./.WORLD TRADE
ORGANIZATIONWT/GC/W/192
1 June 1999
(99-2215)
General Council Original:  English
PREPARATIONS FOR THE 1999 MINISTERIAL CONFERENCE
EC Approach to Government Procurement
Communication from the European Communities
The following communication, dated 28 May 1999, has been received from the Permanent
Delegation of the European Commission.
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The role of the WTO
1. The GATT and then the WTO have been largely successful in progressively liberalizing trade
and eliminating discriminatory treatment in inte rnational commerce.  However, leaving government
procurement outside the scope of the multilateral trading system remains a costly omission with real
trade effects.  Government purchasing can account for up to 15 per cent of GDP, and opaque and
discriminatory procurement procedures and practices therefore significantly distort trade and reduce
potential growth in real income.  The EC believes  that the WTO cannot afford, and should not allow
this to continue into the next millennium.
2. However, the EC recognizes that correcting this omission and building a substantive
framework of rules on procurement will both take time and require a pragmatic approach.  It is
therefore important that WTO Members seize the opportunity of the new round to consolidate and
build on the existing multilateral work programme in this area: that on transparency in procurement
and the GATS work on procurement of services.
Transparency in procurement
3. Transparency is the basic building block of a stable and predictable procurement regime.  All
participants in the procurement process benefit from the existence of transparency, whether it is the
government as a purchaser, the government as a regulator, potential suppliers, those who must enforce
the rules, or investors.  That is why the EC attaches so much importance to the decision taken at theWTO’s first Ministerial Conference in Singapore to establish a Working Group to discuss this issue.
Indeed, we hope that the will exists to interpret the mandate given to the Working Group in a
constructive light, and that it will prove possible to complete this work by the time of the Seattle
Ministerial Conference.  In this context, the EC wishes to recall that the mandate was “to establish a
working group to conduct a study on transparency in government procurement practices, taking intoaccount national policies, and, based on this study, to develop elements for inclusion in an appropriate
agreement” (emphasis added).WT/GC/W/192
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4. The EC believes that it is worth taking the time to get these elements right – in other words,
that the substance of a transparency agreement is more important than its timing.  Furthermore, the
EC recognizes that difficulties surrounding some of the so-called horizontal issues – in particular the
questions of enforcement and of scope and coverage – means that it may not prove possible to
formally conclude a transparency agreement by Seattle, but sufficient progress has been made forthere to be a very real prospect of consensus emerging on what the basic principles of transparency
should be.
5. The EC considers that, at Seattle, Ministers should endorse the results which have been
achieved by then, and – if necessary – mandate the WTO to negotiate and complete the work initiated
at Singapore within a given time-frame.
6. The results of the transparency work should take account of national policies and practices, as
well as the different levels of development of WTO Members.  They should apply to the procurementof both goods and services and to all levels of gove rnment.  In relation to the latter, the EC takes the
view that, if the elements are the right ones, subcentral governments should have no problem of
principle with the rules, although we recognize that  it will be necessary to address the constitutional
difficulties that a number of WTO Members face in relation to binding subcentral governments on
procurement matters.
GATS work on procurement of services
7. Article XIII:2 provides for multilateral negoti ations on government procurement in services
under the GATS.  Within the new round, WTO Members should work to ensure that the substantive
negotiations to which this mandate commits us all, delivers a balanced and mutually advantageoustrade liberalization.  To date, the work of the GATS Rules Group has focused largely on the other two
issues under consideration: safeguards and subsidies.  To inject momentum into the work, Ministers
should be asked at Seattle to reaffirm the Article XIII:2 mandate and to set a target date for the
completion of the negotiations.
8. The EC would also wish to see Ministers agreeing that the WTO should review the need for
further discussions on procurement as requested by interested WTO Members and in the light of
developments in relation to the existing work programme, and, as appropriate, undertake further
negotiations.
The Agreement on Government Procurement
9. Finally, the EC continues to attach importance to the current work aimed at further improving
the Agreement on Government Procurement, through expanding its scope and coverage, as well asefforts to attract new members.
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