RESTRICTED  
  
GPA/ACC/MNE/7  
 
7 March 2014  
(14-1400)  Page: 1/6  
Committee on Government Procurement  Original: English  
 
 ACCESSION OF MONTENEGRO TO THE  
AGREEMENT ON GOVERNMENT PROCUREMENT  
COMMUNICATION FROM MONTENEGRO 
The following communication, dated 5 March 2014, is being circulated at the request of the 
Delegation of Montenegro.  
 
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RESPONSES TO QUESTIONS POSED BY JAPAN (GPA/ACC/MNE/5) AND 
THE EUROPEAN UNION (GPA/ACC/MNE/6) REGARDING MONTENEGRO'S  
FIRST REVISED APPENDIX I OFFER (GPA/ACC/MNE/3 OF 27 NOVEMBER 2013) 
The Permanent Representative of Montenegro to the WTO and Special Representative to the HRC 
presents its compliments to the Chairman of the Committee on Government Procurement. 
 
Further to the commitment made during the Committee's sessions in 2013, we herewith attach Montenegro's responses to the questions of GPA Pa rties pertaining to the first revised Appendix I 
Offer. 
 The Permanent Representative of Montenegro to the WTO would kindly like request the Secretariat 
of GPA to forward Montenegro's' responses to the GPA Parties, namely Japan and the European 
Union. 
 With your help, we are looking forward to completing negotiations for accession to the GPA, 
subject to satisfactory negotiations. 
 Yours sincerely, 
 
Zorica Maric-Djordjevic 
Permanent Representative of Montenegro to the WTO 
and Special Representative to the HRC GPA/ACC/MNE/7 
 
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  1  INTRODUCTION 
Montenegro's Initial Appendix I offer was circulated on 4 November 2013, less than a month after 
its application for accession to the GPA. Explanatory notes were attached to Montenegro's Initial Appendix I offer. Montenegro revised its Initial Appendix I offer on the basis of individual 
comments suggesting improvements received during the course of bilateral meetings with GPA 
Parties on 18-19 November 2013. Subsequently, Montenegro's (first) Revised Appendix I offer, reflecting all these comments, was circulated on 27 November 2013. Detailed explanatory notes 
were attached to Montenegro's (f irst) Revised Appendix I offer. 
 Given the timeframe for completing accession in early 2014, Montenegro requested GPA Parties to send their comments, if any, regarding Monten egro's (first) Revised Appendix I offer by 
14 February 2014. Japan and the European Unio n (EU) have sent comments and questions 
regarding Montenegro's (first) Revised Appendix I offer. Montenegro particularly thanks these GPA 
Parties as well as the other GPA Parties for their pro-active and valuable support during the 
ongoing accession process. The most recent comments were received on 28 February 2014. 
Montenegro herewith jointly resp onds to all comments received. 
 
2  COMMENTS/QUESTIONS RECEIVED 
2.1  Replies to the questions posed by Japan (GPA/ACC/MNE/5 of 17 February 2014) General 
 
1. As mentioned in the bilateral meetin g between Japan and Montenegro on 
18 November 2013, Japan has concerns on Mont enegro's approach, in which it includes 
its coverage that takes effect after its accessi on to the European Union, in order to avoid 
compensation claims by other GPA Parties. Reduction of coverage from the one a Party 
committed upon its accession to the GPA is important issue for other GPA Parties, and 
that is the very reason the Revised GPA is furnished with detailed procedure (i.e. Article 
XIX) when modifying the original coverage. Furthermore, it cannot be prejudged that 
the EU's GPA schedule remains unchanged by the time of Montenegro's accession to the 
EU, especially in the circumstances where it is unknown when the accession happens, 
and therefore Montenegro's Section B may not be committed at this  moment. Japan thus 
requests that Montenegro delete "Section B"  and all Notes regarding its coverage after 
its accession to the EU. If Montenegro considers that it needs to modify Section A consequently, Japan is ready for further discussion. 
At this point we wish to recall the aspect that the two-stage process chosen in Montenegro's Initial 
Appendix I offer (i.e. that it defines coverage both  before its accession to the EU and its coverage 
upon its accession to the EU) was considered the best course of action  and the best approach in 
terms of transparency by other GPA Parties . 
 One of the main reasons for this two-stage process is to avoid any (potential) compensation claims in the future. The approach chosen ensures that no  modification of Montenegro's Appendix I offer 
would take place upon accession to the EU given that Montenegro's Appendix I explicitly – and in a 
fully transparent manner – already  stipulates (modified) coverage upon Montenegro's accession 
to the EU (this by dividing Annexes 1-3 of Montenegro's Appendix I offer into sections A and B as 
well as well as mirroring the respective EU Notes). Also, it was the WTO Secretariat which 
indicated that it could be a possible solution that the decision of the GPA Committee accepting 
Montenegro's application for accession could spell out clearly that no claims for compensation can 
be made by the GPA Parties with regard to modifi cations that will take place in the context of a 
future accession to the EU, if the Parties so wish. This approach is explicitly supported by the EU (see below).  
Should Montenegro never accede to the EU (which seems rather unlikely) Schedules B will never 
apply. The two-step approach merely means that either Schedules A or Schedules B are applicable. 
 
It is true that the EU (like any other GPA Party) could have the intention of making changes to its GPA Appendix I offer prior to Montenegro's accession to the EU. If this is the case, Montenegro GPA/ACC/MNE/7 
 
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  would simply notify changes to its Schedules B in line with the EU's changes. This would ensure 
that Schedules B always correspond to the EU's coverage offer.  In the course of drafting its Initial Appendix I offer, Montenegro considered in detail both whether: 
 
a. to use a wording as close as possible to the Appendix I offer of the EU by mirroring the 
language of the EU's Appendix I offer and thus  to exactly state in Montenegro's Appendix 
I offer which modifications will take place; or  
b. to simply state that the respective EU Annexes will apply upon Montenegro's accession 
to the EU (plus listing examples of covered entities in Annex 1-3). 
Montenegro decided to take the first approach. One important reason for this was to achieve the 
highest degree of legal certainty  and transparency for GPA Part ies by spelling out the 
exact changes in Montenegro's Appendix I offer . Another important reason was uncertainty 
about whether defining coverage by referring to  an Appendix of another GPA Party is legally 
admissible. 
 2. Japan understands that the accession negotiations between Montenegro and the 
EU started in June 2012. Please update the progress of the negotiations, especially the 
progress of the Government Procurement Chap ter, and the prospect of the negotiations. 
On 18 December 2013, the EU opened five new chapters in Montenegro's EU accession 
negotiations, including Chapter 5 on public procurement. Negotiations are currently ongoing. It is 
Montenegro's hope and expectation that it w ill join the EU in the coming few years. 
 Annex 4 
 3. Paragraph 2 of the Annex stipulates that  "This Agreement covers only the goods 
that are described in the Chapters of the Combined Nomenclature (CN) specified below 
and that are procured by the Ministry of De fence and Agencies for defence or security 
activities in Montenegro". Japan would like to ask Montenegro to consider rephrasing 
the paragraph if it intends to exclude some of the goods procured by the Ministry of 
Defence and Agencies by it. 
The provision at issue corresponds with Annex 4 of  the EU. As explained, Montenegro, in the light 
of its eventual accession to the EU, used a structure and wording as close as possible to the Appendix I offer of the EU. This is why Montenegro copied this provision of its (first) Revised 
Appendix I offer from the EU's Appendix I. Th erefore, it is not possible to rephrase it. 
 Annex 5 
 4. Please clarify whether CPC71235 and CPC7321 are covered or not. 
CPC71235 and CPC7321 are covered. 
 
5. Please clarify what kind of procurement wo uld be excluded by Note 2 to the Annex 
("Except for services which entities have to procure from another entity pursuant to an 
exclusive right established by a published law,  regulation or administrative provision."). 
T h i s  n o t e  c o r r e s p o n d s  ( w o r d  f o r  w o r d )  w i t h  A n n e x  5 ,  N o t e  2  o f  t h e  E U ' s  A p p e n d i x  I  o f f e r .  A s  
explained, in the light of its eventual accessi on to the EU, Montenegro used a structure and 
wording as close as possible to the Appendix I of fer of the EU. This is why Montenegro copied 
General Note 2 in Annex 7 of its (first) Revised Appendix I offer from the EU's Appendix I offer. 
 Montenegro, in contrast to Japan, was not involved in the negotiation process as regards this Note of the EU. 
 
However, it seems that this Note refers to the relation between two procuring entities, i.e. not the relationship between a procuring entity and a private bidder. 
 GPA/ACC/MNE/7 
 
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  Annex 6 
 
6. Japan considers that list of CPC51 is not necessary. 
Montenegro has included the list of CPC51 in A nnex 6 because the EU did too. Montenegro agrees 
with Japan that this would not be necessary. 
 Annex 7 
 7. Paragraph 2 of the Annex ("Procurement by procuring entities covered under 
Annexes 1 and 2 in connection with activities in the fields of drinking water, energy, 
transport and the postal sector are not cove red by this Agreement, unless covered under 
Annex 3.") is too broad and unclear. Please limit the field and/or limit the procurement 
in each field which will be excluded by this  paragraph. Please also clarify and limit the 
procurement that would be excluded, for the language "in connection with activities" is 
too vague. 
Annex 7 General Note 2 corresponds (word for word) with the "GENERAL NOTES AND 
DEROGATIONS FROM THE PROVISIONS OF ARTICLE IV  OF APPENDIX I OF TH E EU". As explained, 
in the light of its eventual accession to the EU, Montenegro used a structure and wording as close 
as possible to the Appendix I offer of the EU. This is why Montenegro copied General Note 2 in Annex 7 of its (first) Revised Appendix I offer from the EU's Appendix I.  
Montenegro, in contrast to Japan, was not involved in the negotiation process regarding this note 
of the EU. We are thus not familiar with the exact rationale of this provision. 
 
8. Paragraph 3 of the Annex ("This Agreement does not cover the process of granting 
concessions and privatisations.") is unclear . Please clarify and limit the procurement 
that would be excluded by this paragraph. 
Privatizations are generally not covered by public  procurement law (privatizations – put briefly – 
refer to a sales situation and not a purchase situation by the state, i.e. do not fall within the notion 
of public procurement).  
Concessions are not covered by the Public Procurem ent Law of Montenegro but by other legislation 
of Montenegro. This is why the Public Procur ement Law of Montenegro stipulates that " the process 
of granting concessions and privatisations " is not covered by the Public Procurement Law of 
Montenegro. Montenegro simply mirrored this exception in its (first) Revised Appendix I offer. 
 As mentioned before, public procurement legislation in Montenegro does not distinguish between 
domestic and foreign companies. The same is true with regard to legislation regarding 
concessions. This means that foreign companies (including companies from a GPA Party) are treated as favourably as domestic companies when participating in public tender procedures in Montenegro regarding the award of concessions (principle of non-discrimination). 
 
2.2  Replies to the questions posed by the European Union (GPA/ACC/MNE/6 of 28 February 2014) 
As explained above under item 2.1, question 1, in the course of drafting its Initial Appendix I offer 
Montenegro considered in detail both whether:  
a. to use a wording as close as possible to the Appendix I offer of the EU by mirroring the 
language of the EU's Appendix I offer and thus  to exactly state in Montenegro's Appendix 
I offer which modifications will take place; or  
b. to simply state that the respective EU Annexes will apply upon Montenegro's accession 
to the EU plus listing examples of covered entities in Annex 1-3. 
Montenegro opted for the first approach. The EU is now suggesting the second approach. 
 
Montenegro requests all GPA Parties to inform Montenegro which approach is preferred. It is 
Montenegro's intention to clarify this remaining issue – which is merely a technical question – in GPA/ACC/MNE/7 
 
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  the course of the session of the Committee on Government Procurement that will take place in 
Geneva on 12 March 2014.  Annex 1 
 1. The EU welcomes the fact that in its revised Annex 1 Montenegro decided to 
abandon the "asterisks approach" as provided  for in footnote 1 of the initial offer, 
referring to the coverage of central gove rnment entities of Montenegro upon its 
accession to the EU and the ad ded clarification that no central government entities will 
be marked with an asterisk or double asteri sk in the future. Montenegro looks to aligns 
Part B of its Annex 1 to the EU respecti ve Annex. The latter Annex contains an 
exhaustive list featuring the central governme nt entities of the Member States which the 
EU has included in its coverage. Therefore, we urge Montenegro to include in this part an 
exhaustive list of those central government en tities which it decides to provide to GPA 
Parties and not an indicative one as this is th e case in the revised offer. For this purpose 
we consider it necessary to clarify in the text. 
As stated in the explanatory notes to Montenegro's  Initial Appendix I offer, Montenegro decided to 
opt for a definition of entities plus a reference to an indicative list, in particular for two reasons: 
the second reason is that it is Montenegro's intention that newly established procuring entities (also on the central government level) are also covered by the GPA. This would not be the case with an exhaustive list. 
 
I n  t h i s  r e g a r d ,  w e  w o u l d  a l s o  l i k e  t o  n o t e  t h a t  t h e  E U ,  i n  t h e  v e r s i o n  o f  M o n t e n e g r o ' s  ( f i r s t )  Revised Appendix I offer which the EU modified, suggested using the following language with 
respect to Annex 1: " The indicative list of Montenegro's central government entities as attached 
below will be added to Annex 1 of the European Union's Appendix I ." 
 
Given that Montenegro, as requested by the EU, abandoned the "asterisks approach", we believe 
that is necessary to use the same approach that the EU applies, i.e. to note that the list of Annex 1 
entities is indicative (see Annex 1, 2 "THE CENTRAL GOVERNMENT CONTRACTING AUTHORITIES 
OF EU MEMBER STATES" lit (a)). 
 
We would also like to recall at this point that a number of GPA Parties suggested adding more examples of central government entities covered to the list attached to Annex 1. Montenegro 
therefore added almost 30 central government entities to the list attached to Annex 1 together 
with its (first) Revised Appendix I offer.  
Annex 2 
 
2. According to the two-stage approach take n by Montenegro Part B being aligned 
with the EU Annex 2 offer, Part B of Annex 2 has to contain an indicative list of bodies 
governed by public law as this is the case in the EU Annex 2. Therefore, the EU urges 
Montenegro to ensure that an indicative list of bodies governed by public law compliant 
with the concept of a body governed by publ ic law under the EU relevant legislation is 
i n c l u d e d  i n  P a r t  2  o f  A n n e x  2  o f  M o n t e n e g r o ' s  c o v e r a g e .  N o  i n d i c a t i v e  l i s t  r e g a r d i n g  
regional or local contractin g authorities is required. 
Montenegro only attached the "Indicative list of Montenegro's regional or local contracting 
authorities" to Annex 2 of its (first) Revised Appendix I offer because several GPA Parties 
requested it to do so. Given that "All sub-central government entities (local self-government units) and subordinated organizations" are covered, it wo uld not be necessary to add the said indicative 
list to Annex 2. Montenegro agrees with the EU's view but also has to take the view of the other 
GPA Parties into consideration.  
 Montenegro attached the "Indicative list of Montenegro's contracting authorities which are bodies 
governed by public law as defined by the law on public procurement of Montenegro" to its (first) 
Revised Appendix I offer. This list contains 17 examples of bodies governed by public law that are covered. This list complies with the concept of a body governed by public law under the relevant 
EU legislation. 
 GPA/ACC/MNE/7 
 
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  Annex 3 
 
3. According to the two-stage approach take n by Montenegro, Part B of Annex 3 has 
to contain an indicative list of contract au thorities and public undertakings fulfilling the 
criteria laid down under Annex 3 as this is the case in Annex 3 of the EU Appendix I. 
Therefore, the EU suggests to Montenegro to  clarify in Part B of its Annex 3 that the 
indicated list will be added to the EU Annex 3 following Montenegro's potential 
accession to the EU. 
Montenegro attached the "Indicative List of Montenegro's contracting authorities and public 
undertakings fulfilling the criteria laid down under Annex 3" to its (first) Revised Appendix I offer. Montenegro takes the view that this indicative list (like indicative lists in Annex 1 and 2) would be 
added to Annex 3 of the EU's Appendix I offer up on Montenegro's accession to the EU. Montenegro 
is happy to clarify that all indicative lists in its Appendix I offer will be added to the respective Annexes of the EU's Appendix I (please note that precisely for this reason Montenegro originally 
suggested using the language "this Annex will be  merged with Annex 3 of the European Union's 
Appendix" but changed it to "substituted by" upon the request of a certain GPA Party). 
 
Annex 7 
 
4. We request Montenegro to clarify the scope of application of Note 3. We consider 
that an explanation of the notion "privatisation" is needed, with narrower application. 
Please see our comment in item 2.1, question 8 ab ove. As noted, privatizations within the meaning 
of the Montenegrin public procurement framework refer to the sale or transfer of state-owned 
assets into private hands. In contrast, public procurement refers to the purchase of goods, 
services and works on behalf of a public entity. Privatizations are – as is also generally the case in 
other jurisdictions – not covered by public procurement law in Montenegro.  
As also noted above, the award of concession contracts (like Public-Private-Partnerships) is not 
governed by the Montenegrin public procurement law but by other legislation. Companies from one o f  t h e  E U  M e m b e r  S t a t e s  ( a s  w e l l  a s  f r o m  t h e  o t h e r  G P A  P a r t i e s )  w i l l  h a v e  a c c e s s  t o  t h o s e  contracts on the same terms as domestic companies. 
 
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