Legal Issues of Economic Disintegration: Government Procurement and BREXIT

This article assesses the European Commission’s 2016 Amended Proposal for ‘a Regulation of the European Parliament and of the Council on the access of third-country goods and services to the Union’s internal market in public procurement and procedures supporting negotiations on access of Union goods and services to the public procurement markets of third countries’.1 The proposed regulation aims to improve the conditions under which European Union (EU) businesses can compete for public contracts abroad. It provides the EU with leverage through imposing a price penalty on any tender for an EU procurement which is originating in a country that does not offer the EU ‘reciprocity’ in access to its procurement markets. After introducing the 2016 International Procurement Instrument (IPI) Amended Proposal, the article examines the legal framework of the Amended Proposal with reference to its evolution from the European Commission’s original 2012 proposed regulation. The analysis then turns to the concept of reciprocity, which serves as the justificatory basis of the Commission’s proposal before assessing the 2016 Amended Proposal’s compatibility with the EU’s commitments under the World Trade Organization (WTO), including most notably the World Trade Organization’s Government Procurement Agreement (WTO GPA), the General Agreement on Tariffs and Trade (GATT) and the Agreement on Subsidies and Countervailing Measures (ASCM). This assessment concludes by questioning the compatibility of this proposed regulation with the EU’s obligations under the WTO as well as the objectives of the EU procurement rules, underpinned by Treaty principles.

Does the World Trade Organization Government Procurement Agreement Deliver What It Promises?

Markets for public contracting are in the process of transition. Various public/private partnership arrangements replace conventional purchasing, especially within the local and regional government area. Municipal entities may not be in a position to define their needs up-front because they would not have the overview of what the market may have to offer. So one should ask: Is the traditional ban-on-negotiations in mandatory tender procedures (sealed bidding) - such as it is in EU public procurement law - counter-effective to genuine best value for public money? The article displays significant differences between European Union (EU) law, U.S. law and other regimes such as United Nations Model law, The World Trade Organisation’s Government Procurement Agreement (WTO/GPA), The International Bank for Reconstruction and Development (IBRD), and the NAFTA (North American Free Trade Agreement). New avenues for public/private demand a new agenda and the recent EU 2004 directive scheme attempts to respond to the market challenges. The author accepts that the new directive on public contracting facilitates a more smooth approach than in current EU law with regard to high-tech complicated contract awards, but questions whether the ’competitive dialogue’ really can afford tailor-made solutions to cope with long-term public/private partnership arrangements of the kind now spreading all over Europe

Part I. The WTO Regime on Government Procurement: 1. The WTO regime on government procurement: past, present and future Part II. Expanding the Scope of the Agreement on Government Procurement: Accession and Coverage: 2. Forging a more global procurement market: issues concerning accessions to the agreement on government procurement 3. Accession to the agreement on government procurement: the case of China 4. India's possible accession to the agreement on government procurement: what are the pros and cons? 5. The benefits to developing countries of accession to the government procurement agreement: the case of Chinese Taipei 6. The coverage negotiations for the agreement on government procurement: context, mandate, process and prospects 7. A case study of coverage issues: Canada's sub-central coverage under the agreement on government procurement 8. The procurement of state trading companies under the WTO agreements: a proposal for a way forward 9. Addressing purchasing arrangements between public sector entities - what can the WTO learn from the EU's experience? Part III. Revision of the Procedural Rules and Other Transparency Provisions of the Agreement on Government Procurement: 10. The revised agreement on government procurement: changes to the procedural rules and other transparency provisions Part IV. Developing Countries in the WTO Procurement Regime: 11. Special and differential treatment for developing countries under the agreement on government procurement: the current text and new provisions 12. Building sustainable capacity in public procurement 13. Untying aid through the agreement on government procurement: a means to encourage developing country accession to the agreement and to improve aid effectiveness? Part V. Economic and Social Development (Horizontal Policies) in Government Procurement: 14. The national treatment and exceptions provisions of the agreement on government procurement and the pursuit of horizontal policies 15. The limited case for permitting SME procurement preferences in the agreement on government procurement 16. Social policies in procurement and the agreement on government procurement: a perspective from South Africa Part VI. Enforcement and Remedies: 17. Constructing a system of challenge procedures to comply with the government procurement agreement 18. Designing effective challenge procedures: the EU's experience with remedies 19. The design and operation of a bid challenge mechanism: the experience of Hong Kong Part VII. Multilateralism and Regionalism: 20. Government procurement provisions in regional trade agreements: a stepping stone to GPA accession? 21. A case study of regionalism: the EU-Cariforum economic partnership agreement Part VIII. Challenges and New Directions: 22. Ensuring integrity and competition in public procurement markets: a dual challenge for good governance 23. Developing multilateral rules on government procurement: the value of soft law 24. Work of UNCITRAL on government procurement: purpose, objectives, and complementarity with the work of the WTO 25. Global procurement law in times of crisis: new buy American policies and options in the WTO legal system 26. Procurement rules in times of crisis: lessons from US government procurement in three episodes of 'crisis' in the 21st century.

The World Trade Organisation (WTO) Government Procurement Agreement (GPA) has created the most comprehensive plurilateral system for procurement-related trade liberalization. However, there has been a proliferation of free trade agreements (FTAs) regulating public procurement liberalization, including between GPA parties. Such FTAs seek to bypass or go beyond the GPA on a bilateral basis, or with a more limited plurilateral remit. Such FTAs tend to follow a ‘GPA+’ approach to provide incremental trade liberalization based on the substantive provisions of the GPA. However, there is a trend of substantive divergence between the GPA regulatory baseline and the FTA regulation of crucial issues, such as the national treatment obligation or access to remedies. This is also true of FTAs involving the European Union (EU) or, recently, its former Member State, the UK. This creates a situation of potential conflict of treaty norms that has so far received limited attention. This article focuses on the resolution of conflicts between GPA and FTA substantive provisions under the 1969 Vienna Convention on the Law of Treaties (VCLT), using the UK’s post-Brexit FTAs as a case study. It argues for a rationalization of the system by extending the use of incorporation by reference of the GPA in FTAs involving GPA parties. World Trade Organisation, Government Procurement Agreement, Free Trade Agreements, public procurement, national treatment, access to remedies, conflict of treaty norms, Vienna Convention on the Law of Treaties, interpretation, variable geometry

The chapter addresses applicable non-discrimination principles impacting two World Trade Organization (WTO) Members, Canada and the UK, as a consequence of their respective memberships in the NAFTA and in the European Union (EU). Although both Canada and the UK are WTO Members, the non-discrimination obligations in tax matters splinter again when one looks at the operation of an integrated trade agreement. In Europe, direct tax measures are filtered through the lens of the free trade principles of the Treaty of Rome. EU members who are signatories to the GATS are subject to very different non-discrimination obligations with respect to tax measures when operating in a State that is a signatory to the Treaty on the Functioning of the European Union (TFEU) than, for example a service provider from a NAFTA Party operating in the same State. The non-discrimination obligations if any, that apply to a service provider from a State that is a GATS Member may therefore vary widely when providing services in another Member State depending on whether there is an additional integrated trade agreement like the TFEU with the source State. The non-discrimination obligations affecting service providers from EU Member State may also vary depending on the terms of the tax treaty between the EU Member States. The chapter concludes that there are many approaches to the matter of non-discrimination in tax matters and standards that may apply but there will be no minimum common standard of tax treatment for many non-residents without a non-discrimination obligation in a tax treaty.

The promotion of international trade is seen as one of the important instruments to ensure development in developing nations and regions. The history of the World Trade Organisation (WTO) and the drafting of many regional and similar international trade agreements are evidence of this. The Southern African Development Community (SADC) is no exception.1 It is therefore strange that many states that are members of the WTO and actively encourage the opening up of international borders to free trade do not include public procurement2 in such free trade arrangements. This is particularly evident in developing states. If the WTO Government Procurement Agreement (GPA), which is a plurilateral agreement, is considered it is clear that many states do not wish to open their internal markets to competition in the public procurement sphere. It is therefore not surprising that public procurement has been described as the last rampart of state protectionism (Ky, 2012). Public procurement is an important segment of trade in any country (Arrowsmith & Davies, 1998). It is estimated that public procurement represents between 10% and 15% of the gross domestic product (GDP) of developed countries and up to 25% of GDP in developing states (Wittig, 1999). Unfortunately, governments often expect private industry to open up national markets for international competition but do not lead the way. Except for the limited use of pooled procurement,3 no specific provision is at present made for the harmonisation and integration of public procurement in the SADC. In view of the proximity of the member states, the interdependency of their economies and the benefits that can be derived from opening up their boundaries to regional competition in public procurement, the possibility of harmonisation and deeper integration in this sphere needs to be given more attention. The importance of public procurement in international trade and regional integration is twofold: first, it forms a substantial part of trade with the related economic and developmental implications; secondly, it is used by governments as an instrument to address socio-economic issues. Public procurement spending is also important because of its potential influence on human rights, including aspects such as the alleviation of poverty, the achievement of acceptable labour standards and environmental goals, and similar issues (McCrudden, 1999). In this article the need to harmonise public procurement in the SADC in order to open up public procurement to regional competition, some of the obstacles preventing this, and possible solutions are discussed. Reference is made to international instruments such as the United Nations Commission on International Trade Law (UNCITRAL), the Model Law on Public Procurement and the GPA. In particular, the progress made in the Common Market for Eastern and Southern Africa (COMESA) with regard to the harmonisation of public procurement, which was based on the Model Law, will be used to suggest possible solutions to the problem of harmonising public procurement in the SADC.

We examine the impact of the World Trade Organization (WTO) Government Procurement Agreement (GPA) on government procurement practices in the European Union (EU). We analyse empirically whether the WTO GPA is effective in promoting non-discriminatory, open, transparent, competitive, and cost-effective government procurement. To study this question, we use a unique data set recently released by the EU, covering more than three million tenders conducted in the European Economic Area, Switzerland, and Macedonia during the years 2006–2016. We find that the WTO GPA promotes competition by increasing the probability of awarding a contract to a foreign firm. In addition, the WTO GPA significantly lowers corruption risk by decreasing the number of contracts with single bidders, and by decreasing total number of wins by a single firm. Finally, the WTO GPA fosters cost-effective public procurement by lowering the probability that the procurement price is higher than estimated cost.

The EU Response to COVID-19: From Reactive Policies to Strategic Decision-Making.

A number of countries used discriminatory government procurement policies as part of stimulus packages designed to alleviate the effects of the global economic crisis. This article collates and updates the evidence related to the size of procurement markets, the level of home bias they exhibit, and the effectiveness of multilateral and bilateral procurement agreements in reducing that bias. The share of procurement in GDP has been increasing gradually since 1995 with clear spikes during 2000–2002 and 2008–2010, the latter in response to the global economic crisis. The analysis presents evidence of domestic bias in government procurement markets, bias which has been increasing over recent years. The analysis in this article suggests that the results of international efforts to address home bias in government procurement have been mixed to date. The World Trade Organization’s Government Procurement Agreement (GPA) is found to reduce discrimination in procurement markets, although available – but limited – evidence does not indicate a significant effect for bilateral agreements. The evidence suggests liberalization of investment barriers undertaken in parallel with trade agreements increases the ability of those agreements to reduce discrimination. This suggests that countries negotiating procurement agreements could also benefit from negotiating investment agreements in parallel.

A number of countries used discriminatory government procurement policies as part of stimulus packages designed to alleviate the effects of the global economic crisis. This paper collates and updates the evidence related to the size of procurement markets, the level of home bias they exhibit, and the effectiveness of multilateral and bilateral procurement agreements in reducing that bias. The share of procurement in GDP has been increasing gradually since 1995 with clear spikes during 2000-2002 and 2008-2010, the latter in response to the global economic crisis. The analysis presents evidence of domestic bias in government procurement markets, bias which has been increasing over recent years. The analysis in this paper suggests that the results of international efforts to address home bias in government procurement have been mixed to date. The World Trade Organisation's Government Procurement Agreement (GPA) is found to reduce discrimination in procurement markets, although available -- but limited -- evidence does not indicate a significant effect for bilateral agreements. The evidence suggests liberalisation of investment barriers undertaken in parallel with trade agreements increases the ability of those agreements to reduce discrimination. This suggests that countries negotiating procurement agreements could also benefit from negotiating investment agreements in parallel.

ЗДІЙСНЕННЯ «ЗЕЛЕНИХ» ПУБЛІЧНИХ ЗАКУПІВЕЛЬ: ПОТЕНЦІЙНІ ПЕРЕВАГИ ТА ВИКЛИКИ ДЛЯ УКРАЇНИ

With the reintroduction of agriculture and textiles and clothing into the GATT, the absence of general rules on procurement has become the major `hole' in the coverage of the GATT. This paper provides an analysis of the new Government Procurement Agreement that was negotiated between a subset of GATT members in the Uruguay Round, focusing in particular on the expansion of coverage to services and strengthening of enforcement mechanisms. The latter represent an innovation by allowing for private parties to invoke the Agreement before national courts. The question of why membership of the Agreement remains limited is explored. Pursuit of tariffication is suggested as an avenue through which the Agreement might be expanded to cover all WTO Members.

African RTAs are flexible legal regimes. These agreements are not designed to commit their members to scrupulous and rigorous adherence; rather they have been designed as flexible regimes of cooperation. If enforcement is not intended (in reference to African RTAs) a scarcity of formal trade agreement disputes should be no surprise. The European Union (EU) and its Treaty on the Functioning of the European Union (TFEU) and its predecessors has been hailed as the yardstick for Regional Trade Agreements (RTAs). The provisions of the TFEU have served as templates for RTAs across the world. Among the most influential of these provisions are those on Dispute Settlement Mechanism (DSM), centred on the Court of Justice of the European Union (CJEU).The CJEU has played a major role in the integration process of the EU through its proclamations of principles such as direct effect and the supremacy of community law. All the African RTAs have provided for DSMs and Regional Courts in their treaties that emulate the EU rule-based DSM and its CJEU. This paper appraises the paradox of the leading role played by the CJEU in European integration and yet its clones, amongst them the African Regional Courts, have failed to play a similar role in African regional integration. Taking the TFEU and the EU Court of Justice as benchmarks, the paper examines African RTAs' treaty provisions on DSM and African Regional Courts with their jurisprudence and evaluates their impact in regional integration in Africa. The paper finds that African RTAs' treaty provisions on implementation of integration, particularly those on sanctions for infringements, are weak and the impact of the African Regional Courts in the integration process is minimal.

Regional Trade Agreements (RTAs) have widely spread in recent years. The World Trade Organisation (WTO) notes that 546 RTAs were notified by January 2013, whereas only 380 were notified by 2007. RTAs have been considered as a stumbling block for the slow progress of the WTO Doha Round, and multilateral liberalisation is said to cause erosion of preferences enjoyed under bilateralism. That is, third country exporters that benefit from multilateral trade liberalization increase their exports, whereas the preferential suppliers in bilateral trade agreements face a decrease of their exports, given the substitutability between export products from different countries. Preference erosion also occurs when countries take up new bilateral trade agreements that can result in “old” trade partner countries losing their preferential treatment. The European Union (EU) has granted preferential market access to a large number of countries and is by far the main trading partner of its neighbouring countries, including Mediterranean partner countries (MED countries). Following the Association Agreements with the EU, there have been efforts of enhanced engagement and co-operation, especially after the Arab spring developments, but negotiations for so called free and comprehensive trade agreements (DCFTAs) are also under way with other partner countries. The objective of this paper is to look into possible preference erosion effects from the perspective of MED countries by depicting recent EU trade agreements as well as multilateral trade liberalisation in a simulation analysis. We apply the MAGNET (Modular Applied General Equilibrium Tool) model that builds upon the GTAP (Global Trade Analysis Project) model in a recursive dynamic general equilibrium framework, with a reference scenario that reflects the economic and population growth paths via most recent projections taken from the literature.