RESTRICTED  WORLD TRADE  
ORGANIZATION  S/WPGR/W/52 
15 June 2005 
 (05-2502) 
Working Party on GATS Rules Original:   English 
  
COMMUNICATION FROM THE EUROPEAN COMMUNITIES 
  
Government Procurement in Services
 
  
 The following communication, dated 13 June 2005, from the delegation of the European 
Communities is being circulated to the Memb ers of the Working Party on GATS Rules. 
 
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1. In its communications on government procur ement in services of July 2002, May 2003 and 
May 2004, the European Communities (hereinafter th e EC) submitted proposals for a framework that 
could be developed under the GATS, including an  Annex to the GATS on procedural rules for 
government procurement and the possibility to ma ke specific commitments in GATS Schedules to 
open up to international competition government procurement in services.  These communications 
underlined the flexibility of such framework and the benefits that could be drawn from it. The 
underlying principle would be that each WTO Me mber would have the possibility to undertake 
relevant government procurement commitments in the sectors it wishes to open to international 
competition and according to the specifications it would set in order to fulfil its public investment and 
development needs.  
2. In the EC communication submitted in May 2004 (S/WPGR/W/48), the EC gave in particular 
elements that could be developed into scheduling guidelines for government procurement 
commitments under the GATS .  The WTO Secretariat Note S/WPGR/W/51 on the main approaches 
to the undertaking of commitments on government pr ocurement in Economic In tegration Agreements 
(EIAs) provides interesting observations that could enable the Working Party on GATS Rules to further work on such scheduling guidelines. 
3. The WTO Secretariat Note S/WPGR/W/49, on the government procurement provisions 
contained in economic integrati on agreements, provides a good working basis and a useful source of 
inspiration in regard to procedural rules  that could be developed for government procurement in the 
context of the GATS.  Singapore, in its Statement of 24 November 2004, underlined that most of the  agreements reviewed in that Secretariat Note cont ain procedural rules typically covering such topics 
as: non-discrimination, valuation of contracts, technical specifications , procurement methods, 
qualification of suppliers, procedural rules regard ing invitations to participate, time limits for 
tendering and delivery, tender documentation, and awar d of contracts.  This provides the structure of 
an annex to the GATS on procedural rules for govern ment procurement and the question now is what 
types of rules should be developed under the relevant headings.   
4. In this context, the EC is hereby putting fo rward a new contribution that aims at helping 
defining the appropriate procedural rules to be developed in an Annex to the GATS on government 
procurement in services.  Such rules are particular ly important to ensure the effective opening of 
government procurement markets. They would apply to sectors where Members undertake specific government procurement commitments.   S/WPGR/W/52 
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 I. PRELIMINARY CONSIDERATIONS 
A. SCOPE
 AND  DEFINITIONS 
5. The proposed GATS Annex would indicate that it applies to government procurement of 
services as it is defined in Article XIII:1 of the GATS .  This brings into th e scope of the Annex any 
law, regulations or requirements governing the pr ocurement by governmental agencies of services 
purchased for governmental purposes and not with a view  to commercial resale no r with a view to use 
in the supply of services for commercial sale. 
6. During discussions in the Working Party on GATS Rules, some WTO Members have 
suggested that the scope of government procur ement in services, as opposed to government 
procurement of goods, should be defined.  In its Statement of 24 November 2004, Singapore 
underlined that a basic question to address was whet her a clear distinction could be made between 
goods and services procurement.  
7. The Tokyo Round Agreement on government procur ement had to address this question since 
it was aimed at covering government procurement of goods.  Its Article I: 1 (a) provided that: “This 
Agreement applies to any law, regulation, pro cedure and practice regarding the procurement of 
products by the entities subject to this Agreement.  This includes services incidental to the supply of 
products if the value of these incidental services does not exceed that of the products themselves, but 
not service contracts per se .”   
8. The GATS Annex on Government Procurement c ould include a provision precising that it 
applies to measures by Members affecting the government procurement of services, defined as covering government procurement contracts in which services are the primary subject.  
9. Within the scope of the Annex, the procuring entities could be defined as encompassing all 
entities listed in Article I: 3 (a) GATS. Neverthele ss, the Annex should recognise the right for a WTO 
Member to limit the scope of its government pr ocurement commitments to a limited group of 
procuring entities, which could be listed in the Sc hedule, sector by sector, on the basis of either a 
positive-list or negative-list approach.  For pr actical purposes, Members might consider listing 
covered entities in an annex to their Schedule, especia lly in the case they were to be the same for all 
committed sectors. 
B. THRESHOLDS 
10. Threshold values would be indicated in the Members’ Schedules.  According to studies 
conducted by the EC in the framewo rk of the integration of the EC procurement market, it appears 
that below certain thresholds no effective cross-border procurement takes place.  The EC is therefore of the opinion that all Members should apply the sam e level of thresholds, regardless of the size of 
their procurement market.  This would increase the ef ficiency and transparency of the future GATS 
Annex on Government Procurement.  
C. SPECIAL
 AND  DIFFERENTIAL  TREATMENT 
11. The positive list structure of the GATS and the flexibility of the proposed approach, notably 
the possibility to schedule partial commitments including specific limitations, mean that WTO 
Members would retain full discretion about the tim ing and coverage of the commitments they would 
undertake to open their government procurement mark ets to international competition.  Developing 
countries would therefore be able to open up progr essively their government procurement markets in 
the services sectors they see fit, and to implement measures aimed at the development of certain  S/WPGR/W/52 
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 services sectors and domestic industry, including th e possibility of applying preferential pricing 
policies.  
12. In addition to this “built-in flexibility”, the EC considers that it may be useful to reflect on 
specific special and differential treatment provisions in the GATS Annex on government procurement.  For instance, it is often accepted in government pr ocurement instruments to include provisions in 
favour of offset regimes aimed to develop industrial sectors or regions.
  
II. RULES APPLICABLE TO PROCUREMENT PROCEDURES 
A. NON-DISCRIMINATION 
1. National treatment 
13. In its previous communications, the EC proposed  that WTO Members could indicate in a fifth 
column of their GATS Schedules, for each sector an d each mode of supply, whether and if so, which 
specific commitments and limitations they undertak e for laws, regulations or requirements governing 
government procurement in services.  
2. MFN treatment 
14. The Most-Favoured Nation (MFN) clause of the GATS applies across the board to each 
services sector, regardless of whether the sector has b een subject to specific market access or national 
treatment commitments.  Discussions in the Workin g Party on GATS Rules have suggested that WTO 
Members would favour following this principle al so as regards government procurement in services. 
15. However, there could be a one-off possibility to schedule MFN exemptions at the time of 
entry into force of the GATS Annex on Government Pr ocurement, to take account of the fact that 
MFN exemptions relating to governme nt procurement were not scheduled at the time of entry into 
force of the GATS because Article II GATS was not applying to government procurement.  The 
scheduling of MFN exemptions relating to governme nt procurement could follow the usual structure 
of the GATS lists of MFN exemptions.  
16. Finally, the EC has proposed that the GATS A nnex on Government Procurement include an 
exception to the MFN principle to ensure that th e more favourable treatment that GPA parties may 
accord to each others in the framework of the GP A regime, are not extended on an MFN basis to non 
GPA parties.  
B. VA L U AT I O N  OF CONTRACTS 
17. In order to prevent Members’ procuring entities from splitting or dividing government 
procurement contracts with the intention of avoi ding or circumventing the application of future 
specific commitments for procurement above certain  thresholds, some common rules on the valuation 
of contracts should be fixed.  These valuation ru les should furthermore enable Members to identify 
whether services are the primary subject of a given government procurement contract. 
C. TECHNICAL  SPECIFICATION  AND  QUALIFICATION  OF SUPPLIERS 
18. The provisions of Article VI of the GATS and the disciplines of Article VI:4, once agreed, 
would apply to government procurement in services.  Article VI:4 refers to specific types of domestic 
regulation, more precisely to licensing requirement s and procedures, qualification requirements and 
procedures, and technical standards.  S/WPGR/W/52 
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 19. The question may be discussed whether those provisions and disciplines would be sufficient 
to ensure that domestic regulations relating to tec hnical specification and qualification of suppliers in 
the case of government procurement are not unduly restri ctive.  The need to have tenders that reflect 
the diversity of possible technical solutions (when technical specifications are drawn up in terms of 
functional performance) or the use of official or permanent lists of qualified suppliers by some WTO 
Members, would however plead for the development in the GATS Annex on Government 
Procurement of additional specific provisions on t echnical specification and qualification of suppliers 
for government procurement.  
D. PROCUREMENT
 METHODS 
20. Three broad categories of procedures are commonly distinguished: public or open tendering 
procedures, selective or restricted tendering procedur es (whereby only those suppliers invited to do so 
may submit a tender) and limited tendering or direct  contracting or single tendering (where the 
procuring entity contacts directly potential suppliers). 
21. The agreements reviewed in the Secretaria t Note S/WPGR/W/49 (pp. 23-34) explicitly 
foresee as a standard procedure the use of open or  selective tendering procedures and permit, under 
certain conditions, the use of limited tendering procedures. 
22. Accordingly, the GATS Annex on Government Procurement could indicate that, in general, 
open or selective procurement should be favoured. C onditions and circumstances justifying the use of 
limited tendering could also be specified in  the GATS Annex on Government Procurement. 
23. Effective access to government procurement opportunities is closely linked to competitive 
and transparent procedural rules.  This head ing would also cover information on procurement 
opportunities, tendering, and qualifi cation and contract award procedures.  It could include a 
minimum set of information to be provided in pr ocurement notices, such as title, date and place for 
submission of tenders, etc. 
E. TIME  PERIODS 
24. The GATS Annex on Government Procurement s hould fix reasonable time periods that would 
enable interested suppliers to prepare and submit requests for participation where appropriate and/or 
to prepare and submit tenders in a responsive ma nner. In determining time periods, Members could 
take into account such factors as the distance, the use of electronic means and the complexity of the 
tender.  
F. TENDER  DOCUMENTATION 
25. The GATS Annex on Government Procurement c ould provide that the information made 
available should be sufficiently precise to enable s uppliers to assess their interest in a particular 
government procurement contract and, should they wish to participate in it, to submit tenders. 
Sufficiently precise tender documentation should attr act only the best-qualified service providers and 
at the same time achieve effective competition.  Sp ecific elements of information to be included are 
the address of the entity where tenders should be sen t, the language or languages in which tenders and 
any other documents may be submitted, the criteri a for awarding the contract and the terms of 
payment. 
  S/WPGR/W/52 
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 G. CONTRACT  AWARD 
26. The GATS Annex on Government Procurement could assert the principle that contracts are 
awarded either to the lowest tender or to the tender determined to be economically the most 
advantageous in terms of the specific evaluation cr iteria set earlier in the procurement notice or tender 
documentation (for instance quality, price, technical merit, aesthetic and functional characteristics, 
environmental criteria, which are linked to the subject matter of the contract, etc.).  
27. The GATS Annex on Government Procurement c ould in addition provide that, as regards 
domestic review of decisions to award a specific c ontract, and appropriate a nd prompt information of 
bidders, provisions of GATS Article VI:2 and VI:3, respectively, should apply. 
III. CONCLUSION 
28. The EC looks forward to discussing elements presented in this Communication and to 
elaborating an Annex to the GATS on G overnment Procurement in Services. 
 
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