Government Procurement Negotiations

1. Government Procurement Negotiations NORBERTO IANELLI LAURA ROJAS Trade, Integration and Hemispheric Issues Division BID

2. Agenda • DEVELOPMENT OF INTERNATIONAL DISCIPLINES • FUNDAMENTAL DISCIPLINES • MARKET ACCESS / SCOPE AND APLICATION

3. Development of International Disciplines

4. History • 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. Development of International Disciplines

5. Subregional Agreements Negotiations Bilateral Agreements • Norte America (NAFTA) 1994 • Mexico – Colombia – Venezuela (G-3 ) 1995 • Andean C. (services) 2002 • CAFTA • Free Trade Area of the Americas (FTAA) • WTO • Mexico – Bolivia • 1995 • Mexico – Costa Rica 1995 • Mexico – Nicaragua • 2001 . Chile – Central America • 2002 • Panama – Central America 2002 . Dominican Republic – Central America 1998 Chile - USA 2003 Agreements and Negotiations • CANADA – United States Free Trade Agreement 1993

6. Fundamental Disciplines in GP Agreements

7. Fundamental Disciplines • Disciplines wich impact on laws and regulaciones related to GP as well procurement practices and procedures for public entities covered by the agreement. • Non-discrimination National Treatment (NT) Most Favored Nation (MFN) • Transparency • Due Process

8. Principles/Treatment Special and Differential Treatment Special and Differential Treatment Recognition of the differences in the level of size and development of the economies. • 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

9. Principles/Treatment Transparency • Provisions on Transparency • Publication of laws and regulations • Publicity of invitation for tender participation • Tender Requirements/Specifications • Time limits for tender participation • Limited use of non-open tendering procedures • Evaluation Criteriaand Award of the Contracts. Contratcs shall be awarded according to the evaluation criteria set forth in the tender documentation.

10. Transparency • EntitiesObligations : NAFTA vs. Centra America Model • detailedprocedures for all phases of the tendering process or • flexibility: application of national laws.

11. 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)

12. Principles/Treatment Due Proccess • 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.

13. Market Access Scope and Coverage

14. 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

15. 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.

16. Formats Positive 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

17. Scope and Coverage • Purchasing Modalities • Entities – Level of Government • Products (goods/services/construction • Thresholds • General Exceptions • Exclusions/Reservations/qualifications to coverage

18. Levels of Government Coverage shows concessions reached by each Party to the agreement • Central government entities are included in all Agreements • 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.

19. Niveles de government coverage shows concessions reached by each Party to the agreement • 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.

20. Thresholds 000 $ through March 2002

21. Thresholds 000 $ through March 2002 • US and Canada have a $25,000 threshold • EEUU applies a $250,000 thresholld • Applied to Nicaragua and Bolivia, not for Mexico

22. Partial application of NT in GP Agreements : General 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. 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. Principles/Treatment National Treatment

23. Exclusions/Reservations Reservations • 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)

24. Exclusions/Reservations Services (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)