RESTRICTEDWORLD TRADE
ORGANIZATIONS/WPGR/W/42
22 May 2003
(03-2748)
Working Party on GATS Rules Original:  English
COMMUNICATION FROM THE EUROPEAN COMMUNITIES
Government Procurement of Services
The following communication is circulated at the request of the European Communities to
Members of the Working Party on GATS Rules.
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1. Within the framework of the negotiations under the mandate given by GATS Article XIII:2,
the European Communities (hereafter “the EC”) submitted in July 2002 a contribution with proposals
on a framework for rules for government procurement of services that could be developed, and on thebenefits that could be drawn from them.  WTO Members have discussed this contribution and raised
questions, which helped clarify their concerns and in terests.  The EC is hereby putting forward a new
contribution aiming at suggesting practical steps and putting forward concrete proposals for the
negotiations under the mandate of GATS Article XIII:2.
I. OBJECTIVES OF A FRAMEWORK FOR GOVERNMENT PROCUREMENT OF
SERVICES UNDER THE GATS
2. The objective pursued is to offer a multi lateral framework for rules for government
procurement of services providing WTO Members with the possibility to open their Government
procurement markets with maximum flexibility to modulate their level of openness to their
development needs and their national policy objectives.  The possibility to open up government
procurement opportunities progressively and sector by sector would give WTO Members time to
establish the relevant regulatory framework where necessary.  This would also mean that a Membertaking no commitment as regards access to, and national treatment in respect of, government
procurement opportunities, would actually have no additional obligation in these regards as compared
to the present situation.
3. In other words, the system proposed would offer the possibility for Members to open up their
Government procurement opportunities if they so wish, sector by sector, partially of fully, now or at alater stage.  WTO Members would open up government procurement opportunities in the sectors
where they would most benefit from international serv ices, at their pace and to the extent they wish to
open up (e.g.  the possibility to open up only certain activities, above certain thresholds, for selected
procuring entities, and with scheduled limitations to National Treatment).
4. Procedural rules agreed multilaterally shall give assurance that access to procurement
opportunities will be effective.  The binding of such access will give legal certainty to service
providers.  The proposed framework would provide supplementary access to foreign government
procurement opportunities, and would improve tender conditions where such access already exists byS/WPGR/W/42
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introducing more transparency and certainty regarding applicable rules, and by cutting down
discrimination.
II. SCOPE AND FORM OF THE AGREEMENT
5. WTO Members could approve the text of an Annex to the GATS, that would specify the
conditions under which GATS would apply to Government procurement of services.  GATSArticle XIII could be amended to refer to that Annex.
6. “Government procurement of services ” for the purpose of this “Annex to the GATS”
should cover procurement of services by any governmental agency or body (see paragraph on
procuring entities in part III. A. below).  It should also cover procurement involving a combination of
services and goods when the latter are necessary for the provision of the service considered and their
procurement cannot be done separately, and presupposing that the value of the service is greater than
the value of the goods.
III. MODALITIES FOR THE SCHEDULING OF COMMITMENTS REGARDING
GOVERNMENT PROCUREMENT OF SERVICES (ACCESS TO OPPORTUNITIES
TO BID AND NATIONAL TREATMENT), AND FOR THE APPLICATION OF THE
MOST-FAVOURED-NATION PRINCIPLE.
A. G
OVERNMENT PROCUREMENT COMMITMENTS
7. The EC suggests that a 4th specific column (“Government procurement” column) should be
added to the existing three of the GATS Schedules of commitments of WTO Members (Article XVI,
Article XVII and Article XVIII columns).  WTO Members would indicate in that column, for each
sector and each mode of supply, whether – and if so, which – specific restrictions apply to
Government procurement, that would limit bidding opportunities for foreign service providers orimpinge on the National Treatment principle.
8. For instance,  thresholds  above which tenders would fall under the scope of GATS, would be
indicated in Members’ schedules of commitments in the Government procurement column, for each
sector where Government procurement is opened to international competition.
9. Here also would be listed restrictions on the procuring entities  to be covered by
commitments.  GATS Article I:3 provides that for the purposes of this Agreement, "measures by
Members" means measures taken by central, regional or  local governments and authorities,  and by non-
governmental bodies in the exercise of powers dele gated by central, regional or local governments or
authorities.  All these entities are therefore a priori  covered and any exclusion of some of them for some
specific sectors would have to be exp licitly indicated in Members’ Schedules.
10. Price preferences  would also have to be indicated in Members’ schedules of commitments in
the Government procurement column, for each sector where Government procurement is opened tointernational competition.
11. These commitments for Government procurement would have to be read in conjunction (i.e.
cumulatively) with Members’ existing Market Access and National Treatment commitments for the
relevant sector (including horizontal commitments – or limitations).
12. An “ Unbound ” in the Government procurement column for a specific sector would indicate
that the WTO Member concerned has made no commitment to provide foreign suppliers with
opportunities to bid, nor made any National Treatment commitment for Government Procurement of
Services.S/WPGR/W/42
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B. MOST-FAVOURED -NATION TREATMENT
1. Application of the MFN principle – Built-in exemption for GPA ( Agreement on
Government Procurement)  obligations
13. The EC suggests that the “Annex to the GATS on Government Procurement of Services”
provide that the Most-Favoured-Nation treatment should be applied to Government procurement,without prejudice to the obligations and rights under the Agreement on Government Procurement.
This means that when a GPA-signatory accords to a WTO-Member in the framework of the GPA
regime a more favourable treatment, this treatmen t would not have to be accorded on an MFN-basis to
other WTO Members.  Specific provisions would organise appropriate interface between the GPA and
the "Annex to the GATS on Government Procurement of Services".
2. MFN Exemptions
14. At the time when the GATS entered into force, WTO Members had the possibility to list
MFN exemptions.  GATS Article XIII:1 specifically provides that Article II on MFN does not apply
to Government procurement.  Since the agreement on procurement that will result from GATS Article
XIII:2 negotiations should extend the application of MFN to procurement, consistency would require
that this extension should be accompanied by the possibility to schedule MFN exemptions.
IV. PROCEDURAL RULES TO BE APPLIED
15. The EC, with its experience of the EC Single Market and of the GPA, is acutely aware that
MFN and national treatment commitments are necessary but would not be sufficient to ensure in
practice equal treatment and non-discrimination in the area of government procurement.  In order to
ensure effective market opening, procedural rules (on transparency, bidding periods etc.) have to be
developed.  This is why, at the time of the Uruguay Round, the EC and other WTO Members
supported the decision that market access, national  treatment and MFN obligations should not apply
to government procurement until appropriate procedural rules are developed, and that the GATS
should provide WTO Members with a mandate to negotiate these procedural rules multilaterally.  The
GATS therefore provides on the one hand in its Article XIII:1 that laws, regulations and requirements
governing government procurement of services are exempted from the disciplines contained in GATSArticles II (Most-Favoured-Nation Treatment), XVI (Market Access) and XVII (National
Treatment)
1, and on the other hand in its Article XIII:2 that WTO Members have a mandate to
negotiate multilaterally on Government procurement2.
16. In order to avoid duplication of work with the Working Group on Transparency in
Government Procurement, the EC suggests that the “Annex to the GATS on Government
Procurement of Services” to be negotiated refers to the future Agreement on Transparency and states
that the provisions of that future Agreement will apply to Government procurement of services under
the GATS.
                                                     
1  It is to be underlined that GATS Articles other than Articles II, XVI and XVII, do apply to
Government procurement, since the exclusion provided for in GATS Article XIII:1 does not extend to them.
2  Some WTO Members have tried to argue that the mandate of GATS Article XIII:2 excludes a priori
discussions on market access.  GATS Article XIII:2 howeve r, does not provide for any exclusion: it provides for
“multilateral negotiations on Government procurement”, without excluding any specific aspect from thenegotiations.  Obviously, this mandate was meant to negotiate first and foremost procurement rules andmodalities for the binding of opportunities to bid and of non-discrimination commitments that would enableGATS principles to apply appropriately to Government  procurement. GATS Article XIII:2 also indicates that
these negotiations should be done “under the GATS Agreement”, i.e. not in other frameworks.S/WPGR/W/42
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17. For information purposes, WTO Members will find in the Annex to this submission a
reference to the elements that have been identifi ed in the Transparency Working Group as the ones to
be covered in a future Transparency Agreement.
18. The EC would like to invite Members to discuss procedural rules that they think have to be
implemented to ensure the application of these transparency principles and the effectiveness of futureGATS obligations regarding opportunities to bid, national treatment and MFN treatment.
V. ADDITIONAL PROVISIONS
19. One should note that the provisions of GATS, notably (but not only) GATS Article III on
Transparency covering relevant measures of general application, GATS Article VI on DomesticRegulation (in particular as regards domestic review), GATS Article VII on Recognition, GATS
Article XII on Restrictions to safeguard the Ba lance of Payment, GATS Article XXIII on Dispute
Settlement and Enforcement, do apply to Government procurement of services.S/WPGR/W/42
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ANNEX
Reference for Information, on the Elements identified by the Working Group on Transparency
in Government Procurement, that would apply to Government Procurement
of Services under the GATS.
The Working Group on Transparency in Government Procurement (WGTGP) has developed
the elements to be included in a future Agreem ent on Transparency in Government Procurement
based in the informal note by the Chairman: “List of issues raised and points made” (JOB(99)/6782)
dated 12 November 1999.
The latest state of discussion on these issues is contained in the Secretariat’s notes of
23 May 2002 (WT/WGTGP/W/32) and 3 October 2002 (WT/WGTGP/W/33).
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