# CE2004084EN.01074401.xml

| 3.4.2004 | EN | Official Journal of the European Union | CE 84/744 |
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3.4.2004

EN

Official Journal of the European Union

CE 84/744

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(2004/C 84 E/0839)

WRITTEN QUESTION E-3948/03

by Erik Meijer (GUE/NGL) to the Commission

(22 December 2003)

Subject:   Moves by the USA or other countries to make EU Member States comply with their wishes by rewarding or penalising European companies depending on the Member State in which the company is based

Subject:

| 1. | Can the Commission confirm that, in awarding reconstruction or investment contracts in Iraq, a state occupied by US armed forces, the USA is still making a distinction between companies based in EU Member States that supported the American point of view and the American war effort in 2003 and companies based in EU Member States that did not support this war, and that the USA has announced that it will continue to do so? |
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1.

Can the Commission confirm that, in awarding reconstruction or investment contracts in Iraq, a state occupied by US armed forces, the USA is still making a distinction between companies based in EU Member States that supported the American point of view and the American war effort in 2003 and companies based in EU Member States that did not support this war, and that the USA has announced that it will continue to do so?

| 2. | Does the Commission feel that this signal from the Americans is designed to emphasise that the US Administration has never felt constrained by Europe or the UN when deciding what it will do in Iraq and that, in the future, it will pay little or no attention to the views of others? |
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2.

Does the Commission feel that this signal from the Americans is designed to emphasise that the US Administration has never felt constrained by Europe or the UN when deciding what it will do in Iraq and that, in the future, it will pay little or no attention to the views of others?

| 3. | Have there been situations in the past and in other areas where the US has treated companies from different EU Member States differently? If so, where and when has this happened? How were these distinctions justified? |
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3.

Have there been situations in the past and in other areas where the US has treated companies from different EU Member States differently? If so, where and when has this happened? How were these distinctions justified?

| 4. | Are there states other than the USA that treat companies from different EU Member States differently? If so, where and when has this happened? How were these distinctions justified? |
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4.

Are there states other than the USA that treat companies from different EU Member States differently? If so, where and when has this happened? How were these distinctions justified?

| 5. | Does the Commission accept that treating companies differently by rewarding those in obedient states is a suitable way of making individual EU Member States agree as far as possible with the political views of third countries or of creating a situation in which the EU can reach a common position only when this position corresponds with the priorities of a powerful state outside the EU? |
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5.

Does the Commission accept that treating companies differently by rewarding those in obedient states is a suitable way of making individual EU Member States agree as far as possible with the political views of third countries or of creating a situation in which the EU can reach a common position only when this position corresponds with the priorities of a powerful state outside the EU?

| 6. | If the Commission finds the scenario outlined in question 5 unacceptable, in what way does it intend to put a stop to this as soon as possible? |
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6.

If the Commission finds the scenario outlined in question 5 unacceptable, in what way does it intend to put a stop to this as soon as possible?

Answer given by Mr Patten on behalf of the Commission

(5 February 2004)

(5 February 2004)

| 1. | The ‘Determination and Findings’ issued by the United States (US) Department of Defense on 5 December 2003 under the signature of Deputy Secretary of Defense Wolfowitz applies to 26 prime contracts to be awarded by the Coalition Provisional Authority (CPA) in Iraq or by the Department of Defense on behalf of the CPA. These contracts will be funded from USD 18,6 billion committed to the Iraq Relief and Reconstruction Fund (IRRF) by the US Government. Article 4 of the ‘Determination and Findings’ states that: | It is necessary for the protection of the essential security interests of the United States to limit competition for the prime contracts of these procurements to companies from the United States, Iraq, Coalition partners and force contributing nations. Thus, it is clearly in the public interest to limit prime contracts to companies from these countries. |
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1.

The ‘Determination and Findings’ issued by the United States (US) Department of Defense on 5 December 2003 under the signature of Deputy Secretary of Defense Wolfowitz applies to 26 prime contracts to be awarded by the Coalition Provisional Authority (CPA) in Iraq or by the Department of Defense on behalf of the CPA. These contracts will be funded from USD 18,6 billion committed to the Iraq Relief and Reconstruction Fund (IRRF) by the US Government. Article 4 of the ‘Determination and Findings’ states that:

It is necessary for the protection of the essential security interests of the United States to limit competition for the prime contracts of these procurements to companies from the United States, Iraq, Coalition partners and force contributing nations. Thus, it is clearly in the public interest to limit prime contracts to companies from these countries.

The document goes on to list those countries eligible to compete for these contracts. Current Member States and Acceding Countries listed as eligible are the Czech Republic, Denmark, Estonia, Hungary, Italy, Latvia, Lithuania, the Netherlands, Poland, Portugal, Slovakia, Spain and the United Kingdom. Those not listed as eligible are Austria, Belgium, Cyprus, France, Finland, Germany, Greece, Ireland, Luxembourg, Malta, Slovenia and Sweden. US officials have stressed that these eligibility criteria apply only to the primary contractors and will not be enforced on sub-contractors.

| 2. | Despite the suggestion in the ‘Determination and Findings’ that these criteria have been applied as result of security concerns, Defense Secretary Rumsfeld has made clear that there is a political element to the decision. Speaking in a press conference in Washington on 16 December 2003, Mr Rumsfeld stated that ‘the decision was to preserve for those people who made the Iraqi people's liberation possible access to the prime contracts’. |
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2.

Despite the suggestion in the ‘Determination and Findings’ that these criteria have been applied as result of security concerns, Defense Secretary Rumsfeld has made clear that there is a political element to the decision. Speaking in a press conference in Washington on 16 December 2003, Mr Rumsfeld stated that ‘the decision was to preserve for those people who made the Iraqi people's liberation possible access to the prime contracts’.

| 3. | There have been previous occasions when the US has applied differentiated approaches to Member States in areas of US Government Procurement. For example in 1993 and as a result of the failure of negotiations to liberalise purchases of telecom equipment, the US decided to impose sanctions against certain Member States. The sanctions bar suppliers from a selected group of Member States from bidding for some US Federal Government contracts. |
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3.

There have been previous occasions when the US has applied differentiated approaches to Member States in areas of US Government Procurement. For example in 1993 and as a result of the failure of negotiations to liberalise purchases of telecom equipment, the US decided to impose sanctions against certain Member States. The sanctions bar suppliers from a selected group of Member States from bidding for some US Federal Government contracts.

| 4. | Although it could not be excluded a priori, it is unusual to see a third country applying limitations to bidders from a selected group of Member States for trade or economic reasons. Such a measure is often inefficient considering that Union suppliers often own or control subsidiaries or branches in another Member State from which it would be easy to bid and elude the measure. |
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4.

Although it could not be excluded a priori, it is unusual to see a third country applying limitations to bidders from a selected group of Member States for trade or economic reasons. Such a measure is often inefficient considering that Union suppliers often own or control subsidiaries or branches in another Member State from which it would be easy to bid and elude the measure.

| 5. and 6. | This would, in any case, hardly be the first example of a nation using financial and economic levers to pursue its foreign policy objectives. However, as made clear in its press statement of 11 December 2003 (1), the Commission will monitor procedures relating to the awarding of contracts to ensure that the United States honours the commitments it undertook under the auspices of the World Trade Organisation Government Procurement Agreement. |
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5. and 6.

This would, in any case, hardly be the first example of a nation using financial and economic levers to pursue its foreign policy objectives. However, as made clear in its press statement of 11 December 2003 (1), the Commission will monitor procedures relating to the awarding of contracts to ensure that the United States honours the commitments it undertook under the auspices of the World Trade Organisation Government Procurement Agreement.

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(1)  IP/03/1713.

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