RESTRICTED
WORLD TRADE GPA/IC/W/32
17November 1995
ORGANIZATION(95-3528)
Interim Committee onGovernment Procurement
Working Group onStatistical Reporting
NOTE ONTHE DISCUSSION ATTHE MEETING OFTHE
WORKING GROUP HELD ON25OCTOBER 1995
1. TheWorking Group onStatistical Reporting, which wasestablished bytheInterim Committee
onGovernmentProcurementatitsmeetingon29June1994,helditsfourthmeetingon25October1995.
Theissues ofuniform classification systems forpurposes ofstatistical reporting andcountry oforigin
were discussed.
UNIFORM CLASSIFICATION SYSTEM
(i) Goods
2. TheGrouphadbeforeitaSecretariatNotecontainingatranspositionoftheSystemof26Product
Categories from CCCN toHS(GPA/IC/W/26), acommunication from theUnited States containing
theconcordance between thesystem of26Product Categories andtheUSFederal Supply Classification
System, FSC(GPA/IC/W/27), acommunication from theEuropean Communities containing some
analyses ithadcarried outofthederogations andexclusions intheAgreement aswellasofthecategories
ofproducts inwhich itsprocurements tended tobeconcentrated withregard togoods (GPA/IC/W/20)
andacommunication fromtheUnited States containing procurements bytheFederal Government for
theyear1994 forcontracts andsupplies andequipment (GPA/IC/W/23).
3. With regard toidentifying asystem fortheclassification ofgoods, widespread support was
expressed bydelegations forasystem based ontheexisting system of26product categories, expanded
where necessary.
4. With reference totheSecretariat Notecontaining atransposition ofthesystem of26product
categories fromCCCN toHS(GPA/IC/W/26) andthecommunication fromtheUnited States containing
theconcordance between thesystem of26Product Categories andtheUSFederal Supply Classification
System, FSC(GPA/IC/W/27), several delegations saidthattheyneeded more timetoreview them
butthattheyhoped tobeinaposition tocomment onthem atthenextmeeting. Onedelegation said
thatassurances totheeffect thatnosubstantive redefinition ofthe26product categories hadresulted
fromtheprocess oftransposing themfromCCCN toHSwould behelpful inreviewing thistransposition
favourably. Arepresentative oftheSecretariat saidthatnosignificant differences incoverage had
beenidentified asresulting from thisprocess oftransposition.
5. Therepresentative oftheUnited States drew attention tothedocument hisdelegation had
distributed attheprevious meeting, identifying those categories where United States procurements were
concentratedandexpressedthehopethatsimilarinformationwouldbeforthcomingfromotherdelegations
(GPA/IC/W/23). Itwashisdelegation 'sintention totableproposals bythenextmeeting identifying
those categories within thesystem of26product categories which merited theGroup 'sattention for
possiblemodificationorexpansion.Anotherdelegationsaidthatitwouldtrytoprovidesomesuggestions
along those lineswithaviewtohaving asubstantial discussion onpossible expansion ofthesystem
of26product categories atthenextmeeting.GPA/IC/W/32
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6. TheChairman concluded thatthere seemed tobesupport intheGroup tocontinue tostudy
withfavour theideathatthesystem of26product categories beexpressed interms oftheHarmonized
System, asthiswasalanguage which wasusedmorefrequently elsewhere inadministrations, theCCCN
beingsteadilyreplaced.Delegationshadaccepted,asaworkinghypothesis,thatthesystemof26product
categories might beexpanded onthebasisofeither theHSortheCCCN, using theSecretariat document
GPA/IC/W/26 asabasis. TheGroup hadagreed tosubmit concrete ideas totheSecretariat onthe
wayinwhich thesystem of26product categories should bechanged anddeveloped. Thiscould be
done boththrough identifying those categories where afurther breakdown waswarranted because
procurements tended tobeconcentrated inthem, andthrough identifying those categories which needed
nofurther elaboration. Where afurther breakdown would besuggested, heinvited delegations toidentify
theprecise product coverage oftheproposed newcategories. Inthiscontext, delegations werealso
invited tosubmit precise information, totheextent possible, onareasinwhich theirprocurements tended
tobeconcentrated. Based ontheinformation received fromdelegations, itwashisintention tocome
forward withapaper asabasis fordiscussion atthenextmeeting, planned for7December 1995.
Hetherefore urged delegations tosendtheirsubmissions totheSecretariat notlaterthan20November.
Inthiscontext, hedrew attention tothedocuments submitted bytheUnited States (GPA/IC/W/23)
andtheEuropean Communities (GPA/IC/W/20) which suggested certain categories inwhich their
respective procurements tended tobeconcentrated.
(ii) Services
7. TheGroup hadbefore itaSecretariat Note ontheMain Arguments Advanced inPrevious
Discussions HeldintheCommittee onGovernment Procurement onaUniform Classification System
(GPA/IC/W/16) andaninformal Note bytheSecretariat, dated 17August 1995, reproducing the
preliminaryJointOECD-EUROSTATClassificationforServices.Attentionwasalsodrawntodocument
S/C/W/5, entitled GATS andStatistics andTrade inServices, circulated totheMembers oftheCouncil
forTrade inServices on17July1995.
8. Delegations generally supported theideaofusing theUNCPC asauniform classification system
forservices. However, twodelegations saidthattheiracceptance oftheUNCPC astheclassification
systemforserviceswascontingentuponthesuccessfulcompletionofestablishingaconcordancebetween
theirregional system andtheUNCPC, which wasintheprocess ofbeing finalized. TheChairman
proposed toconduct asimilar exercise ashadbeenagreed bytheGroup withregard totheclassification
system forgoods andinvited delegations toreview theUNCPC headings withaviewtoreaching some
preliminary conclusions onthelevelofdetail which would bedesirable intheGPA context, andto
submit anyideas ingood timebefore thedateofthenextmeeting asabasis fordiscussion atthat
meeting. Inthiscontext herecalled thatfornon-transportable goods andservices, theUNCPC consisted
offiveSections, which were divided into30Divisions or109Groups. (GPA/IC/W/16, Annex 1)
COUNTRY OFORIGIN OFPRODUCTS AND SERVICES
(i) Origin ofProducts
9. Withreference tothequestion ofwhether therulesoforigin usedforstatistical reporting under
Article XIX:5 should bethesame asthose applied under Article IV,onedelegation saidthatitneeded
moretimetoreflect ontheconsequences ofthelinkbetween Articles XIX:5 andIVandwould welcome
anyguidance from theChair andcomments from other delegations onthismatter. Ithaddifficulty
inassessing alltheimplications forArticle IVoftheAgreement onGovernment Procurement thatmight
result fromtheconclusion oftheharmonization programme onrulesoforigin, asprovided forinthe
Agreement onRules ofOrigin, contained inAnnex 1AoftheWTO Agreement, tobecompleted within
threeyears ofinitiation. Itwas,however, important tomake every attempt toreport origin instatistics
thatreflected asclosely aspossible theconcepts asoutlined inArticle IV.Itwasnotpossible toreportGPA/IC/W/32
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onthisbasis entirely accurately, given administrative considerations. Thecreation ofunnecessary
administrative burdens should, where possible, beavoided. TheChairman saidthatthegeneral rule
inArticle IVwould seem tobevalidalsointhecontext ofArticle XIX. Aslongastherewasnofully
harmonized basisforrulesoforigin, eachSignatory individually would decide howitsdomestic rules
would bedrawn upconsistently withgeneral principles intheWTO Agreement onRules ofOrigin.
Herecalled thatArticle IVoftheAgreement onGovernment Procurement stipulated thatParties should
taketheoutcome oftheharmonization programme onrules oforigin intoaccount inamending
paragraph 1ofArticle IVandnoted thatthesame guiding principle would alsoapply inthecaseof
rules oforigin forthepurposes ofstatistical reporting.
10. Insumming upthediscussion, theChairman suggested thatthismatter beconsidered again
atthenextmeeting, andthatifadelegation continued tohavereservations onthismatter, itshould
submit these inwriting, withanexplanation oftheproblems seen, totheSecretariat forcirculation
toalldelegations before thenextmeeting.
11. With regard tothedegree oftransparency oftender notices asawayofeffective monitoring
ofprocurement, therepresentative oftheEuropean Communities saidthat,tosatisfy fullythemonitoring
objectives under theAgreement, criteria, different from those examined today, should alsobetaken
intoconsideration. Itwasdifficult forasupplier toknow theexact origin ofaproduct. Figures on
theorigin ofproducts alone would therefore notbesufficient toallow aproper surveillance ofthe
Agreement. Hehoped tobeinaposition atthenextmeeting tocome forward withmore concrete
ideas. Onedelegation saidthat,while itappreciated theconcerns raised bytheEuropean Communities
inrespect ofreporting origin ofgoods instatistical reporting, ithadcertain qualms because, first,the
Agreement wasnotsupposed toguarantee foreign sales butrather guarantee market opportunities.
Secondly, untilsuchtime,ifever,when thepractice ofreporting statistics onorigin would beabandoned,
itwould bedifficult toimagine increasing thestatistical reporting burden byreporting onadditional
items. TheChairman concluded thattheissuewould mostlikely bepursued under thenewCommittee
onGovernment Procurement nextyearrather thanbeconcluded under themandate ofthisWorking
Group, foreseen toterminate attheendofthisyear.
(ii) Origin ofServices
12. TheGroup hadbefore itaSecretariat NoteontheDefinition ofNationality inCertain WTO
Agreements (GPA/IC/W/15). TheChairman recalled thattheGroup hadpreviously spoken about the
nationality ofthesupplier asthemain waytodefine theorigin ofaservice. Under theGATS, this
criterion wasusedtodetermine origin ofaservice inthecaseofsupply through commercial presence
orthrough presence ofanatural person. Thishadthemerit ofbeing anagreed andexisting practice
which delegations might alsowanttofollow under theAgreement onGovernment Procurement. He
recalled thatthequestion ofthedefinition oftheorigin ofaservice wasalsobeing discussed inother
fora,suchastheEUROSTAT TaskForce forEstablishing Trade Statistics, which proposed that,for
reasons ofpracticability andeaseofcollecting data, thecriterion ofmajority ownership beusedfor
determining thenationality ofacompany. IntheOECD, thatsame criterion wasbeing usedinthe
framework ofongoing discussions onglobalization.
13. Arepresentative saidthatArticle IVoftheAgreement onGovernment Procurement referred,
initsparagraph 1,torulesoforigin interms ofthenormal course oftrade, notonlywithrespect to
goods butalsowithrespect toservices andinitsparagraph 2tonegotiations regarding tradeinservices.
While, forthetimebeing, there appeared nottobeagenerally accepted ruleonwhatconstituted the
normal course oftrade inservices, ongoing work onthismatter wasbeing pursued inGATS. Inthat
context, hequestioned whether itshould beassumed thatitwasappropriate toreport ontheorigin
ofservices before aclearunderstanding wasreached onthetypeofruleoforigin which wasdesirable
inthecontext ofgovernment procurement? Thisquestion waspartly motivated bytheconcerns raisedGPA/IC/W/32
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earlier withrespect togoods interms ofhowdependable statistics ontheorigin ofgoods were. Similar
problems might beencountered withregard toservices. Inthisregard, concern wasexpressed that
ifstatistics ontheorigin ofservices were tobereported before anacceptable rulewasdetermined,
there wasadanger that,while Parties totheAgreement might understand therelative accuracy ofthe
statistics reported onorigin ofservices, awider audience might notandmight hence view them as
being entirely accurate, anduse,ormisuse, them assuch. Hesuggested, therefore, thatthere was
perhaps merit inconsidering whether topostpone application oftherequirement toreport statistics
ontheorigin ofservices untilapracticable ruleoforigin forservices hadbeendefined. Inthiscontext,
hereferred tothewording ofArticle XIX:5, lastparagraph, where therequirement toreport statistics
onorigin ofgoods andservices wasqualified bythewords "totheextent suchinformation isavailable".
Herecalled thatithadbeentheintention ofthenegotiators when theyhaddrafted theseparticular words
toallow fortheapplication ofthisobligation inaflexible manner, because problems relating tothe
issue oforigin hadbeenforeseen atthetimeoftheconclusion ofthenegotiations. Thiswaswhythe
textofparagraph 5ofArticle XIXhadbeenchanged atthelastminute totheeffect thatthereference
tocountry oforigin, which hadpreviously beenincluded inseveral ofthesub-paragraphs ofparagraph 5,
hadbeentaken outofthemandreplaced bythewording intheverylastparagraph including thequalifier
"totheextent thatsuchinformation isavailable". Another delegation saidthatdevelopments inthe
GATS areaonthose matters werenotlikely tobeconclusive inthenearfuture andfurther discussions
were warranted.
14. Insumming upthediscussion, theChairman noted thatsome delegations hadexpressed their
concern nottopreempt discussions which werebeing conducted inother foraontheissueofdefining
rules oforigins forservices. There seemed tobetwooptions. Oneconcerned theinterpretation of
therequirement intheAgreement toreport statistics onorigin. Hewondered whether thiswentbeyond
themandate ofthisWorking Group andwasperhaps more appropriately suited fordiscussion inthe
CommitteeonGovernmentProcurementunderthenewAgreement.Theotheroptionwastorecommend
theuseofthesame rulesoforigin under Article XIX:5 asthose applied under Article IV,which were
those applied inthenormal course oftrade. Future experience would tellhowfeasible itwastogenerate
suchstatistics onorigin andhowvaluable theywould turnouttobeasaninstrument formonitoring
theoperation oftheAgreement. While similar concerns asthose intheareaofgoods might befaced
intheareaofservices, thework which hadalready beendone intheGATS todevelop common
definitions aswellastheguidance given inArticles IVandXIX:5 oftheAgreement onGovernment
Procurement would, forthetimebeing, havetoberelied upon. Thediscussion onthisissue wasfar
from being concluded, either inthiscontext orinawider context.
FUTURE OFTHE WORKING GROUP
15. TheChairman recalled that,according tothemandate fortheWorking Group, itwastoreport
totheInterim Committee, which would cease toexistattheendofthisyear. Itwas,therefore, expected
thattheWorking Group would holditslastmeeting attheendofthisyear, foreseen for7December.
Itsfunctions would besuperseded bytheCommittee onGovernment Procurement under thenew
Agreement after1January 1996. Heintended, therefore, torequest theSecretariat todrawupadraft
report totheInterim Committee forconsideration bydelegations atthenextmeeting, forsubsequent
transmission totheInterim Committee, setting outthework doneintheWorking Group and,asfar
aspossible, todeliver theguidelines itwasasked toprovide asabasisforfuture work intheCommittee
onGovernment Procurement under thenewAgreement.
16. TheChairman furthermore encouraged delegations tosubmit inwriting totheSecretariat any
ideas onthevarious items discussed today, intimeforthenextmeeting.