RESTRICTED
WORLD TRADE S/WPGR/W/3
8November 1995
ORGANIZATION(95-3458)
Working Party onGATS Rules
GOVERNMENT PROCUREMENT OFSERVICES
Note bytheSecretariat
I. Introduction
1. Thelack ofmultilateral rules covering government procurement hasbeen perceived asa
significant gapintheinternational trading system. Government procurement typically represents
between 10and15percent ofGNP. Procurement ofservices isasubstantial partofthistotal.
Currently, only the22signatories totheAgreement onGovernment Procurement (GPA) accept
international disciplines onprocurement incertain services sectors1while procurement ofservices
inother countries isnotsubject toanymultilateral disciplines.2
2. Article XIII:2 oftheGeneral Agreement onTrade inServices (GATS) stipulates that
"there shall bemultilateral negotiations ongovernment procurement inservices under this
Agreement within twoyears from thedate ofentry intoforce oftheWTO Agreement."
Accordingly, theSecretariat wasasked toprepare thisnote bytheCouncil forTrade inServices at
itsfirst meeting on1March 1995.
3. Thenext section ofthisnote describes thetreatment ofgovernment procurement inthe
GATS. Section IIIexamines theGPA, highlighting thedisciplines relevant toprocurement of
services. Section IVdeals with certain issues thatnegotiators may need toaddress asthey take up
theGATS Article XIII mandate.
II. GATS andgovernment procurement
4. Article XIII.1 exempts laws, regulations andrequirements governing government
procurement from thedisciplines contained inArticles II(MFN Treatment), XVII (National
Treatment) andXVI (Market Access). Exempted government procurement isdefined inthe
Article toinclude "services purchased forgovernmental purposes andnotwith aview to
commercial resale orwith aview touseinthesupply ofservices forcommercial sale."
1There are, infact, twoAgreements onGovernment Procurement. The first was negotiated during theTokyo Round
ofTradeNegotiationsandenteredintoforceon1Januar y1981, andthesecond wasnegot iatedsimultaneousl ywiththeUruguay
Round negotiations andwillenter into force on1January 1996. The signatories tothemore recent Agreement areCanada,
the15Member States oftheEuropean Union, Israel, Japan, Korea, Norway, Switzerland andtheUnited States. The older
Agreement includes Hong Kong andSingapore butdoes notinclude Korea. This paper focuses onthemore recent Agreement
which istheonly one ofthetwo tocover services assuch.
2The Understanding onCommitments inFinancial Services, described inSection II,does create certain disciplines for
Members who have subscribed toit.S/WPGR/W/3
Page 2
5. Toanextent, Article XIII:1 oftheGATS mirrors Article III:8a oftheGATT which
exempts government procurement ofgoods from thenational treatment obligation.3Inboth cases,
theexemption reflects thecontinued desire ofcertain Members tofavour local (ornational)
products andsuppliers when awarding contracts. TheMFN exemption inArticle XIII ofthe
GATS wasincluded sothatsignatories totheGPA would notbeobliged toextend thebenefits of
thenational treatment andother obligations thatthey have agreed tounder theGPA onanMFN
basis tocountries who have notaccepted similar disciplines.4
6. Notwithstanding Article XIII oftheAgreement, certain disciplines onprocurement have
already been created inthearea offinancial services. Section B:2oftheUnderstanding on
Commitments inFinancial Services states that"each Member shall ensure thatfinancial service
suppliers ofanyother Member established initsterritory areaccorded most-favoured-nation
treatment andnational treatment asregards thepurchase oracquisition offinancial services by
public entities oftheMember initsterritory." TheUnderstanding hasbeen accepted asabasis
formaking commitments byonly 27countries (seeAnnex 1ofthispaper). Two aspects ofthe
Understanding arenoteworthy. First, thebenefits oftheUnderstanding arealsoextended to
Members who have notsubscribed toit,andsecond, thecoverage oftheobligations hasbeen
limited only toentities established intheterritory oftheMember.
III. The Government Procurement Agreement andServices
7. Thenew GPA, towhich there are22signatories, willenter intoforce on1January 1996.
Itsobjective, stated inthepreamble, istocontribute totheliberalization andexpansion ofworld
trade. This istobeachieved byeliminating discrimination against, andbetween, foreign
products, services andsuppliers, byenhancing thetransparency oflaws andpractices, andby
ensuring fair, prompt andeffective enforcement ofinternational provisions ongovernment
procurement. Therenegotiation oftheGPA during theUruguay Round focused onexpanding its
coverage toservices contracts, sub-central government entities andpublic undertakings, andon
strengthening itsenforcement provisions.
8. This section attempts tohighlight certain aspects oftheGPA which may berelevant tothe
negotiations ongovernment procurement ofservices. Itisnotintended here toprovide an
exhaustive description ofthenew GPA.5
1. Scope andcoverage
9. TheAgreement applies toanylaw, regulation, procedure orpractice regarding any
procurement, above acertain threshold value, byentities which arespecifically listed byeach
party.6Furthermore, only services expressly indicated bythesignatory arecovered bytheGPA.
3There isnostrict counterpart intheGATT forArticle XVI oftheGATS onMarket Access, though thisArticle includes
elements ofwhat iscontained inArticles IIand XIoftheGATT.
4Article XVII.2 oftheGATT, which exempts government procurement from theprovisions onstate trading enterprises,
states that"with respect tosuch imports, each contracting party shall accord tothetrade oftheother contracting parties fair
and equitable treatment." The precise content ofthisobligation hasnever been tested.
5Blank (1995), Hoekman and Mavroidis (1995), and Messerlin (1994) contain useful discussions oftheGPA.
6Appendix 1oftheGPA contains fiveAnnexes foreach signatory. Thefirst three Annexes contain listsofcovered entities,
thefourth anindication ofcovered services, and thefifth pertains toconstruction services.S/WPGR/W/3
Page 3
Thus, theGPA generally adopts apositive listapproach forservices inlinewith theapproach of
theGATS.7
10. There arethree entity annexes: Annex 1listscovered central government entities; Annex
2listssub-central government entities; andAnnex 3lists"allother entities thatprocure in
accordance with theprovisions ofthisAgreement" which ismeant toinclude entities such as
public undertakings (e.g. public utilities). Since itwasnotpossible toarrive atacommon
definition ofentities, particularly public undertakings, theAgreement takes theflexible approach
ofallowing signatories todetermine their listsofentities through theexchange ofspecific
concessions.
11. Theinclusion ofsub-central entities isamajor feature ofthenew GPA. Thus, theUnited
States Annex contains, forinstance, alistof24States which have accepted toopen their tenders
toforeign competition.8TheAnnex oftheEuropean Communities includes allsub-central
entities, such asstate entities inthecase offederal Member states likeGermany andregional
entities inthecase ofcentralised Member states likeFrance, aswell aslocal authorities. The
Japanese Annex includes many prefectorial governments andcities covered bytheLocal
Autonomy Law.
12. TheAgreement alsoaddresses theissue ofprivatization andother circumstances where
governments loseinfluence over decisions ofpublic entities. Article XXIV:6(b) states that"where
aparty wishes, inexercise ofitsrights, towithdraw anentity from Appendix Ionthegrounds
thatgovernment control orinfluence over ithasbeen effectively eliminated, theparty shall notify
theCommittee." Thus, itistheendofpublic control orinfluence rather than thechange of
ownership which isdeemed tobetherelevant consideration.
13. Thecoverage ofservices procurement intheGPA islimited bycertain factors. First, as
noted above, only contracts above acertain threshold value areincluded (seeTable 1).Secondly,
most Parties have excluded from their listsarange ofservices sectors (seeTable 2).These
include postal services, basic telecommunication services, audiovisual services, distribution
services, educational services, health-related andsocial services, tourism andtravel, and
recreational, cultural andsporting services. Theempirical significance ofthese exclusions isnot
clear. Finally, there isarange ofsectoral non-application andreciprocity provisions contained in
theAnnexes listing theservices. Themost general reciprocity provisions areoftheform: "a
service listed inAnnex 4iscovered with respect toaparticular Party only totheextent thatsuch
Party hasincluded thatservice inAnnex 4."Butthere arealsoother specific non-application or
reciprocity provisions pertaining tosectors, thresholds andtheapplication ofArticle XXdealing
with challenge procedures. Parties agreed with each other ontheinclusion ofsuch provisions
presumably with aview toensuring abalance ofadvantage inaccess toprocurement opportunities
(seeAnnex 2ofthispaper foradiscussion ofthenon-application andreciprocity provisions inthe
GPA).9
7The United States istheonly Party totheGPA tohave included anegative listofservices notcovered bytheAgreement.
8Once themain commitments inthebilateral agreement between theUnited States andtheEuropean Communities will
have been officially notified tothesignatories totheGPA andincorporated into their Annexes, thelistofentities inAnnex
2oftheUnited States will increase from 24to37.
9These departures from theprinciple ofMFN treatment were thereason given byHong Kong, asignatory oftheTokyo
Round procurement agreement, fordeclining tosign thenew GPA.S/WPGR/W/3
Page 4
2. Basic disciplines: National Treatment andMFN
14. Article IIIoftheGPA states thefundamental principles ofnon-discrimination. National
Treatment means thatproducts, services andsuppliers from other parties totheAgreement should
benefit from atreatment "nolessfavourable" than domestic products, services andsuppliers.
MFN treatment prohibits discrimination between products, services andsuppliers ofother Parties
totheAgreement. Thetwoprinciples arestated both interms ofthecountry oforigin (Article
III:1) aswell asinterms ofthedegree offoreign affiliation orownership (Article III:2).10
15. Article III.3 states that"the provisions ofparagraphs 1and2shall notapply tocustoms
duties andcharges ofanykind imposed onorinconnection with importation, themethod of
levying such duties andcharges, other import regulations andformalities, andmeasure affecting
trade inservices other than laws, regulations, procedures andpractices regarding government
procurement covered bythisAgreement."
16. This provision makes itclear thattheGPA contains rules only onthegovernment
purchase ofservices, anddoes notdeal with other measures affecting market access and
competitive conditions forservices andservice suppliers. These measures remain subject to
GATS rules. Thus, thebenefit thatmay begained from anyconcession onservices inthecontext
oftheGPA issubject tothecommitments onmarket access andnational treatment under the
GATS. Itmay benoted thatwhile national treatment isageneral obligation inrespect ofinternal
measures inthegoods context, itissubject toallthelimitations contained inaMember 'sschedule
intheservices context.
3. Procedural disciplines: Transparency andother rules ontendering procedures
17. Inorder toensure theimplementation ofitsbasic principles, theGPA laysdown detailed
operational rules. There isparticular emphasis ontransparency ateach stepoftheprocurement
process. Exante transparency requirements stipulate thatadequate efforts bemade toinform all
interested bidders about relevant aspects oftheprocurement inquestion (Articles VIItoXVII).
Expost transparency requirements stipulate thatadequate information beprovided regarding the
decisions thataretaken (XVIII andXIX). Article XVII specifies transparency rules vis-a-vis
suppliers incountries notParties totheAgreement onthebasis ofreciprocity. Article XIX lists
theannual statistics thatparties have tocollect andprovide toeach other through theCommittee
onGovernment Procurement.
18. TheGPA alsocontains anobligation tojustify thedecisions thataretaken. Thus,
Article XVIII:2 stipulates thateach entity shall, ifrequested, provide toanunsuccessful tenderer
information justifying itsdecision. Article XIX:2 imposes anobligation ontheprocuring
government toprovide, ifrequested bythegovernment ofanunsuccessful tenderer, information
necessary "toensure thattheprocurement wasmade fairly andimpartially."
19. Other disciplines ontendering procedure include those pertaining to:technical
specifications (Article VI); qualification ofsuppliers (Article VIII); tender notices andtheir
selection procedures (Article X); time-limits fortendering anddelivery (Article XI); submission,
10Article III:1 states theprinciples ofNational Treatment andMFN interms ofthecountry oforigin, andsetsthetreatment
accorded to"domestic" (orlocal) products, services orsuppliers asthestandard for"National Treatment". Article III.2
prohibits discrimination within thecategory of"domestic" (orlocally established) suppliers onthebasis offoreign ownership
oraffiliation. The standard for"National Treatment" inArticle III:2 isthetreatment accorded tothe"most national" of
products, services orsuppliers.S/WPGR/W/3
Page 5
receipt andopening oftenders andawarding ofcontracts (Article XIII);11conditions under which,
andthemanner inwhich, anentity may conduct negotiations with potential suppliers (Article
XIV) andresort tolimited tendering (Article XV).
4. Enforcement mechanisms: Consultation, challenge procedures anddispute settlement
20. Several features have been introduced intheGPA toadapt thedispute settlement rules to
thespecific nature ofprocurement -often asingle event, costly toreverse, andwhere
modifications tonational rules ofgeneral application would notnecessarily provide adequate
guarantees ofnon-recurrence. One isthatthesignatories collectively acting astheDispute
Settlement Body may authorize consultations regarding remedies when withdrawal ofmeasures
found tobeincontravention oftheAgreement isnotpossible (Article XXII:3).
21. Asecond significant feature istheintroduction ofthechallenge procedures (Article XX).
Article XX:2 stipulates that"each Party shall provide non-discriminatory, timely, transparent and
effective procedures enabling suppliers tochallenge alleged breaches oftheAgreement arising in
thecontext ofprocurements inwhich they have, orhave had, aninterest." Article XX:7(a)
requires thatchallenge procedures must provide forrapid interim measures tocorrect breaches of
theAgreement andtopreserve commercial opportunities, which may result insuspension ofthe
procurement process. Theprocedures must alsoprovide foracorrection ofthebreach ofthe
Agreement orcompensation forthelossordamages suffered, which may belimited tocosts for
tender preparation orprotest (Article XX:7(c)).
5. Developing Countries: Special anddifferential treatment
22. Article VoftheAgreement contains special provisions onspecial anddifferential
treatment ofdeveloping countries -both interms ofproviding them increased opportunities to
export andinimposing lessstringent disciplines onthem. Article V:1obliges Parties totake into
account thedevelopment, financial andtrade needs ofdeveloping countries, inparticular least
developed countries, intheimplementation andadministration oftheGPA. Article V:2andV:3
state thatParties shall, both intheapplication oflaws, regulations andprocedures affecting
government procurement, andinthepreparation oftheir coverage lists, facilitate increased
imports from developing countries. Articles V:4oftheGPA allows developing countries to
negotiate mutually acceptable exclusions from therules onnational treatment with respect to
certain entities, products orservices thatareincluded intheir listsofentities. Article V:5allows
developing countries torequest theCommittee onGovernment Procurement togrant similar
exclusions even after they have acceded totheAgreement. Articles V:4andV:5alsoallow for
exclusions (presumably from theMFN rule) fordeveloping countries participating inregional or
global arrangements among developing countries. Article Valsocontains provisions ontechnical
assistance fordeveloping countries, andspecial provisions forleast developed countries.
23. While developed countries areforbidden theuseofoffsets, such asdomestic content or
counter-trade requirements, developing countries may continue tousethem, provided they are
negotiated during accession, clearly defined, andareapplied non-discriminatorily (Article XVI).
Itisalsostipulated thatsuch offsets canonly beused forqualification toparticipate inthe
procurement process andnotascriteria forawarding contracts. This implies thatoffsets canbe
11Itisstipulated inArticle XIII:4(b) thattheentity must make theaward tothetenderer who isfully capable ofundertaking
thecontract andwhose tender iseither thelowest orthemost advantageous interms ofthespecific evaluation criteria set
forth inthenotices ortender documentation.S/WPGR/W/3
Page 6
conditions thatarespecified inthetender documentation, butafirm cannot beawarded acontract
onthebasis ofexceeding theminimum offset requirement.12
IV. Some issues forconsideration
24. Given theGATS mandate andtheexistence oftheGPA, abasic question tobeanswered
ishow Members would liketoseethepresent situation regarding government procurement
evolve. Would they wish tomaintain thestatus quo, inwhich theGATS exemption of
government procurement would coexist with theplurilateral GPA? Orisitpossible todevise
multilateral disciplines ongovernment procurement within theGATS context? Inthelatter case,
would Parties totheGPA extend itsbenefits onanMFN basis toallGATS Members orisadual
structure ofcommitments envisaged?
25. One aspect oftheproblem isthetension inthepresent context between thetwo
fundamental principles ofinternational trade law: national treatment andMFN. Ontheonehand,
theelimination oftheMFN exemption inArticle XIII oftheGATS with unchanged national
treatment disciplines incountries notsignatory totheGPA may notbeacceptable totheGPA
signatories. Even within theGPA, Parties have found itdifficult toaccept unconditionally an
MFN obligation vis-a-vis other Parties. Most Parties have reserved theright todiscriminate in
particular sectors against other parties who, intheir perception, have notaccepted adequate
disciplines. Ontheother hand, thecountries who arenotcurrently signatory totheGPA have
generally revealed areluctance toseek itsmembership.
26. Isitpossible todevise disciplines onthepropensity toprotect inprocurement which are
acceptable toallcountries and, atthesame time, arenotsoweak astoprompt some toseek a
derogation from theMFN principle? Thenext section examines alternative approaches tothe
question ofnational treatment andcertain related disciplines. This isfollowed byabrief
consideration oftheextent towhich these different approaches might accommodate anMFN-based
setofprocurement disciplines.
1.Variations onthetheme ofnational treatment andrelated disciplines
27. Three possible approaches tonational treatment andrelated disciplines forgovernment
procurement areidentified below. This listing does notpretend tobeexhaustive, anditshould
alsobeborne inmind thatthevarious approaches could becombined indifferent ways.
(i) Abasic national treatment obligation only
28. Under thisscenario, Members would agree toapply national treatment intheir
procurement decisions. Thequestion, then, iswhether national treatment with respect to
government procurement would beageneral obligation forallsectors, would apply only to
scheduled sectors, orwould besubject toexplicit limitations inscheduled sectors orwith respect
tocertain modes ofsupply. Entity coverage andthreshold values might alsobeissues needing
attention.
12Israel, oneofthetwodeveloping country signatories, specifies initsAnnex thatthemaximum local content requirement
is35percent forthefirst five years oftheAgreement, 30percent forthenext four years, and 20percent thereafter.S/WPGR/W/3
Page 7
(ii) Abasic national treatment obligation reinforced byprocedural andenforcement disciplines
ofthekind contained intheGPA
29. Ithasbeen observed that"asimple national treatment requirement, ascontained inArticle
IIIoftheGATT, would notbeenough toensure equal treatment andnon-discrimination inthe
area ofgovernment procurement. Signatories tothe[Government Procurement] Agreement had
found itnecessary todevelop procedural guarantees toensure effective non-discrimination."13It
may, therefore, beuseful tobegin byasking: how dotheexisting GATS disciplines compare with
those contained intheGPA? Inother words, what would need tobeadded totheGATS toensure
thatanelimination oftheArticle XIII exemption would lead torules onprocurement comparable
tothose intheGPA? Itwould seem thattheGPA contains twocrucial setsofdisciplines: first,
theprocedural disciplines, which areimportant formaking thenon-discrimination obligation
effective inthefaceofadministrative discretion; andsecond, theenforcement mechanisms --
particularly thechallenge procedures --which arecrucial foreffective enforcement, given theone-
shot andirreversible nature ofmany procurement contracts.
(iii) Diluted national treatment obligation together with acceptance ofprocedural and
enforcement disciplines
30. Under thisoption thestrict principle ofnational treatment would betemporarily sacrificed
inreturn forincreased transparency andstrengthened enforcement (along thelines discussed in(ii)
above). Animmediate move tostrictly non-discriminatory procurement may bedifficult to
achieve insome cases. Inthepresent GPA, Governments areconfronted with an"allornothing"
choice --either asector isnotincluded atallor,ifitis,procurement must bestrictly non-
discriminatory. If,intheGATS context, governments hadthefreedom tochoose thedegree of
protection, would they bewilling toinclude more sectors? Would other governments bewilling
toconcede thisfreedom toinduce greater coverage? One possibility would beforcountries to
maintain preference margins, buttobind them andmake them subject tounilateral ornegotiated
reductions -inamanner analogous totariffs.
2.National treatment andMFN
31. Theoutcome ofthediscussion ofprocurement under theGATS Article XIII programme
depends ontworelated questions. One concerns thelevel ofdisciplines acceptable tothose
Members whose procurement, ingeneral orinspecific sectors, issofarnotsubject toany
multilateral disciplines. Thesecond relates totheconditions under which Members who have
already accepted certain disciplines under theGPA would bewilling toextend MFN treatment to
other Members.
32. Theassumption oflessstringent disciplines ofthetype described intheprevious section
may beconsidered bycountries who have notaccepted anydisciplines inallorsome sectors. The
level ofdisciplines thatareassumed islikely toinfluence theapproach ofMembers who accept a
higher standard ofdisciplines under theGPA. They could either extend MFN treatment towards
allMembers or,asisthecase now, only towards those Members who accept comparable
disciplines. Intheformer case, theoutcome would beamultilateral agreement, while inthelatter
case, rules onprocurement would retain their plurilateral character.
33. Theprevious discussion contains twoexamples ofattempts toresolve thetension inthe
present context between national treatment andMFN. First, theGPA, inprinciple, already
provides forthepossibility ofdual standards fordeveloped anddeveloping countries with MFN
13GPA/IC/M/4S/WPGR/W/3
Page 8
treatment forallsignatories -subject, ofcourse, tothevarious reciprocity provisions. Thus
developing countries cannegotiate mutually acceptable exclusions from therules onnational
treatment with respect tocertain entities, products orservices thatareincluded intheir listsof
entities. Developing countries may alsocontinue touseoffsets, forbidden todeveloped countries,
provided they arenegotiated during accession. Secondly, intheprocurement offinancial
services, certain Members have accepted national treatment obligations towards suppliers
established intheir territories. Thebenefits ofthisnational treatment obligation, albeit limited,
have been extended unconditionally even toMembers who have notaccepted anydisciplines on
their procurement.
34. Finally, thewillingness toaccept disciplines ongovernment procurement islikely to
depend onfuture negotiations under theGATS onmeasures affecting trade inservices. Foreign
suppliers canonly effectively contest themarket forgovernment procurement ifthey arenot
unduly handicapped byrestrictive trade measures. Inthecase ofboth goods andservices, foreign
bidders may stillbeobliged first tocross thehurdle oftrade restricting measures (seethe
discussion ofArticle III:3 oftheGPA).14Thecreation ofgenuine international competition for
procurement contracts thus depends crucially ontheliberalization oftrade.
3.Certain questions which theWorking Party may wish toaddress
What doMembers regard astheobjective ofnegotiations under Article XIII oftheGATS? In
particular, how would members liketoseethepresent situation concerning disciplines on
government procurement evolve?
What level ofdisciplines isacceptable toMembers who have sofarnotassumed anyinternational
obligations onprocurement?
What relationship, ifany, might beenvisaged between thecommitments under theGPA ofthose
Members who areParty toit,andcommitments under theGATS? Under what conditions would
Members who areParty totheGPA bewilling toextend itsbenefits onanMFN basis tothose
who arenot?
How doMembers view thepossibility ofintroducing acertain degree offlexibility inthe
application ofnational treatment andrelated disciplines (asdiscussed inSection IV.1 ofthis
paper)? How doMembers assess therelative importance ofthebasic national treatment
obligation, ontheonehand, andprocedural andenforcement disciplines, ontheother?
How would Members propose todefine thescope ofagreed obligations -i.e.ingeneral terms, on
asectoral basis, orwith specific limitations?
14One ofthemost important services sectors inthecontext ofgovernment procurement isconstruction. Allsignatories
totheGPA have accepted itsdisciplines inthissector above acertain threshold value. YetintheGATS, Members have
usually notbound themselves togrant market access tothesupply ofconstruction services through thepresence ofnatural
persons, except forcertain limited categories ofintra-corporate transferees. Thelack ofassurance thatworkers canbemoved
toconst ructionsitesisanexampl eofhow limitationsonmarketaccess may reduce thebenefi tofnon-di scriminatorygover nment
procurement.S/WPGR/W/3
Page 9
Bibliography
Blank, A.(1995), History oftheAgreement onGovernment Procurement, mimeo.
Hoekman, B.M. andMavroidis, P.C. (1995), TheWTO 'sAgreement onGovernment
Procurement: Expanding Disciplines, Declining Membership, Public Procurement Law Review,
vol.4,pp.63-79.
Messerlin, P.A. (1994), Agreement onGovernment Procurement, inTheNew World Trading
System: Readings, OECD, Paris.S/WPGR/W/3
Page 10
ANNEX 1:COUNTRIES WHICH HAVE BASED THEIR COMMITMENTS ONTHE
"UNDERSTANDING ONCOMMITMENTS INFINANCIAL SERVICES "
Aruba (Netherlands)
Australia
Austria
Belgium
Canada
Czech Republic
Denmark
Finland
France
Germany
Greece
Iceland
Ireland
Italy
Japan
Liechtenstein
Luxembourg
Netherlands
Norway
Portugal
Slovak Republic
Spain
Sweden
Switzerland
Turkey
United Kingdom
United StatesS/WPGR/W/3
Page 11
ANNEX 2:THE NON-APPLICATION AND RECIPROCITY CLAUSES INTHE GPA
Thereason formost ofthesectoral non-application andreciprocity provisions inthe
Annexes ofindividual Parties totheGPA stems from thefactthaton15December 1993, thetime
thatthenegotiations were concluded, certain participants, inparticular theUnited States andthe
European Communities, could notreach agreement with each other onoffers attheAnnex 2and
Annex 3levels (sub-central andpublic utilities). Moreover, theCanadians were notinaposition
tomake, atthatstage, anycommitments inrespect oftheir Provinces. Theoption thatthe
negotiators were faced with waseither toagree onamuch smaller agreement, limited essentially
tocentral government procurement ofgoods andservices, ortokeep onthetable therather
extensive offers which countries were able tomake attheAnnex 2andAnnex 3levels andto
agree, atleast forthetime being, thatcountries could include intheir Annexes country-specific
non-application clauses andreciprocity provisions inorder toprovide foramutually-agreed
balance ofadvantage. Thelatter option waschosen, with theintention ofusing theperiod until
thedate ofentry intoforce oftheGPA, 1January 1996, tonegotiate improvements tothe
commitments intheAnnexes thatwould enable alifting ofsome, ifnotall,non-application and
reciprocity clauses.
Atthetime oftheconclusion oftheGPA negotiations, on15December 1993, the
European Communities andtheUnited States declared their determination toexpand their
commitments under theGPA before 15April 1994, andmade itclear thatanyexpansion intheir
respective commitments asaresult ofthisunderstanding would beapplied toother Parties whose
offers hadbeen accepted bythem by15December 1993, subject totheconditions orqualifications
contained intherespective Annexes oftheECandtheUS,andthatthey would notseek to
rebalance theAnnexes ofother Parties onthestrength ofsuch expansion. Asaresult offurther
negotiations, theUSandtheECnegotiators reached abilateral agreement inMarrakesh in
April 1994 which wasformally concluded between them inthemiddle of1995. The
incorporation ofmost ofthese additional commitments intotheGPA, expected totake place
before theentry intoforce oftheAgreement atthebeginning ofnext year, willmean thata
substantial part, butnotall,ofthenon-application andreciprocity provisions between these two
Parties willberemoved. Inaddition, theCanadian Annexes provided thatCanada would make
offers, onthebasis ofcommitments from itsProvincial Governments, tocover entities inallits
Provinces within 18months oftheconclusion oftheGPA. Successful negotiations between
Canada andtheother Members would lead totheremoval, prior totheentry intoforce ofthe
Agreement, ofsome orallnon-application andreciprocity provisions between Canada andthe
other Members. Moreover, itshould alsobenoted that, asaresponse totheuseofreciprocity
andnon-application provisions intheAnnexes, aparagraph wasinserted, asArticle XXIV:7(c) of
theAgreement, under which theParties "shall seek toavoid introducing orprolonging
discriminatory measures andpractices which distort open procurement andshall, inthecontext of
negotiations under subparagraph (b),seek toeliminate those which remain onthedate ofentry
intoforce ofthisAgreement".TABLE 1:THRESHOLDS INANNEXES 1,2AND 3OFAPPENDIX 1OFTHE GPAS/WPGR/W/3
Page 12Special Drawing Rights (SDR)
SDR 1equals approx. $US 1.4(1994)
CANADA EC ISRAEL JAPAN KOREA NORWAY SWITZERLA
NDUS
ANNEX 1
Goods 130,000 130,000 130,000 130,000 130,000 130,000 130,000 130,000
Services except construction
services130,000 130,000 130,000 130,000 130,000 130,000 130,000 130,000
Construction services 5,000,000 5,000,000 8,500,000 4,500,000
Architectural
services:
450,0005,000,000 5,000,000 5,000,000 5,000,000
ANNEX 2
Goods 355,000 200,000 250,000 200,000 200,000 200,000 200,000 355,000
Services except construction
services355,000 200,000 250,000 200,000 200,000 200,000 200,000 355,000
Construction services 5,000,000 5,000,000 8,500,00 15,000,000
Architectural
services:
1,500,00015,000,000 5,000,000 5,000,000 5,000,000
ANNEX 3
Goods 355,000 400,000 355,000 130,000 450,000 400,000 400,000 400,000
Services except construction
services355,000 400,000 355,000 130,000 - 400,000 400,000 400,000
Construction services 5,000,000 5,000,000 8,500,00 15,000,000
Architectural
services:
450,00015,000,000 5,000,000 5,000,000 5,000,000
Annex 1: Central government entities
Annex 2: Sub-central government entities
Annex 3: Allother entities which procure inaccordance with theAgreement, which include entities such aspublic undertakings (e.g. public utilities).TABLE 2:COVERAGE OFSERVICES INTHE GOVERNMENT PROCUREMENT AGREEMENTS/WPGR/W/3
Page 13CANADA EC ISRAEL JAPAN KOREA NORWAY SWITZERLAND US
Exc. /Rec. Exc. /Rec. Exc. Exc. /Rec. Exc. /Rec. Exc. /Rec. Exc. /Rec. Exc. /Rec.
Business Services
Professional X X X X X X X X
Computer X X X X X X X X
R&D X
Real Estate X X X X X
Rental/Leasing X X
Other Business services X X X X X X X X
Communication Services
Postal Services
Courier Services X X X X X X
Basic Telecom Services
Value Added Services X X X X X X X
Audiovisual Services X
Construction &Engineer X X X X X X X X
Distribution Services X
Educational Services X
Environmental Services X X X X X X X X
Financial Services (U)X(U)(U)X(U) X(U) X(U)
Health-Related Services X
Tourism &Travel X X
Recreational, Cultural &Sport
Services X
Transport Services
Maritime transport X X X X X
Internal waterways X X X X
Airtransport X X X
Space transport
Rail transport X X X X
Road transport X X X X X
Services auxiliary toall
modes oftransportX X
x Anxinabox indicates that acountry hasmade commitments inallorpart ofthesector.
(u) Countries with (u)infinancial services row have based their commitments inthissector onthe"Understanding onCommitments inFinancial Services". Inaddition tocountries intheabove table with the(u)sign, there areseven
other countries with asimilar commitment: Aruba, Australia, Czech Republic, Iceland, Liechtenstein, Slovak Republic, Turkey.
Exc. Countries which have exclusion clauses, limiting thescope oftheir commitment inGPA.
Rec. Countries which have parts oralloftheir commitments subject toreciprocity.