RESTRICTEDWORLD TRADE
ORGANIZATIONWT/WGTGP/M/9
10 November 1999
(99-4854)
Working Group on Transparency
in Government Procurement
REPORT ON THE MEETING OF 6 OCTOBER 1999
Note by the Secretariat
1. The Working Group on Transparency in Government Procurement held its ninth meeting on
6 October 1999 under the chairmanship of Ambassador Ronald Saborío Soto (Costa Rica).
2. The agenda for this meeting consisted of:  (i) transparency-related provisions in existing
international instruments on government procurement and national procedures and practices;
(ii) requests for observer status by international intergovernmental organizations;  and (iii) report ofthe Working Group for 1999 to the General Council.  In addition, at the outset of the meeting there
was an exchange of views with regard to the draft texts for an agreement on transparency in
government procurement submitted respectively by a number of delegations.
A. DRAFT TEXTS FOR AN AGREEMENT ON TRANSPARENCY IN GOVERNMENT PROCUREMENT
3. The representative of the United States introduced the draft text for an agreement submitted
jointly by Hungary, Korea and the United States (Job No. 4510).  He said that discussions in the
Working Group during the past few years had indicated that there was broad agreement within the
Group in respect of both the nature of transparency in procurement and the elements that were
important in ensuring transparency.  The draft proposed text reflected the work undertaken by the
Group and sought to summarize in concrete term s the common views that had been formed among
Members on the core elements of transparency.  One of the key objectives of the draft proposal was to
provide adequate flexibility to accommodate the diversity of conditions prevailing in Membercountries.  The Group had been successful in identifying the key elements of transparency in
procurement and it was presently in a position to move forward.  Concluding an agreement around the
core elements of transparency could make an im portant contribution towards the Members' broader
efforts to restore confidence and stability in global markets.  Such an agreement would have
immediate and concrete benefits for all including taxpayers, citizens who relied on public goods andservices as well as suppliers.  It would also respond to the call by Ministers for greater coherence
between the WTO and the work of the main international financial institutions which, for some time,
had recognized the need to establish consistent standards of good practice in the area of government
procurement.  There was growing support for moving  forward in this area as had been evidenced by
the APEC Ministers' endorsement in Auckland on 9-10 September 1999 of the efforts to reach anagreement on transparency in government procurement at Seattle.  The WTO should take advantage
of the work accomplished in the Working Group and the opportunity that was currently available to
make an important contribution in this area.  He added that, in response to requests by some
delegations, the United States had put together, in a tabular form, the draft texts for an agreement on
transparency submitted so far (Job No. 5898).  The purpose of the paper was to assist delegations intheir comparison of the ways in which the draft texts addressed the core elements.
4. The representative of the European Community, in introducing his delegation's submission of
a draft text for an agreement on transparency in go vernment procurement (Job No. 4519), said that theWT/WGTGP/M/9
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paper was based on the proposals that the European Community had previously submitted to the
Working Group and which had also been incorporated in the List of the Issues Raised and Points
Made.  Simplicity was the starting point of the Community's proposal.  A transparency agreement
should set out a number of core principles that were to be reflected in Members' legal systems and
should not prescribe in detail the way in which each principle should be applied.  Transparency shouldbe guaranteed throughout the government procurem ent process on a non-discriminatory basis.  The
work of the Working Group had revealed that transparency requirements could not be considered in
isolation but were part of a broader context.  This suggested that there would be need for work in
future towards multilateral rules on government procurement. The European Community considered
that government procurement disputes should be addressed under domestic systems and WTO dispute
settlement procedures should apply in cases of blatant violations of the transparency agreement.  His
delegation also favoured the application of information technology in government procurement whichwas a key element in ensuring transparency.
5. The representative of Australia introduced her delegation's submission of a draft agreement
on transparency in government procurement which reflected the procurement system in Australia and
the importance attached to the existence of transparency throughout every stage of the procurement
process at the level of federal and state governments (Job No. 5803).  The main aim of the proposedtext was to focus on transparency per se  given that suppliers around the world believed that
transparency in government procurement was the most  important issue in the context of international
project work.  The principles reflected, to a great extent, the commonalities that had been evident in
the List of the Issues Raised.  These principles were set out in as flexible and concise a manner as
possible so as to avoid over-prescriptiveness while incorporating enough detail in the agreement tofacilitate its understanding and implementation.
6. In introducing the submission by his delegation of a draft text for an agreement on
transparency in government procurement (Job No. 5239), the representative of Japan said that a
simple, flexible and non-prescriptive agreement focusing on core principles would reduce the cost ofimplementation, minimize the burden of translating the principles into Members' respective nationalsystems and ensure wide application of the agreement.  This approach would also facilitate any
necessary amendments to the agreement, for instance with a view to accommodating new
developments in procurement methods.  Japan believed that a multilateral agreement could be
concluded at an early stage.  However, to be effective and meaningful, the agreement should be
legally binding and should contain monitoring and enforcement mechanisms, including provisions on
domestic challenge procedures and intergovernmental dispute settlement.  The proposal by Japan also
contained transitional arrangements to address the problems of implementation that might arise indeveloping countries.
7. The representative of Venezuela said that, as part of the educational process, the Group
should proceed with its work of developing the possible elements of a transparency agreement by
taking up each of the proposed texts in turn as well by using the List of the Issues Raised which
summarized the discussions in the Group so far.
8. The representative of India, joined by the representatives of Brazil , Egypt , Cuba , Honduras ,
Indonesia, Malaysia , Pakistan , Thailand  and Turkey , said that the Venezuelan approach of discussing
the proposed texts would go beyond the mandate of the Working Group.  The study phase of the
Singapore mandate had not yet been concluded.  There was still a wide divergence of views among
Members in respect of several concepts and principles, including definitions and scope, procurementmethods, application of dispute settlement and the question of whether all the issues under discussion
related to transparency.  Rather than reflecti ng a common view, the proposed texts reflected the
transparency elements as they were understood by the delegations that had advanced those proposals.
In the absence of consensus among Members regarding the basic elements that should be part of an
agreement on transparency, it would be premature to move on to the discussion of the proposed textsWT/WGTGP/M/9
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for an agreement.  The representative of the Philippines, supported by the representative of Thailand ,
said that the Group should not disregard the fact that a significant number of Members did not fully
appreciate the implications of the issues involv ed and were not sufficiently satisfied that the
educational phase had allowed them to make sound and concrete decisions with respect to elements of
a transparency agreement.
9. The representative of India, joined by the representatives of Egypt , Indonesia  and Pakistan ,
further said that since procurement was an important tool used by governmental authorities in
developing countries to pursue their social  and development objectives, developing countries had a
need to retain flexibility in this area.  While the principle of transparency, in itself, was good, the
Group would need to have a more focused discussion on the implications for developing countries of
the various obligations regarding transparency in a future WTO agreement.  The representative of
Pakistan, joined by the representatives of Egypt , India , Indonesia  and Thailand , said that the
submission of draft proposals implied that the Working Group was ready and willing to negotiate
texts in specific terms, notwithstanding the fact that the time was not ripe for moving on to the
discussion of negotiating proposals at this stage.  The mandate of the Working Group was to conduct
a study and not to conduct negotiations.  The Work ing Group should continue with its study based on
the List of the Issues Raised with a view to reaching a common understanding on the various elements
of transparency.  The representative of India said that there should be no discussions on any proposals
concerning a draft agreement on transparency in government procurement even outside the WorkingGroup, until the Working Group had completed its study and had reached a common understanding
on the elements of transparency.  Neither should the Seattle Ministerial Conference mandate the
Working Group to negotiate an agreement given that Members of the Working Group held differingviews.
10. The representative of Hungary, joined by the representatives of Canada
 and Chile , said that it
was evident from the relatively stable state of the List of the Issues Raised during the recent Working
Group meetings that the educational process includ ing the identification of core elements of a
transparency agreement had come close to a conclusion.  While, as yet, no consensus had beenreached in respect of all the issues relevant to transparency, this was not the objective underlying the
educational process.  The time had come to move on to the next phase of the mandate and to begin
considering concrete proposals for the development of elements of an appropriate agreement.  The
representative of Hong Kong, China said that transparency in government procurement helped to
create and maintain an open and predictable market environment and to foster open and effectivecompetition.  Accordingly, Hong Kong, China supported the conclusion of a multilateral agreement
on transparency in government procurement by the third WTO Ministerial Conference.  Therepresentative of Mexico said that Mexico favoured early conclusion of an agreement on
procurement.  A future agreement should be co nfined to transparency in accordance with the
Singapore mandate.  The discussion of the elements of an agreement was clearly part of the Working
Group's mandate.  The List of the Issues Raised could also be used to help the process move forward.
The core elements of an agreement had been identified in the List of the Issues Raised and werereflected in the proposals submitted by various delegations.  This did not necessarily mean that there
was consensus on all of the relevant issues.  While it was important to continue the analysis of these
issues, discussions should become more focused in order to expedite the Group's work.  Joined by the
representative of Japan, she said that her delegation was ready to enter into a more detailed discussion
of the negotiating proposals.  The discussion of the elements of an agreement was clearly part of the
mandate of the Group.  The representative of Japan stated that his authorities were committed to
concluding a transparency agreement at the Seattle Ministerial Conference.  However, consensus in
respect of all the elements should be achieved and the Working Group should take the time necessary
to ensure that this occurred.  Transparency was in everyone's interests and not just in the interests of
developed countries.WT/WGTGP/M/9
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11. The representative of Argentina said that the consensus on the Singapore Ministerial mandate
for the establishment of the Working Group had been achieved on the basis of two basic guarantees.
First, the Working Group would only deal with the issue of transparency and not with the broader
topic of due process.  Second, Members would not be compelled to amend their national legislation
pursuant to a future agreement.  However, at least two of the draft proposals implied changes in
legislation for certain Members.  Further, there was a suggestion that discussions might move from
transparency to market access.  The representative of Pakistan, joined by the representatives of Egypt ,
India, Indonesia  and Malaysia , said that the European Community's proposition that an agreement on
transparency in government procurement was merely a building block towards the establishment of a
multilateral framework for government procurement went well beyond the mandate of the Working
Group.  An all-encompassing government procurement agreement containing rules on market access
would be another way of forcing the plurilateral Agreement on Government Procurement ondeveloping countries.  Joined by the representative of the United States, the representative of Hungary
emphasized that the exercise engaged in by the Working Group was confined to transparency and wasnot linked in any way to market access.  The joint proposal submitted by his delegation was focused
on achieving transparency in government procurement and was not intended to be a stepping stone
towards a future market access agreement.  The representative of the European Community stated that
clearly the current task of the Working Group was to discuss transparency.  However, while the
European Community did not expect that any substantive rules on procurement could be agreed at this
point, the option of investigating multilateral rules on public procurement in future should be kept
open.
12. The representative of Hong Kong, China said that, through a communication submitted by his
delegation, the Chairperson of the APEC Gove rnment Procurement Experts Group (GPEG) had
forwarded to the Working Group for reference the set of non-binding principles which had been
completed in August 1999 (WT/WGTGP/W/24).  Those elements and illustrative practices were
non-binding and should not be used to prejudge the position of individual APEC Members in the
discussions regarding a transparency agreement in the WTO.   The representative of the United States
said the APEC non-binding principles on procurement reflected a strong sense of commonality of
view within the WTO membership on the nature of the elements of transparency in procurement.
13. In response to a clarification sought by the representative of the European Community
regarding the respective positions taken by some delegations within the Working Group and in the
APEC context, the representative of  Malaysia said that APEC operated on a voluntary basis and that
the agreed principles were non-binding.  Furtherm ore, the APEC Ministerial Declaration had clearly
stated that Ministers had merely supported efforts to reach an agreement on transparency.  Therepresentative of India said that the Chair's summary at the G15 Ministerial meeting in Bangalore,
India in August 1999 had categorically stated that the work of the Working Group on Transparency inGovernment Procurement should continue in an analytical mode.
B. T
RANSPARENCY -RELATED PROVISIONS IN EXISTING INTERNATIONAL INSTRUMENTS ON
GOVERNMENT PROCUREMENT AND NATIONAL PROCEDURES AND PRACTICES
14. The Group took up, in turn, each of the sections in the informal note by the Chairman "List of
the Issues Raised and Points Made" (Job (99)/5534).  In the discussion under the relevant headings of
this document reference was also made to the proposed texts submitted by Australia (Job (99)/5803);
the European Community (Job No. 4519);  Hungar y, Korea and the United States (Job No. 4510);
and Japan (Job (99)/5239).  The points made will be reflected in the sixth revision of the note by theChairman.
1
                                                     
1 To be issued shortlyWT/WGTGP/M/9
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C. OBSERVER STATUS OF INTERGOVERNMENTAL ORGANIZATIONS
15. The Working Group agreed to revert to the requests from intergovernmental organizations for
observer status (OECD, SELA and OIC) in the light of the consultations that were currently being
held by the Chairman of the General Council on this matter.
D. REPORT TO THE GENERAL COUNCIL
16. Before taking up the discussion of the draft text of the Report for 1999, the Chairman said
that, regarding the situation in the work on transpar ency in government procurement, it was clear that
some delegations were interested in actively pursuing work on the elaboration of a transparency
agreement for submission to Ministers at Seattle in the coming days and weeks, while some other
delegations had indicated that they considered this to be premature.  Given this situation, the extent to
which it would be possible for those delegations who wished to complete that work in time for Seattle
to engage in a viable process to that end would have to be seen.  If that did not appear to be the case,then that was that.  However, if there was evidence of a process taking place that might lead to
significant developments, it might prove necessary to take steps to ensure the transparency of that
process so that adequate opportunities were provid ed for all delegations to be informed about the
work that was being undertaken and to have their views taken into account, and some further meetings
of the Working Group might need to be held.
17. The representatives of Pakistan, India
, Indonesia  and Egypt  said that discussion of a proposal
for a decision at the Seattle Ministerial Conference fell under the ambit of the General Council.  It was
up to the General Council to decide whether the Working Group should be mandated to conduct
negotiations with a view to concluding an agreement at the Seattle Ministerial Conference.  The
representative of Pakistan said that, even though some Members might wish to proceed with efforts toconclude an agreement by Seattle, the mandate of the Group did not prescribe a specific time-frame
within which the Group was required to conclude its work.  Further meetings should be held only in
connection with a demand driven within the context of the General Council.
18. By way of clarification, the Chairman said that, given that a number of delegations had
indicated that they were willing to present elements that could be included in a possible agreement,
and to the extent that this was within the mandate of the Working Group, it was appropriate to
consider the possibility of having informal meetings to allow this to happen.  The mandate of the
Working Group was broader than the mandates for the other Working Groups established at the
Singapore Ministerial Conference.  Accordingly, he considered it his duty to make it possible for the
mandate to be pursued and to leave the door open for delegations wishing to put forward certain
elements to be able to do so in the Working Gr oup.  Any process that involved the identification of
elements that might go into a possible agreement should be conducted in as transparent a manner aspossible.  There was no contradiction or overlap between the work done by the General Council and
by the Working Group.  Any future activity in the Working Group framework did not preclude
delegations from raising issues of transparency in government procurement in the General Council.
19. The representative of Japan stated that the momentum that had been built up thus far in the
Group should be maintained and further meetings should be held before the Seattle Ministerial
Conference.  The representative from Guatemala said that her delegation supported the view that the
decisions within the WTO should be made in a transparent manner.  The Working Group might needto hold informal meetings as referred to by th e Chairman with a view to informing the General
Council appropriately of developments relating to the Group's work.  The representative of the
European Community said that the possibility of continuing discussions in the context of the Working
Group should be retained.  The mandate of the Singapore Ministerial Conference to develop elements
of a future transparency agreement was separate from the work done by the General Council.  The
representative of the United States said that both the General Council and the Working Group hadWT/WGTGP/M/9
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their roles to play within their respective mandates.  The Singapore mandate did not require that the
Group's work should or should not be completed by any particular point in time.  An opportunity
should be provided for all Members to be aware of the work that was under way within the mandate
of the Group.  The possibility of continuing the work at any time in future should be left open.
20. After a brief discussion of a draft prepared by the Secretariat, the Working Group adopted its
Report for 1999 to the General Council which was subsequently circulated in
document WT/WGTGP/3.
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