regard to developments during the reporting period,China's fourth revised coverage offerwas circulated to Parties on 6January 2014.[48] Substantive discussions on this offer were held on 12March 2014, on 25June2014 and on 29October 2014. In the course of discussions, Parties, while recognising the improvements contained in the new offer, also expressed disappointment that their previous requests had not been fully reflected in the offer and indicated that their outstanding requests remain on the table.[49]
3.16.Further to the above, in their various statements the representatives of the United States, the European Union, Japan, Canada, Korea and Switzerland requested China to provide additional coverage of central and sub-central government entities; more coverage of services; and full coverage of construction services. They also asked China to include coverage of state-owned enterprises; to lower its proposed thresholds; and to simplify or eliminate a good number of its general notes. In addition, they urged China to make use of the momentum of its domestic reform to accelerate the accession process, and vice versa. A number of Parties also emphasized the necessity for China to pursue work, in parallel with improving the market access offer, on the alignment of China's domestic legislation with the GPA's rules.
3.17.In the Committee's meeting held on 12March 2014, China informed the Committeeof its commitment, undertaken in the context of the 24th China-US Joint Commission on Commerce and Trade in December 2013, to circulate a further revised offer later in 2014, which would provide coverage commensurate, on the whole, with that of existing GPA Parties. China reconfirmed this at the Committee's meetings on 25June 2014 and on 29October 2014. Parties requested that China submit its further revised offer as early as possible and certainly before the end of 2014, in order to enable the Committee to give appropriate consideration to it at the Committee's meeting scheduled forFebruary 2015.
3.18.As noted also in its 2013 Annual Report, the Committee considers that China's GPA accession, on the appropriate terms, is a matter of great significance for the Agreement, for the WTO, and for the world economy; and a very important signal for other emerging economies. Essentially, to conclude the accession it is looking for terms of participation on China's part that are comparable to those of the existing Parties. The alignment of China's relevant legislation with GPA norms is also vital to conclude the accession. The Committee hopes for significant progress toward a conclusion of China's accession in the remainder of 2014 and in 2015.