COMMISSION OF THE EUROPEAN COMMUNITIES 
C0M(93) 80 final 
Brussels, 3 March 1993 
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REPORT FROM THE COMMISSION 
concerning 
B-?L,-." negotiations regarding 
Iff access to third countries' markets 
in the fields covered by 
liV# fit à*S Directive 90/531/EEC 
(the Utilities Directive) 
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INTRODUCTION 
This report describes the progress made in multilateral or bilateral 
negotiations regarding access for Community undertakings to the third 
countries' markets in the fields covered by Directive 90/531/EEC of 17 
September 1990, on the procurement procedures of entities operating in the 
water, energy, transport and telecommunications sectors ("the Utilities 
Directive")^). It is presented in accordance with Article 29 (6) of that 
Di rect ive. 
It first lists the agreements which the Community and its Member States 
have already signed with third countries and which cover procurement in the 
fields covered by the Directive. 
It then describes the state of play of other multilateral and bilateral 
negotiations which the Commission is conducting with third countries in the 
same fields. 
(1) O.J. L 297 of 29 October 1990, p.1. 
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1. NEGOTIATIONS CONCLUDED 
Agreements have been signed between the Community and the EFTA countries 
and some of the eastern European countries in the fields covered by the 
Directive. Formal conclusion will follow the completion of ratification 
procedures currently under way. 
*• • EFTA countries 
The Agreement on the European Economic Area signed on 2 May 1992 by 
the Community, its Member States and the EFTA Countries (the EEA) 
provides in its Article 65 and Annex XVI that the provisions of the 
Utilities Directive be applied in the EFTA Countries. As a result, 
Sweden, Finland, Iceland and Austria will, upon entry into force of 
the Agreement, provide access to Community undertakings. 
As regards Norway and Liechtenstein, the Agreement provides for a 
reciprocal suspension of such opening until 31 December 1994 at the 
latest. Consequently, until such time as Norway and Liechtenstein 
implement the Directive, EC undertakings will not have guarantees of 
access to contracts awarded in these countries. 
Following the withdrawal of Switzerland from the EEA, EC undertakings 
have no guarantee of access to contracts awarded in Switzerland in the 
fields covered by the Directive. 
2. Eastern European Countries 
The European Agreements signed on 16 December 1991 by the Community, 
its Member States and Hungary, Czechoslovakia and Poland provide that 
undertakings of the respective countries shall be given full access to 
the contract award procedures in the Community under conditions not 
less favourable than those applied to Community companies. National 
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treatment will also be granted to Community companies established 
under specific forms in the countries concerned. By the end of the 
respective transition periods, national treatment will be granted to 
any Community undertakings and full access to procurement established 
on a reciprocal basis. 
II. ONGOING NEGOTIATIONS 
1• GATT Government Procurement Agreement 
In pursuance of Article IX:6(b) of the GATT Agreement on Government 
Procurement^2) (the GPA) negotiations have been undertaken with a 
view to broadening its coverage to other awarding entities and 
extending it to cover works and other services contracts. 
The Community has sought, in these negotiations, to obtain guarantees 
of access for Community undertakings to markets in the fields covered 
by the Directive. 
These negotiations, which run in parallel to the Uruguay Round, have 
not so far been concluded. 
The Community's request and offer 
The Community, in its request of 2 August 1990, sought coverage under 
the GPA of Parties' entities operating in the telecommunications, 
electrical, water, urban transport, port and airport sectors, which 
are either publicly owned or are privately owned and operate on the 
basis of special or exclusive rights, it also sought a commitment by 
governments not to impose discriminatory requirements on the 
procurement practices of entities in other fields. 
In return, the Community offered to cover its own entities in the 
relevant fields under the GPA and to provide the same commitment not 
to impose discrimination on entities in other fields. 
(2) 0J N- L 71 of 17.1.1980, p. 1 
0J N' L 345 of 9.12.1987, p. 24 
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GPA disciplines have been negotiated which correspond to the ruies of 
the Direct ive. 
Other Parties' offers 
Apart from the EFTA Countries (including Switzerland) whose offers 
following the EEA Agreement, correspond to that of the EC, other 
Parties' offers have not met the Community's request in full. 
There are three outstanding characteristics of the US offer in the 
fields of the Directive. In the first place, the concrete commitment 
is limited to subjecting the six federal power administrations to GPA 
disciplines, and to committing five federal agencies to refrain from 
imposing discriminatory requirements on non-governmental entities. 
Secondly, the federal authorities agree to seek the voluntary 
acquiescence of the states to the GPA. Since urban transport, port, 
airports and water supply are largely owned by state and municipal 
governments, as are some electrical utilities, American failure to 
make a concrete offer in this respect clearly raises major 
difficulties. Although Commission negotiators have been given the 
names of 30 states that have, so far, agreed in principal to accept 
coverage, the US negotiators have been unable to be specific as to the 
entities of the fields of activity covered in these states. Thirdly, 
the American offer makes no provision for the elimination of 
discriminatory requirements which are imposed along with the provision 
of federal funds, or for the coverage of the many privately owned 
entities which operate under special or exclusive rights. As a 
result, the telecommunication operators and the private electrical 
power utilities are absent from the US offer. 
In the fields of the Directive, Canada offers to "seek to include" 
unspecified entities which are: 
- owned by the federal government and performing an essentially 
government function; these should be subject to procurement 
disciplines; 
- privately owned, but substantially influenced by the federal 
government; the federal government would agree not to influence 
their purchasing decisions; 
- provincial I y owned or influenced; the provincial governments would 
voluntarily agree not to influence their purchasing decisions. 
The coverage implied by this offer is unclear. It has been understood 
that it would include some publicly owned electrical utilities. 
However, purchases of rail and urban transportation equipment, 
systems, components and materials incorporated therein are excluded, 
as well as all project-related materials of iron and steel. 
Telecommunications operators are not covered. 
The Japanese offer includes a number of entities within the fields 
covered by the Directive. These include the 7 railway companies and 
NTT (all of which are covered under the existing GPA). However, 
purchases of materials connected with operational safety of 
transportation (which would include railway signalling equipment) are 
excluded for the railway companies, and telecommunications equipment 
is excluded for NTT. The Japanese authorities have been prepared to 
explore the possibility of coverage of purchase of telecommunications 
equipment by NTT. However, this has been linked to special procurement 
procedures, resulting from their bilateral agreement with the US, 
which are not fully in conformity with agreed GPA procedures. The 
offer includes Tokyo International Airport. 
Most of the remaining entities in the fields of the Directive are not 
offered. Japanese negotiators have explained that this is because 
they are owned by municipalities which are not offered (this is mainly 
the case of urban transport, ports and airports), or because they are 
privately owned (the situation of the electrical utilities and some 
urban transport). Further, some governmental, or quasi-governmental, 
agencies which operate in these fields have not been offered either. 
Japanese negotiators have been willing to commit Japan not to impose 
discriminatory requirements on the entities not offered. 
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In the context of the renewal of the US/Japan bilateral agreement on 
NTT procurement, the Japanese authorities proposed, in April 1992, to 
hold EC-US-Japan trilateral discussions on the liberalisation of 
telecommunications procurement and basic telecommunications services. 
The Korean offer has many gaps in the fields of the Directive. Thus, 
although Korea Telecom is offered, network equipment is excluded and 
the offer only concerns the central procurement office. The Korean 
National Railroad is offered, with the important exception of 
procurement related to maintenance of transport safety. Moreover, 
Korea has announced its intention to introduce new legislation 
regarding Korea Telecom procurement of network equipment. The new 
legislation, initially announced for implementation as of 
1 January 1993, provides for the rejection of tenders presented by 
foreign suppliers whose country has not concluded a bilateral 
agreement with Korea. 
There is no provision in the offer for coverage of urban transport and 
subway construction is specifically excluded. The port administration 
and the container terminal authority are included, but there is no 
offer regarding airports. The water offices of the six largest cities 
are offered, but there is no provision regarding other water offices 
and agencies. 
Israel already offers the purchases of its ports, airports and its 
railways under the GPA. Further, it has offered coverage of its 
electricity and telecommunication utilities under GPA disciplines, 
with the exception of procurement of cables, electricity meters and 
transformers. Water provision by the 3 main municipalities is offered. 
Hong-Kong has not made an offer. Further, it has made it clear that it 
would not be in a position to subject its privately owned utilities in 
airport, urban transport, electricity and telecommunications to GPA 
d i sc i pIi nes. 
Singapore has not made an offer. 
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Progress in the negotiations 
Extensive discussion has taken place with a view to closing the gap 
between the Community's request and the offers of other Parties, and 
to evaluating the situation which would result from less than complete 
coverage of the sectors in question by GPA disciplines. The issues on 
which negotiations have focussed include in particular: 
- the extent to which there are, in practice, obstacles to access to 
contracts awarded by utilities which are privately owned and 
operated; 
- practical means which would enable the Community to receive 
sufficient guarantees concerning access to contracts awarded by 
entities controlled by sub-central levels of government, in 
countries where the central government has difficulty in entering 
into commitments or in imposing obligations on sub-central levels 
of government; 
- the need to ensure a balance of rights and obligations concerning 
sectors, activities and entities which have not been offered by one 
or other Party. 
2. Bilateral negotiations 
The importance attached to agreeing on access to the US market for 
telephone network equipment and the difficulty of the US authorities 
to accept that disciplines could be imposed on the privately-owned US 
telecommunications operators through the GPA, have led the Commission 
to undertake discussions with the US authorities in this sector. The 
aim has been to see if a bilateral agreement in this sector could give 
appropriate guarantees of access in the context of a wider GPA. 
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The Commission, moreover, has made a number of proposals during the 
last two years with a view to reaching a satisfactory compromise. In 
doing so, it has firmly maintained the principles of non­
discrimination and transparency, while showing its openness to 
alternative means of implementing these principles. Most recently, it 
has submitted a draft agreement to the US authorities, based on 
national treatment. 
These negotiations have not been concluded. Indeed, they have been 
made more complicated by the announcement by the US authorities of 
unilateral trade sanctions, which may enter into force from 
22 March 1993. These sanctions on which the Council has reserved its 
full rights to take whatever action is necessary have been addressed 
elsewhere and are not further discussed here. 
Negotiations with a view to "Europe Agreements" are under way with 
Bulgaria and Romania, but have not yet been concluded. 
The Council has been kept informed of developments in all these 
negotiations through the channels provided for in the Treaty. 
CONCLUSION 
The agreement regarding the EEA extends the benefits of the Directive to 
the countries concerned. 
The "Europe Agreements" for their part, will also require the Community to 
give access to undertakings from the signatory countries. 
Adjustments to the EEA agreement are however required following 
Switzerland's withdrawal. Further, the manner in which the "Europe 
Agreement" with Czechoslovakia will be taken over by the successor States 
is not yet clear. 
When procedures are complete, the Commission will take the appropriate 
steps with a view to the benefits of the Directive being made available to 
the third countries concerned. 
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The Commission will not be influenced in its efforts to achieve a 
satisfactory outcome to the as-yet uncompleted negotiations, by unilateral 
and unjustified trade sanctions. It remains committed to achieving general 
reciprocal opening-up of contracts at international level in the water, 
energy, transport and telecommunications sectors. It will continue its 
efforts to make progress to this end. In view of the particular 
difficulties experienced in negotiations with several of the countries 
concerned, the Commission considers that the multilateral process could be 
aided if certain problems were to be resolved, in parallel, on a bilateral 
or plurilateral basis. To this end, the Commission is transmitting a 
recommendation for negotiating directives to the Council. 
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' ISSN 0254-1475 
COM(93) 80 final 
DOCUMENTS 
EN 11 02 
Catalogue number : CB-CO-93-101-EN-C 
ISBN 92-77-53368-4 
Office for Officiai Publications of the European Communities 
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