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
Date: 1996-04-10
Institutions: European Commission
Subjects: Israel, agreement (EU), public contract, telecommunications

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I  COMMISSION OF THE EUROPEAN COMMUNITIES 
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1 

Brussels,  10.04.1996 
COM(96)148  final 

%)t 01Q4 (CNS) 

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 

(presented  by the  Commission) 

EXPLANATORY MEMORANDUM 

The EC and Israel were key participants in the negotiations which led to the WTO's new 
Government  Procurement  Agreement  (GPA).  These  negotiations  were  successfully 
completed in parallel with the Uruguay Round. For its part, the EC concluded  the GPA 
on  22  December  19941.  Israel,  however,  delayed  ratification  pending  an  expansion  of 
coverage to include the procurement of telecommunications equipment in the EC. As part 
of the negotiations toward  an EU-Israel  Association  agreement,  both  parties  reaffirmed 
their  commitment  to  mutually  open their  respective procurement  markets  and  in a joint 
declaration  annexed  to  the  draft  Association  agreement,  they  agreed  to  carry  out 
negotiations  with  a  view  to  reaching  an  agreement  before  the  end  of  1995.  Those 
negotiations, carried out in consultation with the Committee set up under Article  113 of 
the  Treaty,  were  completed  on  22  December  1995  and  resulted  in  the  two  draft 
agreements  attached.  As  a  result  of  reaching  these  agreements,  Israel  subsequently 
ratified the GPA prior to its entry into force on 1  January 1996. 

As the two  draft  agreements were  negotiated  in parallel with  each  other  in accordance 
with  the joint  declaration  cited  above  and  the  advice  of  the  Committee  set  up  under 
Article  113 of the Treaty, they form  one package.  The Commission  therefore  proposes 
that  the  two  are  concluded  together.  Nevertheless,  a  possible  termination  of  one 
agreement in the future does not necessarily affect the operation of the other agreement. 

The European Court of Justice, by its judgement  of 7 March  1996 in the case C-3 60/93 
concerning  the  1993  EU-US  procurement  agreement,  stated  that,  as  Community  law 
stands  at  present,  only transfrontier  services  fall  within  the  scope  of  article  113 of the 
treaty.  Since the Agreements to  be concluded  with  Israel  also  concern  services whose 
nature cannot be considered as merely transfrontier,  it is proposed that Articles  113, 66, 
57(2) and 228(3) form the legal base for the two draft  agreements.  This would imply a 
consultation of the European Parliament. 

Government Procurement 

The  first  draft  agreement  covers  government  procurement.  For  the  most  part,  it 
complements and broadens the scope of commitments under the GPA. The parties agree 
to  notify  such additional commitments to the WTO and incorporate  them into the GPA 
coverage.  As  such,  these  commitments  would  be  backed  up  by  the  WTO's  dispute 
settlement  mechanism.  Some  limited  commitments  are  made  outside  the  scope  of  the 
GPA. 

This draft  agreement  represents  real  progress  in the  EU's goal  to  continue  to  open up 
public procurement markets beyond what has already been achieved in the GPA.  In spite 
of the fact that at the time of completing negotiations the new GPA had not entered into 
force,  as  a  result  of  the  draft  agreement,  Israel  will  be  committed  to  further  market 
opening  in  urban  transport,  services,  medical  equipment  and  sub-central  government 

]OJ No L 336, 23.12.1994, p. 1 

t 

procurement.  For its part, the EC would open those same sectors to Israel on a reciprocal 
basis.  The  draft  agreement  also  safeguards  EC  interests  should  the  Israel  market  open 
further.  Negotiations  did  not  lead  to  any change in offset  provisions permitted  under  the 
GPA. The latter permits Israel to require the limited  incorporation  of domestic content  or 
offset  procurement  of up to  35 per  cent  of the  contract.  Over  a period  of nine years this 
limit  is  reduced  to  20  per  cent  while  thereafter  Israel  will  review  its  offset  policy  in 
consultation with other GPA members. 

(i) The  addition  of urban  transport  (except  buses),  a  sector  where  the  EC  is  particularly 
competitive  and  successful  in  international  markets,  virtually  completes  the  coverage  of 
utilities  sectors  by  Israel  in the  GPA  (total  spending  in this  sector  accounts  for  roughly 
ECU  1.2  billion  annually).  This  addition  guarantees  that  EC  suppliers  will  be  able  to 
compete  on  an  equal  footing  as  Israel  and/or  its  municipalities  develop  urban  metro 
systems.  In the  EC,  the  provisions  of  Article  36  of  the  Utilities  Directive  (93/38/EEC)2 
would be disapplied against tenders comprising products of Israeli origin as a result of this 
draft  agreement. 

(ii) As service coverage under the GPA operates only on the basis of strict reciprocity, the 
addition  by Israel  of three  services which  are  already  contained  in the EC's  GPA  Annex, 
increases mutual coverage. 

(iii) The removal  of one product  coverage  exception by Israel (a certain type  of bandage) 
is welcome.  Given that  at  the  point  of finishing  negotiations  the  new  GPA  had  not  even 
entered  into  force,  Israel  was  unwilling,  at  this  stage,  to  consider  removing  all  product 
coverage exceptions which it had successfully  negotiated  in the GPA. Nevertheless, of the 
product  exceptions in the field of  medical  equipment,  the  one  removed  as a result  of the 
draft  bilateral  agreement  is  one  which  the  EC  successfully  exports  to  Israel  (about  14 
tonnes  a year)  and therefore  is potentially  of most  economic  value.  The European  textile 
industry  specifically  requested  the  coverage  of  this  exception  under  our  bilateral 
agreement. 

(iv) On sub-central  procurement  not yet covered by the GPA, Israel was not  in a position 
to guarantee GPA procurement  and challenge procedures. However,  by agreeing to  grant 
EC  suppliers  national  treatment  above  a  specified  threshold,  Israel  disapplies  domestic 
price  preferences  for  EC  suppliers,  thus  opening  up  the  market  for  procurement 
opportunities beyond what was originally covered in the GPA. 

(v)  Finally,  to  safeguard  EC  suppliers  against  potential  discrimination  resulting  from 
agreements between  Israel  and  other  GPA parties, the  draft  agreement  commits  Israel  to 
grant the same benefits to the EC. 

Telecommunications  procurement 

The second draft  agreement, on telecommunications procurement,  is purely bilateral.  It is, 
therefore,  a  stand-alone  agreement  with  no  impact  on  coverage  under  the  GPA.  It 
provides  for  a  mutual  opening  of  procurement  by  telecommunications  operators  by 
granting  an  exchange  of  national  treatment.  In  the  main  segment  of  telecommunications 
procurement,  provision  is  made  to  enhance  transparency  and  guarantee  suppliers'  rights 
by  setting  out  minimum  procurement  and  national  challenge  procedures.  While this  does 
not  imply  any  procedural  change  for  European  operators,  the  main  Israeli  operator, 

2OJ No L  199, 9.8.93, p.84 

1 

Bezeq, is obliged to follow  procedures based on those set out in the GPA. The  agreement 
is enforced  through  the bilateral  dispute  settlement  procedure  provided  for  in the  interim 
Association  Agreement  (and  subsequently the Association  Agreement  when it  enters into 
force). 

It  is  a  liberal  and  broad  agreement  with  no  product  exceptions.  This  means  that  there 
would  be a mutual  dismantling  of domestic  price preference  provisions.  In Israel,  a price 
preference  of  15% in favour  of Israeli products would not apply against EC bidders. In the 
EC,  the  provisions  of  Article  36  of  the  Utilities  Directive  (93/38/EEC)2  would  be 
disapplied  for  tenders  comprising  products  of  Israeli  origin.  With  regard  to  the  offset 
provision, the  agreement  ensures that the EC would  benefit  from  better terms than  Israel 
provides under the GPA and the offset  is to be eliminated  after  a transition  period  of five 
years. 

While  the  Israeli  market  is  small  (procurement  opportunities  will  be  around  ECU  170 
million in  1996 for  switching and  cable equipment), it is a growing  market.  Moreover,  as 
the  Middle-East  peace  process  may  help  to  bring  about  regional  economic  integration, 
successful  penetration  into  the  Israeli  market  could  lead  to  further  opportunities  in 
neighbouring countries. 

*  *  * 

The  two  draft  agreements  build  on  the  closer  political  and  economic  relationship 
established  between  Israel  and the EC  under  the  draft  Association  Agreement,  making  a 
concrete  contribution  to  the  region's  economic  development  and  political  stabilisation. 
They  offer  the EC  more favourable  treatment  than  Israel  has been  prepared  to  offer  any 
other third  country,  bringing further  economic  opportunities  to  EC  suppliers.  Moreover, 
the  draft  agreements  protect  such  suppliers from further  discrimination  should  access  to 
the  Israeli  market  improve  as  a  result  of  negotiations  with  other  third  countries.  They 
provide for joint review of progress made and for areas where further  improvement  can be 
achieved  in the  future.  Their  conclusion  would  send  a  positive  message  to  the  ongoing 
GATS  negotiations,  in  particular  those  in  the  field  of  telecommunications  services  and 
government  procurement.  As  a  further  result  of  the  telecommunications  procurement 
agreement,  Israel  has  decided  to  participate  in  the  GATS  basic  telecommunications 
services negotiations. 

*  *  * 

The main elements of the agreements reached on 22 December  1995 are as follows: 

1. Public  procurement 

Israeli  commitments. 

GPA: 

•  Ratification  of the  1996 GPA 

•  Coverage of urban transport  sector under the  1996 GPA (with the exception of 

buses) 

V 

•  Extension of list of services covered under the GPA, thus increasing mutual 

coverage 

•  With regard to the EC, removal of a product coverage exception (specific medical 

bandage) under Annex  1 of its GPA  offer, 

Further bilateral  concessions 

• 

as regards municipalities not covered under the GPA, national treatment for EC 
above a threshold of 550,000 SDR 

•  MFN treatment for the EC with regard to any changes on coverage exceptions, 

thresholds and offset  requirements in the GPA. 

EC  Commitments: 

GPA 

• 

extend the benefits of its GPA offer  to Israel with regard to the urban transport 
sector (except buses). 

2. Telecommunications  procurement 

The main elements of this agreement are: 

Exchange  of  national  treatment  above  and  below  thresholds,  including  mobile  and 
cable operators. 

Israel to remove a  15% price preference  provision. 

EC  to  disapply  the  application  of  Article  36  of  the  Utilities  directive  with  regard  to 
tenders containing goods of Israeli origin. 

In  the  case  of  Israel's  main  operator,  Beseq,  Israel  applies  GPA  procurement  and 
challenge procedures. 

EC applies Utilities Directive procedures and Remedies Directive. 

Thresholds  -  Israel  has  a  lower  threshold  than  the  EC  for  telecommunications 
equipment but a higher threshold for  construction. 

No product exceptions. 

Israel  maintains  an  offset  provision  of  up  to  30%  of  the  contract  value  which  will 
expire after  5 years. This is below the offset  granted to Israel in the GPA (35%). 

Dispute  settlement  is  provided  for,  using  the  provisions  of  the  draft  Association 
Agreement. 

Linked to the conclusion  of the telecom  procurement  agreement, Israel  has joined  the 
ongoing GATS negotiations on the liberalisation of basic telecom services. 

j 

The Council is invited to  approve the agreements and adopt the proposal  for  a Decision 
concerning  the  conclusion  of  two  Agreements  on  government  procurement  and 
telecommunications procurement between the EC and Israel. 

c 

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 

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 of the Commission, 

Having 
Parliament, 

regard 

to 

the  opinion  of 

the  European 

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

HAS DECIDED AS FOLLOWS: 

1-

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 authorised to  designate the person empowered  to 
sign the Agreements in order to bind the Community. 

Article 3 

The Commission is authorised 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  authorisation  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). 

Done at Brussels, 

For the Council 

The President 

2 

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 I 

Objective, Definitions and Scope 

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. 

For the purpose of this Agreement: 

(a) 

(b) 

"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, 

"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. 

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. 

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) 

600,000 ECU as regards supplies and services; 

(b) 

5,000,000  ECU as regards construction services, 

in the case of The State of Israel 

(a) 

355,000 SDR as regards supplies and services, 

(b) 

8,500,000  SDR 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). 

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

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." 

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." 

3. 

4. 

5. 

6. 

7. 

AJO 

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. 

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, 

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. 

(b) 

(c) 

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: 

lD 

(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. 

M 

(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. 

4. 

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.  * 

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. 

S 

Article 3 

Procurement Procedures 

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) 

(b) 

(c) 

(d) 

(e) 

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, of 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; 

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

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; 

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, 

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. 

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. 

J2 

Article 4 

Challenge Procedures 

1. 

2. 

3. 

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. 

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. 

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. 

2. 

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

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. 

^V 

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 

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. 

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. 

3. 

4. 

5. 

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. 

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. 

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. 

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. 

v// 

Annex I 

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

List of TOs* 

European Community 

A 

-  Belgacom  (Belgium) 

-  Tele Danmark A/S and subsidiaries  (Denmark) 

-  Deutsche Bundespost Telekom  (Germany) 

-  OTE/Hellenic Telecom Organisation  (Greece) 

-  Telefonica  de Espana  S.A.  (Spain) 

-  France Telecom  (France) 

-  Telecom Eireann  (Ireland) 

-  Telecom  Italia  (Italy) 

-  Administration  des postes et télécommunications  (Luxembourg) 

-  Koninklijke PTT Nederland  NV and subsidiaries  (Netherlands) 

-  Portugal Telecom  S.A. and subsidiaries  (Portugal) 

-  British Telecommunications  (BT) (United  Kingdom) 

City of Kingston  upon Hull  (United  Kingdom) 

-  Ôsterreichischc Post und Tclekommimikation (PTT)  (Austria) 

-  Telecom Finland  (Finland) 

-  Telia  (Sweden) 

B 

mobile telecommunication  operators 

cable operators  when  they provide telecommunication  services 

Israel 

Bezeq 

B 

mobile telecommunication  operators 

cable operators when  they provide 
telecommunication  services 
international  operators 
(licence  pending) 

and successor entities thereto. 

Air 

Annex  lï 

CPC 

Description 

6112,6122,633,886 

Maintenance and repair services 

874, 82201 - 82206 

Building-cleaning services and property  management 
services 

88442 

8672-3 

8671 

8674 

841-3 

871 

864 

865-6 

94501-5 

Publishing and printing services on a fee or contract basis 

Architectural services 

Engineering services 

Urban planning 

Computer and related  services 

Avertising services 

Market research and public opinion 

Management  consulting 

Environmental  services 

IS 

Annex III 

(referred  to in Article 4 on challenge  procedures) 

Challenges  shall  be  heard  by  a  court  or  by  an  impartial  and  independent  review 
1. 
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). 

(b) 

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 

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. 

M 

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  todays  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  Art  8)  that  you  notified  under  Article  1(6)  the  draft 
agreement  between 
Israel  on  procurement  by 
telecommunications  operators. 

the  European  Community  and 

from Israel. 

2o 

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  co 
ordinating  the  procurement  procedures  of  entities  operating  in  the  water,  energy, 
transport  and  telecommunications  sectors  (OJ  No  L  199,  09.08.1993,  p.84)  fulfil  the 
requirements of Article 3 of this Agreement. 

2A 

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  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 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 

In order to complement  and broaden the scope of its commitments under the GPA 
1. 
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"; 

The  EC  shall  notify  the  WTO  Secretariat  of  such  amendment  within  one  month 

2. 
from the entry into force of this Agreement. 

2Z-

Article 2 

Obligations of Israel 

In order to complement  and broaden the scope of its commitments under the GPA 
1. 
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: 

6112, 6122, 633, 886 

Maintenance and repair services 

874, 82201 - 82206 

88442 

building -cleaning services and property 
management  services 

Publishing and printing services on a fee or 
contract basis 

" 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) 

Israel  shall  notify  the  WTO  Secretariat  of  such  amendments  within  one  month 

2. 
from the entry into force of this Agreement. 

£3 

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. 

With  respect  to  the  procurements  above  a  threshold  of  550,000  SDR  by  the 
4. 
municipalities not covered by the List  of Entities in Annex 2 of the  1996 GPA Israel  shall 
treat  product,  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. 

This  Agreement  shall  enter  into  force  on the first day  of the  month  following  the 
2. 
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. 

This Agreement  does not  affect  the rights and obligations  of the Parties under  the 

3. 
WTO or other multilateral instruments concluded under the auspices of the WTO. 

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

zi 

ISSN 0254-1475 

COM(96) 148 final 

DOCUMENTS 

EN 

11 

Catalogue number  :  CB-CO-96-160-EN-C 

ISBN 92-78-02546-1 

Office  for Official Publications of the European Communities 

L-2985 Luxembourg 

2i