Proposal for a Council Decision concerning the conclusion of two Agreements between the European Community and the State of Israel on procurement by government and telecommunications operators (96/C 162/07) COM(96) 148 final - 96/0104(CNS)

(Submitted by the Commission on 11 April 1996)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Articles 113, 66, 57, second paragraph, in connection with Article 228, third paragraph, first sentence, and fourth paragraph thereof,

Having regard to the proposal from the Commission,

Having regard to the opinion of the European Parliament,

Whereas the Agreements between the European Community and the State of Israel on procurement by government and telecommunications operators should be approved;

Whereas these Agreements concern public procurements to award contracts for goods, works and other services; whereas the latter cannot be reduced to the sole hypothesis of transfrontier services; whereas in its recent judgment of 7 March 1996 the Court of Justice has indicated that, in the present state of Community law, Article 113 of the Treaty is not sufficient to base a Council Decision to conclude an agreement which concerns, on an independent basis, the provision of services whose nature cannot be considered as merely transfrontier; whereas it is therefore appropriate to base the present decision also on Article 66 of the Treaty, in conjunction with Article 57, second paragraph, which provides the procedural requirements necessary for its application;

Whereas it is appropriate that the Council authorizes the Commission, in consultation with a special committee to be appointed by the Council, to approve modifications on behalf of the Community of Annexes I and II of the telecommunications agreement; however, such authorization will be limited, as far as Annex I is concerned, to the modifications resulting from the application of the procedure of Article 8 of Council Directive 93/38/EEC of 14 June 1993, and as for as Annex II is concerned, to the results of future negotiations within the framework of the GPA,

HAS DECIDED AS FOLLOWS:

Article 1

The Agreements between the European Community and the State of Israel on procurement by government and telecommunications operators are hereby approved on behalf of the Community.

The texts of the Agreements are attached to this Decision.

Article 2

The President of the Council is hereby authorized to designate the person empowered to sign the Agreements in order to bind the Community.

Article 3

The Commission is authorized to approve, on behalf of the Community, modifications to Annexes I and II of the telecommunications agreement.

The Commission is assisted in this task by a special committee appointed by the Council.

The authorization referred to in paragraph 1 of this Article shall be limited, as far as Annex I is concerned, to the modifications that will be necessary if the procedures laid down in Article 8 of Council Directive 93/38/EEC were to be applied and, as far as Annex II is concerned, to the results of future negotiations to be conducted in the framework of the 1996 Government Procurement Agreement (GPA).

AGREEMENT between the European Community and the State of Israel on procurement by telecommunications operators

THE EUROPEAN COMMUNITY (hereinafter 'the EC`),

of the one part, and

THE GOVERNMENT OF THE STATE OF ISRAEL, acting on behalf of the State of Israel (hereinafter 'Israel`),

of the other part,

hereinafter referred to as the 'Parties`,

CONSIDERING the Parties' efforts and commitments to liberalize their respective public procurement markets notably through the draft EC-Israel Association Agreement of 20 November 1995, and the Government Procurement Agreement (1996 GPA),

DESIROUS to pursue liberalization efforts among themselves by granting reciprocal access to procurement by their respective telecommunications operators, subject to the conditions provided for in this Agreement,

HAVE AGREED AS FOLLOWS:

Article 1

Objective, definitions and scope

1. The aim of this Agreement is to secure a reciprocal, transparent and non-discriminatory access of the Parties' suppliers and services providers to purchases of products and services, including construction services, by telecommunications operators of both Parties.

2. For the purpose of this Agreement:

(a) 'telecommunications operators` (hereinafter referred to as 'TOs`) shall mean entities that provide or operate public telecommunications networks or provide one or more public telecommunications services and which either are public authorities or undertakings or operate on the basis of special or exclusive rights granted by a state authority;

(b) 'public telecommunications network` shall mean the telecommunications infrastructure available to the public which enables signals to be conveyed between defined network termination points by wire, microwave, optical means or other electromagnetic means;

(c) 'public telecommunications services` shall mean services the provision of which consists wholly or partly in the transmission and routing of signals on the public telecommunications network by means of telecommunications processes, with the exception of radio-broadcasting and television.

3. This Agreement applies to any law, regulation or practice affecting procurement by the Parties' TOs as defined in paragraph 1 and to the award of all procurement contracts by such TOs. Annex I contains a list of the TOs covered by this Agreement. The Parties shall update this list as appropriate.

4. Article 3 on procurement procedures and Article 4 on challenge procedures shall apply only to contracts, or series of contracts, awarded by TOs listed under A in Annex I the estimated value of which, excluding VAT or comparable turnover tax, is not less than:

in the case of the EC

(a) ECU 600 000 as regards supplies and services;

(b) ECU 5 000 000 as regards construction services.

in the case of the State of Israel

(a) SDR 355 000 as regards supplies and services;

(b) SDR 8 500 000 as regards construction services.

The value of sdr in nis shall be fixed in accordance with the procedures applied in the Government Procurement Agreement (1996 GPA).

5. With regard to services, including construction services, this Agreement applies to those listed in Annex II of this Agreement.

6. This Agreement shall not apply to contracts, awarded by TOs, that are operating under full and effective competition in accordance with relevant legislation. This legislation shall be applied following the notification to and review by the other Party. Each Party shall promptly inform the other Party about those services in regard to which such contracts are excluded by this paragraph from the provisions of the Agreement.

7. This Agreement shall not be applicable to the award of contracts entered into before 1 January 1997 by TOs established in Spain or to the award of contracts entered into before 1 January 1998 by TOs established in Portugal or Greece. Israel will not extend the benefits of this Agreement to suppliers and service providers established in these countries for the respective periods.

Article 2

Non-discrimination

1. The Parties shall ensure that, in all their procurement procedures and practices and in the award of procurement contracts, regardless of the threshold referred to in Article 1 (5), TOs duly established in their respective territories shall not:

(a) treat products, services, suppliers and service providers of the other Party less favourably than

(i) domestic products, services, suppliers and service providers; and

(ii) third country products, services, suppliers and service providers;

(b) treat a locally-established supplier or service provider less favourably than another locally-established supplier or service provider on the basis of the degree of affiliation to, ownership of or control by natural or legal persons from the other Party;

(c) discriminate against a locally-established supplier or service provider on the basis of the fact that the product or service being supplied originates from the other Party.

2. As a result of the principles set out in paragraph 1, any offsets prescribed in the qualification and selection of products, services, suppliers or service providers, or in the evaluation of tenders and award of contracts shall be prohibited. Likewise, any law, procedure or practice, such as price preference, local content requirements, local investment or production requirements, terms of licence, authorisation, funding or bidding rights which discriminate, or require a Party's TO to discriminate, against the other Party's products, services, suppliers or service providers in the award of procurement contracts shall be prohibited.

By way of derogation from the first two sentences of this paragraph and until 1 January 2001, Israel may, with regard to procurement contracts by TOs listed under A of Annex I, apply provisions which require the limited incorporation of domestic content, offset procurement or transfer of technology in the form of objective, clearly defined and non-discriminatory conditions. Such requirements shall be used only for qualification to participate in the procurement process and not as criteria for awarding contracts. They shall be notified to the EC and applied under the following terms:

(a) Israel shall ensure that TOs listed under A in Annex I indicate the existence of such conditions in its tender notices and specify them clearly in the contract documents.

(b) Suppliers will not be required to purchase goods that are not offered on competitive terms, including price and quality, or to take any action which is not justified from a commercial standpoint.

(c) Offsets in any form may be required up to 30 per cent of the contract.

At the end of two years, Parties will examine the implementation of this provision on the basis of a report submitted by Israel.

3. The principles set out in paragraph 1 shall also apply with regard to the treatment granted by the Parties and their TOs listed under A in Annex I in the context of challenge procedures.

4. The Parties shall apply the provisions of the Agreement on Technical Barriers to Trade of the WTO with regard to procurement by their respective TOs.

Article 3

Procurement procedures

1. The Parties shall ensure that the procurement procedures and practices followed by their TOs listed under A in Annex I comply with the principles of non-discrimination, transparency and fairness. Such procedures shall at least contain the following elements:

(a) the call for competition shall be made by means of a tender notice inviting submission of tenders, an indicative notice or a notice on the existence of a qualification system. These notices, or a summary of the important elements thereof, shall be published at least in one of the 1996 GPA official languages on a national level or, as regards the EC, on a Community level. They shall contain all necessary information about the intended procurement, including where applicable the type of award procedure being followed;

(b) time-limits shall be adequate to allow suppliers or service providers to prepare and submit tenders;

(c) tender documentation shall contain all information necessary, notably technical specifications and selection and award criteria, to enable tenderers to submit eligible tenders. Tender documentation shall be forwarded to suppliers or service providers upon request;

(d) selection criteria shall be objective. Where a TO runs a qualification system, such a system shall operate on the basis of pre-defined and objective criteria and the procedure and conditions for participation shall be made available upon request;

(e) award criteria may be either the most economically advantageous, involving specific evaluation criteria such as delivery or completion date, cost-effectiveness, quality, technical merit, after-sales service, commitments with regard to spare parts, price, etc., or the lowest price only.

2. The Parties shall also ensure that their TOs listed under A in Annex I define the technical specifications set out in the tender documentation in terms of performance rather than design or descriptive characteristics. Such specifications shall be based on international standards, where such exist, otherwise on national technical regulations, recognized national standards or building codes. Any technical specifications adopted or applied with a view to, or with the effect of, creating obstacles to procurement by a Party's TO of products or services from the other Party and to related trade between the Parties shall be prohibited.

Article 4

Challenge procedures

1. With respect to procurements by TOs under A in Annex I, the Parties shall provide non-discriminatory, timely, transparent and effective procedures enabling suppliers or service providers to challenge alleged breaches of this Agreement arising in the context of procurements in which they have, or have had, an interest. The challenge procedures laid down in Annex III shall apply.

2. The Parties shall ensure that their respective TOs listed under A in Annex I retain relevant documentation relating to procurement procedures covered by this Agreement for at least three years.

3. The Parties shall ensure that decisions taken by bodies responsible for challenge procedures are enforced effectively.

Article 5

Information exchange

To the extent necessary to ensure effective implementation of this Agreement, the Parties shall, upon the request of either Party, exchange information on legislation, other measures or imminent changes affecting or likely to affect TOs' procurement policies or practice.

Article 6

Dispute settlement

1. The Parties shall seek to resolve any dispute concerning the interpretation or application of this Agreement by means of prompt consultations.

2. If a dispute has not been settled by means of consultations within three months from the date of the initial request for consultations, either Party may refer the dispute to the EC-Israel Cooperation Council in accordance with Article 32 of the Interim Association Agreement, and, as from its entry into force, to the EC-Israel Association Council in accordance with Article 75 of the Association Agreement.

Article 7

Safeguard

1. If either Party considers that the other Party has failed to fulfil an obligation under this Agreement or if one Party fails to take measures specified in the decision by the arbitration panel or if a law, regulation or practice of either Party substantially reduces or threatens to reduce substantially the benefits accruing to the other Party under this Agreement, and the Parties are unable to agree promptly on appropriate compensation or other remedial action, the adversely affected Party may, without prejudice to its other rights and obligations under international law, suspend partly or completely, as appropriate, the application of this Agreement and immediately notify the other Party thereof.

2. The scope and duration of such measures shall be limited to what is necessary in order to remedy the situation and to secure, if necessary, a fair balance of rights and obligations under the Agreement.

Article 8

Consultations

The Parties shall, upon the request of either Party, and at least once a year, hold consultations on the functioning of this Agreement.

Article 9

Information technology

1. The Parties shall cooperate with a view to ensuring that the type of procurement information, notably in tender notices and documentation, held on their respective databases is comparable in terms of quality and accessibility. Likewise, they shall cooperate with a view to ensuring that the type of information exchanged through their respective electronic means between interested parties for the purposes of public procurement is comparable in terms of quality and accessibility.

2. Paying due attention to issues of interoperability and interconnectivity, and after having agreed that the type of procurement information referred to in paragraph 1 is comparable, the Parties shall secure reciprocal access of suppliers and service providers of the other Party to relevant procurement information, such as tender notices, held on their respective databases. They shall also ensure reciprocal access of suppliers and service providers of the other Party to their respective electronic procurement systems, such as electronic tendering. The Parties shall also take due account of Article XXIV (8) of the 1996 GPA.

Article 10

Final provisions

1. This Agreement is drawn up in duplicate in the Danish, Dutch, English, Finnish, French, German, Greek, Italian, Portuguese, Spanish, Swedish and Hebrew languages, each of these texts being equally authentic. It shall apply to the same territories as mentioned in Article 38 of the Interim Agreement on trade and trade related matters and, as from its entry into force, in Article 83 of the Association Agreement.

2. This Agreement shall enter into force on the first day of the month following the date on which the Parties have notified each other that their ratification or conclusion or adoption process, according to the rules applicable to each Party, has been completed.

3. This Agreement does not affect the rights and obligations of the Parties under the WTO or other multilateral instruments concluded under the auspices of the WTO.

4. The Parties shall complete a review of the functioning of this Agreement not later than three years from the date of its entry into force with the aim of improving its operation, if necessary.

5. This Agreement is concluded for an unlimited period. If a Party wishes to withdraw from this Agreement, it shall notify the other Party in writing of its intention. The withdrawal shall take effect six months from the date on which the notification was received.

6. The annexes to this Agreement shall form an integral part thereof.

ANNEX I

(referred to in Article 1 (3) on TOs covered)

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ANNEX II

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ANNEX III

(referred to in Article 4 on challenge procedures)

1. Challenges shall be heard by a court or by an impartial and independent review body having no interest in the outcome of the procurement, the members of which are secure from external influence and the decisions of which are legally binding. A review body which is not a court shall either be subject to judicial review or shall have procedures which provide that:

(a) the time-limit, if any, within which a challenge procedure may be initiated, shall in no case be less than 10 days and shall run from the time when the basis of the complaint is known or reasonably should have been known;

(b) participants shall be heard before a decision is reached, they may be represented and accompanied during the proceedings and shall have access to all proceedings;

(c) witnesses may be presented and documentation relating to procurement under challenge and necessary to the proceedings shall be disclosed to the review body;

(d) proceedings shall take place in public and decisions shall be given in writing and shall state the reasons on which they are based.

2. The Parties shall ensure that measures concerning challenge procedures include at least either provisions for the powers:

(a) to take, at the earliest opportunity and by way of interlocutory procedure, interim measures with the aim of correcting the alleged infringement or preventing further injury to the interests concerned, including measures to suspend or to ensure the suspension of the procedure for the award of a contract or the implementation of any decision taken by the TO; and

(b) to set aside or ensure the setting aside of decisions taken unlawfully, including the removal of discriminatory technical, economic or financial specifications in the tender notices, in the tender documentation or in any other document relating to the contract award procedure in question;

or provisions for powers enabling to exert effective indirect pressure on the TOs in order to make them correct any infringements or prevent them from committing infringements, and to prevent injury from occurring.

3. Challenge procedures shall also provide for the award of damages to persons injured by the infringement. Where damages are claimed on the grounds that a decision has been taken unlawfully, either Party may provide that the contested decision must first be set aside or declared illegal.

Article 1 (6) side letters

Dear . . . of Israel,

In accordance with Article 1 (6) of the draft agreement between the European Community and Israel on procurement by telecommunications operators, I hereby notify that the relevant legislation referred to is Council Directive 93/38/EEC, and in particular, its Article 8.

I have transmitted a copy of this legislation through diplomatic channels.

from the EC

Dear . . . of the EC,

Further to your letter of today's date and recent discussions between our services, I can inform you that Israel has completed its review of the legislation (Council Directive 93/38/EEC, and in particular, its Article 8) that you notified under Article 1 (6) the draft agreement between the European Community and Israel on procurement by telecommunications operators.

from Israel

Agreed minutes

As regards the Agreement on the procurement by telecommunications operators, the two Parties agree that with respect to Israel, Article 3 of the Agreement requires the application of procurement procedures as specified in the 1996 GPA. As regards the EC, the procurement procedures set out in Council Directive 93/38/EEC of 14 June 1993 coordinating the procurement procedures of entities operating in the water, energy, transport and telecommunications sectors (1) fulfil the requirements of Article 3 of this Agreement.

(1) OJ No L 199, 9. 8. 1993, p. 84.

AGREEMENT between the European Community and the State of Israel on government procurement

THE EUROPEAN COMMUNITY (hereinafter 'the EC`),

of the one part, and

THE GOVERNMENT OF THE STATE OF ISRAEL, acting on behalf on the State of Israel (hereinafter 'Israel`),

of the other part,

hereinafter referred to as the 'Parties`,

CONSIDERING the Parties' efforts and commitments to liberalize their respective public procurement markets through the Government Procurement Agreement (1996 GPA),

DESIROUS to improve access to their respective procurement markets and to broaden the scope of their respective Appendices I to the GPA,

HAVE AGREED AS FOLLOWS:

Article 1

Obligation of the EC

1. In order to complement and broaden the scope of its commitments under the GPA vis-à-vis Israel, the EC undertakes to amend its General Notes to Appendix I of the GPA as follows:

- alter General Note 1, second indent, letter (e) to read:

'(urban transport) to the suppliers and service providers of Canada, Japan, Korea and the USA; to the suppliers and service providers of Israel, as regards bus services`;

2. The EC shall notify the WTO Secretariat of such amendment within one month from the entry into force of this Agreement.

Article 2

Obligations of Israel

1. In order to complement and broaden the scope of its commitments under the GPA vis-à-vis the EC, Israel undertakes to amend its Annexes and Notes to Appendix I of the GPA as follows:

(a) add to the list of entities in Annex 3:

'. . . All entities operating in the field of urban transport, except those operating in the field of bus services . . .`;

(b) add to Note 2 in Annex 3 the following paragraph:

'With regard to procurement by entities operating in the field of urban transport, except those operating in the field of bus services, this Agreement shall apply only to goods and services, including construction services, of the European Community.`

Israel is willing to negotiate the opening of procurement by entities operating in the field of urban transport, except those operating in the field of bus services, to other code members under the condition of reciprocity;

(c) add the following services to the list of Annex 4:

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`

The Parties agree that Israel shall use its best endeavours to extend its list of services under the GPA with regard to the EC, in accordance with the terms provided for in Article 4 (4) of this Agreement;

(d) amend Note 1 to Annex 1, the following:

'- Medical dressings (bandages, adhesive tapes excluding gauze bandage and gauze pads).`

2. Israel shall notify the WTO Secretariat of such amendments within one month from the entry into force of this Agreement.

3. Notwithstanding Article 2 (d) above, if Israel, with respect to another GPA Party, reduces or disapplies its exceptions as set out in Notes to Annex 3 in the 1996 GPA, it shall offer the same benefit to the EC on a reciprocal basis.

Israel will not, by law, procedure or practice, require hospitals not covered under the 1996 GPA to discriminate against EC's products, services or suppliers.

Without prejudice to any separate agreement between the Parties to this agreement, with regard to its offset requirements and procedures and its thresholds' levels, Israel shall treat EC suppliers, service providers, products and services no less favourably than other GPA Parties' suppliers, service providers, products and services.

4. With respect to the procurements above a threshold of 550 000 SDR by the municipalities not covered by the list of entities in Annex 2 of the 1996 GPA Israel shall treat products, services and suppliers of the EC no less favourably than domestic products, services and suppliers.

Israel shall use its best endeavours to apply to these procurements the procedures set out in the GPA. To this end Israel will submit in due time to the GPA Secretariat a list of entities to be added to the present Annex 2 to the GPA under the condition of reciprocity.

Article 3

Consultations

The Parties shall, upon the request of either Party, and at least once a year, hold consultations on the functioning and implementation of this Agreement. This provision shall be without prejudice to the consultation procedures provided for by the GPA.

Article 4

Final provisions

1. This Agreement is drawn up in duplicate in the Danish, Dutch, English, Finnish, French, German, Greek, Italian, Portuguese, Spanish, Swedish and Hebrew languages, each of these texts being equally authentic. It shall apply to the same territories respectively of the EC and of Israel as the GPA applies.

2. This Agreement shall enter into force on the first day of the month following the date on which the Parties have notified each other that their ratification or conclusion or adoption process, according to the rules applicable to each Party, has been completed.

3. This Agreement does not affect the rights and obligations of the Parties under the WTO or other multilateral instruments concluded under the auspices of the WTO.

4. The Parties shall complete a review of the functioning of this Agreement not later than three years from the date of its entry into force with the aim of improving its operation and coverage, if necessary.