International Trade Agreements And Government Procurement

1. International Trade Agreements AndGovernment Procurement October 2013

2. WTO Government Procurement Agreement • January 1, 1981: Government Procurement Agreement (GPA) entered into force. • United States was a major proponent • Federal procurement only • Only covered goods, not services • Plurilateral – (Only applies to signatories, not all WTO members) • January 1, 1996: Revised WTO GPA enters into force. • Covers sub-federal procurement (37 U.S. states): Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Hawaii, Idaho, Illinois, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, New York, Nebraska, New Hampshire, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Texas, Utah, Vermont, Washington, Wisconsin and Wyoming • Covers services procurement

3. WTO GPA CNTD. • Signatories: • United States, the EU and its 28 Member States (Austria, Belgium, Bulgaria, Croatia, Czech Republic, Cyprus, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovak Republic, Slovenia, Spain, Sweden, United Kingdom); the Netherlands with respect to Aruba, Armenia, Canada; Hong Kong; Iceland, Israel, Japan, Liechtenstein, Norway, Republic of Korea, Singapore, Switzerland, and Taiwan. (October 2013) • Other countries will be acceding to the GPA (China, etc.)

4. Other Procurement Agreements • Government procurement is a major goal for U.S. trade negotiators in free trade agreements (FTAs) and regional trade agreements. • Procurement provisions of FTAs are basically the same. FTAs and Regional Trade Agreements in Effect • North American Free Trade Agreement (NAFTA): does not cover sub-federal procurement) • U.S.-Israel FTA: does not cover sub-federal procurement, but Israel is a signatory to the WTO GPA • U.S.-Jordan FTA: does not cover sub federal procurement • U.S-Chile FTA: covers sub-federal procurement including WA • U.S.-Singapore FTA: Singapore is a signatory to the WTO GPA • U.S.-Australia FTA: covers sub-federal procurement, including WA • U.S.-Bahrain FTA: does not cover sub-federal procurement

5. Other Procurement Agreements (Cntd.) • Central American Free Trade Agreement (Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras & Nicaragua): covers sub-federal procurement, including WA • U.S.-Morocco FTA: covers sub-federal procurement, including WA • U.S.-Bahrain FTA: does not cover sub-federal procurement • U.S- Oman FTA: does not cover sub-federal procurement • U.S.-Peru FTA (sub-federal but not Washington State) Recent Agreements • US-Panama (Sub-federal but not Washington State) • U.S.-South Korean FTA: GPA signatory • U.S.-Colombian FTA: (Sub-federal but not Washington State)

6. Overview of the WTO GPA Article I – Scope and Coverage • Covers procurement by federal, state and other entities. • Only covers procurement contracts above certain thresholds which are recalculated every two years. • Current State Thresholds • Goods and Services Contracts: $552,000 • Construction Services Contracts: $7,777,000 • Thresholds last revised in December 2011. Article II – Valuation of Contracts • Contracts cannot be divided to avoid the GPA thresholds.

7. Overview of WTO GPA (Cntd.) Article III – National Treatment and Non-Discrimination • National Treatment: Accord the products, services and suppliers of the signatories with treatment no less favorable than that provided to domestic suppliers. • Non-discrimination against a locally-established supplier on the basis of foreign ownership or the county of production of the good or services. • Most Favor Nation/Non Discrimination: Will not discriminate between GPA signatories. All countries will be treated the same.

8. Overview of WTO GPA (Cntd.) Article VI – Technical Specifications • Technical specifications establishing the characteristics, of the product or services shall not be used in order to create unnecessary obstacles to trade. • Technical specifications include quality, performance, safety dimensions, symbols, terminology, packaging, marking and labeling or the process and methods of production and requirements relating to conformity assessment procedures. • Technical specifications shall be in terms of performance rather than design or descriptive characteristics. • Technical specifications shall be based on international standards, where such exist. Otherwise, they shall be based on national technical regulations, recognized national standards, or building codes. • Procurement entities will not seek or accept advice on specifications in a manner which would preclude competition.

9. Overview of WTO GPA (Cntd.) Article VII – Tendering Procedures • Tendering procedures shall be applied in a non-discriminatory manner. • Information concerning a specific procurement shall not be provided in a manner which would have the effect of precluding competition. • Allows open, selective and limited tendering procedures, with safeguards to ensure that any method is not used to discriminate against suppliers from signatory countries.

10. Overview of WTO GPA (Cntd.) Article VIII – Qualification of Suppliers • Qualification procedures shall be applied in a non-discriminatory manner. • Conditions for participation shall be limited to those that are essential to ensure the firm’s ability to fulfill the contract. Article IX – Invitation to Participate Regarding Intended Procurement • Establishes requirements concerning the publication of intended procurement to prevent discrimination. • Establishes requirement concerning the content of the notice of proposed procurement.

11. Overview of WTO GPA (Cntd.) Article XI – Time-Limits for Tendering and Delivery • Establishes time limits for the period from the date of publication to receipt of tenders. • Example: 40 days or more: the time period for the receipt of tenders for open procurement Article XIII – Submission, Receipt, and Opening of Tenders and Awarding of Contracts • Contract shall go to the tenderer who has been determined to be fully capable of undertaking the contract and whose tender is either the lowest tender or the tender which in terms of the specific evaluation criteria set forth in the notices or tender documentation is determined to be the most advantageous.

12. Overview of WTO GPA (Cntd.) Article XVI – Offsets • Offsets are prohibited (measures to require domestic content, licensing of technology, investment requirements, etc.)

13. Overview of WTO GPA (Cntd.) Washington State Coverage and Specific Exemptions • Washington state executive branch agencies, including “General Administration, Department of Transportation, and State Universities.” • Washington Specific Exemptions: • Fuel • Paper products • Boats, ships, and vessels

14. Overview of WTO GPA (Cntd.) Other Exemptions • National security • Public morals and order or safety* • Human, animal or plant life* • Intellectual property* • Products or services of handicapped persons* • Philanthropic institutions* • Prison labor* • Development of distressed areas • Set asides on behalf of small and minority-businesses

15. Overview of WTO GPA (Cntd.) Other Exemptions (Cntd.) • Businesses owned by disabled veterans • Women-owned businesses • General environmental quality of the state* • Procurement made by a covered entity on behalf on non-covered entities at a different level of government. • Restriction attached to Federal funds for mass transit and highway projects • Transportation services • Dredging services • Services in support of military forces located overseas • Management and operation contracts of certain government or privately-owned facilities used for government purposes, including federally-funded research and development centers (FFRDCs).

16. Overview of WTO GPA (Cntd.) Other Exemptions (Cntd.) • Public utility services • Research and development services • Printing services • Acquisition of fiscal agency or depository services, liquidation and management services for regulated financial institutions, and sale and distribution services for government debt • Non-contractual agreements of any form of government assistance not specifically covered under the agreement including cooperative agreements, grants, loans, equity infusions, guarantees, fiscal incentives, and governmental provision of goods and services to persons or governmental authorities

17. Overview of WTO GPA (Cntd.) Other Exemptions (Cntd.) • Emergencies • procurement of agricultural products made in furtherance of agricultural support program or human feeding program (USDA funded) * Provided that such measures are not applied in a manner, which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail or a disguised restriction on international trade.