EU focuses on three sectors in procurement; won’t challenge SME policy
World Trade Online | 22 October 2015
EU focuses on three sectors in procurement; won’t challenge SME policy
In bilateral trade talks with the United States, the European Union has signaled that its efforts to expand the types of U.S. government procurement contracts open to EU firms will focus on three specific sectors, and that it will not seek to undo longstanding U.S. procurement preferences for small and minority businesses, according to informed sources.
EU Chief Negotiator Ignacio Garcia Bercero met with environmental and labor groups here on Wednesday (Oct. 21) and identified wider coverage in the sectors of energy, transportation and environmental services as a key offensive interests for the EU on procurement, they said.
By specifically identifying these three areas, the EU indicated it was scaling back its demands to seek a "more realistic" outcome on public procurement, according to these sources. That said, the EU is still pushing for the U.S. to expand its coverage of sub-central entities beyond the level contained in the Government Procurement Agreement (GPA).
The EU made expanded access to U.S. government procurement in the transportation sector a priority in the renegotiation of the GPA that was concluded at the political level in December 2011. In those talks, the EU was ultimately unsuccessful in getting the U.S. to open up to EU bidders mass transit and highway projects carried out by sub-central entities with federal government money.
Garcia Bercero also indicated to U.S. stakeholders that the EU was unable to overcome strong pushback from the United States on the idea of eliminating procurement preferences for small or minority-owned businesses. The EU unsuccessfully sought to eliminate those preferences in the GPA renegotiation, but Garcia Bercero told U.S. stakeholders that they do not have to worry about those preferences being rolled back in the Transatlantic Trade and Investment Partnership (TTIP).
Garcia Bercero declined to comment on the EU’s specific goals on public procurement, when asked by Inside U.S. Trade. "We have good discussions on public procurement. We discussed very broadly the interests in public procurement," he said.
U.S. and EU procurement negotiators met last week in Washington because not all of those negotiators were available to travel here for the round, sources said.
The U.S. and EU plan on swapping public procurement offers in February and are in the process of preparing a framework for what those offers will look like. Such benchmarks are expected to be exchanged in January. But EU officials have signaled that these offers would not cover sub-central government procurement, which is sensitive for the United States.
Several stakeholders have speculated that the EU is approaching the exchange of market access offers on procurement cautiously in order to avoid a situation similar to when the two sides exchange initial tariff offers and the U.S. proposal did not have the same level of ambition as the EU. The U.S. proposal defined concessions on about 88 percent of all tariff lines, while the EU proposal covered 96 percent of all tariff lines.
The U.S. is expected to show more flexibility in the area of government procurement in exchange for the EU’s increase in tariff line coverage for goods up to 97 percent. The extent of the increased U.S. flexibility is still unclear.
The EU is hoping to gain procurement access to 13 states not currently covered by the GPA as well as other regional and local jurisdiction.
The Office of the U.S. Trade Representative cannot offer procurement coverage of those state and local jurisdictions without them first agreeing to be covered.
According to a leaked negotiating document from July 2014 released by the Minnesota-based Institute for Agriculture and Trade Policy on Nov. 13, 2014, the EU was seeking to cover procurement by all U.S. state executive agencies and entities of the state government. It also wanted to cover the main executive agencies of counties with a population greater than 500,000, and counties that form part of a larger metropolitan area. In addition, the EU was also seeking coverage of procurement by municipal governments in state capitals, cities with a population greater than 250,000, and cities that form part of a larger metropolitan region (Inside U.S. Trade, Dec. 12, 2014).
One labor source indicated that it was possible the EU also reduced the scope of the cities it is seeking to cover. This source also characterized the EU’s reduced ambition on procurement as a victory for labor unions, which believed the EU goals in procurement were far too ambitious and could result in job loss because governments would no longer be allowed to reserve public contracts for U.S. companies.
The leak also said that the EU was seeking coverage all public universities which are executive state agencies, and remaining public universities and colleges with an enrollment of around 10,000 or more. Lastly, it would apply rules to public hospitals with more than 500 beds.
