The United States and the European Union are each members of the WTO Government Procurement Agreement (GPA). As a result, substantial parts of each other’s government procurement markets are open to the bidders of the other, although there remain significant restrictions in areas that are not covered by the GPA.
On March 30, 2012, the parties to the GPA formally adopted a revised version of the GPA. In conjunction with the revised GPA, the United States and the European Union agreed to establish a Bilateral Procurement Forum for the purpose of improving the U.S.-EU procurement relationship, including by exploring the possible expansion of each other’s procurement commitments.
Also in March 2012, the European Commission proposed a significant new regulation on the access of third-country goods and services to EU procurement markets (2012/0060). The proposed regulation would allow local authorities to restrict access to procurement contracts if more than 50 percent of the value of goods and services in a tender comes from countries outside of the GPA. This approach is termed “negative reciprocity” by the European Commission.
The February 2013 Final Report of the High Level Working Group (HLWG) on Jobs and Growth identified new market access in government procurement as one of the priorities for bilateral trade and investment negotiations between the United States and the European Union. The HLWG specifically recommended that one goal of these negotiations should be to enhance business opportunities through substantially improved access to government procurement opportunities at all levels of government on the basis of national treatment.
Why Procurement Matters
The federal and sub-federal public procurement markets of the United States and the European Union are large, amounting to trillions of dollars annually. The magnitude of these markets on both sides of the Atlantic suggests that significant commercial opportunities may be created through further liberalization of procurement practices in the United States and the European Union.
Objectives for the TTIP Negotiations
The TTIP negotiations should comprehensively tackle market-access barriers relating to government procurement, in a manner that goes beyond what the U.S. and EU have achieved in previous trade agreements, including the GPA.
A successful Transatlantic Trade and Investment Partnership agreement should ensure an open, transparent, non-discriminatory and efficient government-procurement process that will optimize competition among suppliers and make more effective use of government funds, at all levels of government.
Negotiators should explore alternative methods of coverage that overcome weaknesses in the GPA and other existing trade agreements to which either the United States or the European Union is party, such as the feasibility of a negative-entity list.
The TTIP should take as a starting point the procurement policies applied by the United States and European Union as of the launch of the negotiations, and ensure that each commits to refrain from imposing any more restrictive policies with respect to procurement on the suppliers of goods and services of the other.
Thus, for example, the TTIP should ensure that U.S. exporters and service suppliers are not in any way adversely impacted by the application of “negative reciprocity” or any similar effort to restrict access to government procurement in the European Union, and that the European Union is protected against any restrictive effect from any subsequently-enacted U.S. legislation or regulation affecting procurement practices.
- Further, the TTIP should broaden commitments in order to increase access to procurements at all levels of government, including coverage of central government financial assistance to sub-central governments. In addition, the TTIP should set standards for transparency, anti-corruption, and the rule of law in procurement practices that are as high as – or higher than – such standards in other agreements entered into by the United States and European Union, to serve as a template for other trading nations around the world. Finally, the United States and the European Union should ensure that, going forward, new technologies and services are eligible to benefit from the government procurement commitments of the TTIP.
For more information about this working group, please contact:
Stephen Schaefer, Emergency Committee for American Trade
John Murphy, U.S. Chamber of Commerce