RESTRICTED  WORLD TRADE  
ORGANIZATION  GPA/M/29 
31 January 2006 
 (06-0415) 
Committee on Government Procurement  
  
 
 
MINUTES OF THE MEETING HELD ON 21 DECEMBER 2005 
 
Chairman:  Ambassador Tae-yul Cho (Korea)
 
 
 
 1. The Chairman
 said that, in preparation for the meeti ng, delegations had received an airgram 
on 28 November 2005.1  Subsequently, a corrigendum to the airgram had been circulated2, moving the 
date of the meeting to 21 December 2005.  An a nnotated agenda for the meeting had also been 
circulated to delegations on 15 December 2005.3 
2. He suggested that under the item "Other business" the Committee take up:  (i) the dates of the 
Committee's meetings in 2006;  and (ii) the submi ssion of offers in the bilateral market access 
negotiations. 
3. The Committee adopted  the following agenda, as outlined in the airgram: 
A. Israel's proposed modification pursuant to Article XXIV:6(a) 
 
B. Other business. 
 
A. ISRAEL 'S PROPOSED MODIFICATION PURSUANT TO ARTICLE  XXIV :6(a) 
4. The Chairman  noted that, as foreseen in the airgram, delegations had received: 
(a) a communication from Israel with proposed modifications to Israel's schedules4;  and 
(b) a draft decision for adoption by the Committee5, which he understood reflected 
informal consultations between interested delegations. 
5. With the Chairman's introduction, the Committee adopted  the Decision (attached).6 
6. The representative of Israel  thanked Parties for their coope ration during the consultations 
prior to the adoption of the Decision.   Israel viewed industrial cooperation in government 
procurement as an important vehicle for the developmen t of its industry.  As his delegation had stated 
in previous meetings of the Committee, maintaini ng Israel's right to require offsets represented a 
crucial element of its participati on in the Agreement on Government Procurement.  With that in mind, 
                                                      
1 WTO/AIR/2724. 
2 WTO/AIR/2724/Corr.1, 2 December 2005. 
3 Job No. 9439. 
4 GPA/MOD/ISR/5, 12 December 2005. 
5 Job No. 9258, 12 December 2005. 
6 Circulated following the meeting as  document GPA/86, 22 December 2005. GPA/M/29 
Page 2  
 
  Israel had provided substantial compensation for ma intaining offsets at the level agreed upon in the 
Decision.  The compensation offered new opport unities to foreign bidders in the government 
procurement market of Israel.  He reiterated hi s delegation's intention to engage in further 
consultations with other Parties in the framewor k of the coverage negotia tions under Article XXIV:7 
of the Agreement.  In regard to offsets, the inten tion of his delegation, as set out in the Decision, was 
to reach agreement on a long-term solution, including a revised Note to the schedules of Israel to the 
Agreement. 
7. The representative of the United States
 said that his delegation appreciated that Israel was 
reducing its offsets below 30 per cent and was offe ring compensatory adjustments in the form of 
expanded coverage of services and a reduction of its construction services thresholds to 
SDR 5 million.  He also appreciated the commitme nt of Israel to negotiate a schedule for the 
reduction of its offsets in the forthcoming mark et access negotiations.  As his delegation had 
repeatedly emphasized, it regarded offsets as a tran sitional measure.  The continued use of offsets set 
an unfortunate precedent.  Given that Israel had ma intained offsets for the past 20 years, since it 
joined the Tokyo Round Agreement on Government Procurement, the time had come for Israel to 
work out with other Parties a schedule for the expedi tious phase-out of its offsets.  His delegation was 
looking forward to working with Israel in the upcoming market access negotiations to find a 
permanent solution to the issue of offsets. 
8. The representative of Canada  said that his delegation accepted the immediate commitment by 
Israel to reduce the value of its offsets to 28 per cent and the commitment by Israel to work out and 
follow a schedule for future reductions  to its offsets.  In the contex t of the Agreement on Government 
Procurement, measures such as offsets and price pr eferences should be transitional in nature, should 
be utilized only when necessary based on developmen t needs and should lead to the full adoption of 
non-discriminatory coverage at the end of the transition period. 
9. The representative of Japan  said that his delegation recognized the efforts by Israel to offer 
compensation for the extension of its use of offsets,  such as expanded coverage of services.  Similarly 
to the United States and Canada, his delegation also regarded offsets as an exceptional, transitional 
measure and was disappointed with the renewed exte nsion of Israel's use of offsets, following the 
Decision adopted at the end of 2004.7  His delegation was looking forward to working with Israel on 
this issue in the coming months. 
10. The representative of Korea  welcomed the Decision on the revision of the Note regarding the 
offset measures of Israel with compensatory adjustme nts.  His delegation appreciated that Israel had 
made its request already five months earlier, Israel's  provision of a study on the participation of Israel 
in the GPA and the impact of its offset provisions, and Israel's constructive approach to consultations 
with other Parties.  As a general principle, o ffsets should be avoided.  However, his delegation 
recognized the positive role that they might play in allowing a developing country Party to benefit 
from its participation in the Agreement while providi ng market access to suppliers of other Parties.  
His delegation hoped that the Decision would give a positive signal to potential future Parties to the 
Agreement that the Agreement could accommodate th eir needs, should those be legitimate, while 
furthering the goals of the Agreement as a whole.   His delegation was looking forward to working 
with Israel and other Parties to find a long-term wi n-win solution to this issue in the context of the 
negotiations on the revision of the Agreement. 
                                                      
7 GPA/83, 17 December 2004.  GPA/M/29 
 Page 3 
 
 
  11. The representative of the European Communities  thanked Israel for its cooperation in 
resolving this issue.  The views of his delegation on offsets were similar to those already expressed by 
the representatives of the United States, Canada and Jap an, and were also reflected in the preamble to 
the Decision.  His delegation was looking forward to fu rther work with Israel on this issue as part of 
the coverage negotiations. 
12. The representative of Switzerland  said that the views of his delegation were reflected in the 
recital to the Decision in the paragraph referring to  "the long-standing views of several Parties that 
offsets are only transitional measures" and affirming th at "Israel must eliminate its offsets".  This was 
in accordance with the new commitments his delegati on was prepared to make under Article III of the 
revised Agreement, which reflected the movement of  offsets from a separate Article of the Agreement 
to the Article on "General Principles".  Indeed, the prohibition of offsets should be addressed as a 
general principle of the revised Agreement. 
13. In conclusion, the representative of Israel  thanked all Parties for their comments and their 
constructive attitude to Israel's request.  He re iterated the readiness of his delegation to engage 
constructively in the upcoming negotiations under Article XXIV:7 of the Agreement. 
14. The Committee took note  of the statements made. 
B. OTHER BUSINESS  
Dates of meetings in 2006 
15. The Chairman  said that, as indicated in his communication to delegations of 
14 December 2005, he would not be available to chai r the meeting that had been planned for the week 
of 15 May 2006.  He said that if Parties wished hi m to continue as chair of the Committee in 2006, the 
meeting planned for the week of 15 May 2006 would have to be rescheduled.  Following 
consultations , he proposed that the meeting be rescheduled to  the week of 29 May 2006.  As set out in 
his communication, with this change the full list of dates for the Committee's planned meetings 
in 2006 was: 
(a) the week of 6 February 2006; 
(b) the week of 27 March 2006; 
(c) the week of 29 May 2006; 
(d) the week of 10 July 2006;  and 
(e) the week of 16 October 2006. 
It was understood that, if the number of meetings ne eded to be reduced, the meeting scheduled for the 
week of 10 July 2006 could be treated as optiona l.  The room reservations for these dates were 
without prejudice to the organization of work duri ng the meeting weeks, which would be arranged in 
consultation with Parties, as usual. GPA/M/29 
Page 4  
 
  Submission of offers in the bila teral market access negotiations 
16. The Chairman
 noted that the deadline for submission of  offers in the bilateral market access 
negotiations, which had been extended by the Committee's Decision of 21 July 20058, had passed.  
To date, offers had been received from onl y two delegations, the European Communities9 and the 
United States.10  The Chairman urged delegations to submit their offers as soon as possible so that the 
market access-related negotiations could move to the next level early in 2006.  He also noted that a 
supplementary request had been received from Norway.11 
17. The representative of Korea  said that Korea had almost finalized its offer, and intended to 
submit its offer after obtaining the necessary final a pproval from an inter-agency ministerial meeting 
to be held in January 2006. 
18. The representative of Switzerland  said that the offer of Switzerland was awaiting final 
acceptance by the Federal Counsellor.  He hoped th at his delegation could submit the offer in 
January 2006. 
19. The representative of Japan  said that his country was in the final stages of internal 
consultations on its offer and planned to  submit the offer in the near future.12 
20. The representative of Canada  said that his delegation expected its offer to be completed and 
circulated soon, hopefully in advance of th e Committee's meeting in early February 2006.13 
21. Taking note of the above statements, the Chairman  expressed the hope that all participants 
would submit their offers by early January 2006. 
                                                      
8 GPA/79/Add.1. 
9 GPA/O/EEC/2, 14 November 2005. 
10 Subsequently circulated to participants in th e bilateral coverage negotiations as GPA/O/USA/2, 
22 December 2005. 
11 Subsequently circulated to participants in the bilateral coverage negotiations as 
GPA/O/NOR/1/Add.1, 22 December 2005. 
12 Subsequently received and circulated to particip ants in the bilateral coverage negotiations as 
GPA/O/JPN/2, 4 January 2006. 
13 Subsequently received and circulated to particip ants in the bilateral coverage negotiations as 
GPA/O/CAN/2, 24 January 2005.  GPA/M/29 
 Page 5 
 
 
  
 WORLD TRADE  
ORGANIZATION  GPA/86 
22 December 2005 
 
 (05-6230) 
Committee on Government Procurement  
    
DECISION PURSUANT TO ARTICLE XXIV:6(a) OF THE  
AGREEMENT ON GOVERNMENT PROCUREMENT 
 
Decision of 21 December 2005
 
 
 
 The Committee on Government Procurement,   Having regard  to the provisions of paragraph 6(a)  of Article XXIV of the Agreement on 
Government Procurement; 
 
 Noting  that, pursuant to the Committee's Decision of 16 December 2004 as set forth in 
document GPA/83, Israel committed in its Note to Appendix I to reduce by 1 January 2006 its offsets 
to 20 per cent of the value of a contract;  
 Having considered  Israel's submission in document GPA/W/294, dated 18 July 2005, and 
having regard to the statements made by Israel emphasizing the importance of offsets to its economy 
as a development tool
; 
  Having considered  Israel's proposal in document GPA/MOD/ISR/5, dated 
12 December 2005, to further modify its No te to Appendix I, based on Article XXIV:6(a)
; 
 
 Noting that Israel has offered compensatory adju stments in the above-referenced proposal, 
pursuant to Article XXIV:6(a), and that th e Parties have accepted those adjustments ; 
 
 Noting the long-standing views of several Parties that offsets are only transitional measures 
and that Israel must eliminate its offsets;  and 
  Noting  the intention of Israel to engage in consu ltations with the Parties,  in the framework of 
the negotiations on the revision of the Agreement on Government Procuremen t under Article XXIV:7, 
with a view to agreeing on a revised Note, incl uding a schedule to reduce its use of offsets, 
 
 Hereby decides  as follows: 
 
Article I 
 
 Paragraph 1(c) of Israel's Note to Append ix I shall be modified to read as follows: 
 GPA/M/29 
Page 6  
 
  "Offsets in any form may be required up to 35  per cent of the contract going down to 30 per 
cent after five years, 28 per cent after ten years and 20 per cent after 13 years, beginning from the date Israel implements the Agreement."  
Article II 
 
 Paragraph 2(a) of Israel's Note to Append ix I shall be modified to read as follows: 
  "At the end of each period mentioned in paragr aph 1(c), Israel will submit a report concerning 
the implementation of this Note." 
 
Article III 
 
 Israel's Annex 4 shall be replaced by the text attached hereto.  Article IV 
 
 Israel's Annexes  1, 2, 3 and 5, referring to the thresholds for construction services, shall be 
modified to read as follows:   "Threshold:  8,500,000 SDR;  during the period beginning from 1 January 2006 until 
31 December 2008 the threshold shall be set at 5,000,000 SDR." 
 
Article V 
 
 Israel's Note to Appendix I, as modified by th is Decision, shall remain in force until the entry 
into force in Israel of the revision of the Ag reement on Government Procurement presently being 
negotiated under Article XXIV:7 of th e Government Procurement Agreement. 
  GPA/M/29 
 Page 7 
 
APPENDIX I ISRAEL  ANNEX 4 Page 1/2
 
  
ATTACHMENT1 
 
ANNEX 4 
 
Services  
  
  Of the Universal List of Services, as cont ained in document MTN.GNS/W/120, the following 
services are included:   CPC   Description  
 
6112, 6122, 633, 886 Maintenanc e and repair services 
 641   Hotel and similar accommodation services 
 
642-3   Food and bevera ge serving services 
 712   Land transport services  
73   Passenger transportation services 
 7471   Travel agency and tour operator services  752   Telecommunications services  
821   Real estate services i nvolving own or leased property 
 83106   Leasing or rental services conc erning machinery and equipment without 
to 83109  operator only  
83203   Leasing or rental services c oncerning personal and household goods only 
to 83209  84   Computer and related services 
 861   Legal Services (advisory services  on foreign and international law only) 
 
862   Accounting, auditing and bookkeeping services  863   Taxation Services (excluding legal services)  
864   Market research and public opinion 
 865-6   Management consulting  
                                                     
 
1 In English only. GPA/M/29 
Page 8  
APPENDIX I ISRAEL  ANNEX 4 Page 2/2
 
 867  Architectural services; engineering services and integrated engineering 
services, urban planning and landscape arch itectural services; related scientific 
and technical consu lting services; technical tes ting and analysis services 
 871   Advertising services  874, 82201-82206 Building-cleaning services and property management services 
 
876   Packaging services  8814   Services incidental to forestry and logging, including forest management 
 883   Services incidental to mining , including drilling and field services 
 
88442   Publishing and printing servic es on a fee or contract basis 
 887   Services incidental to energy distribution  
9401-5   Environmental services 
   
Note to Annex 4  
 
 The offer regarding services (including construc tion) is subject to the limitation and conditions 
specified in Israel's schedule of the GATS. 
 
__________