WRITTEN QUESTION E-2663/99 by Glenys Kinnock (PSE) to the Commission. Public procurement liberalisation.
Date: 2000-01-12
Institutions: European Parliament, Provisional data
Subjects: application of EU law, development aid, liberalisation of the market, public contract, tariff negotiations

C 374 E/8

Official Journal of the European Communities

EN

28.12.2000

(2000/C 374 E/008)

WRITTEN QUESTION E-2661/99

by Glenys Kinnock (PSE) to the Commission

(12 January 2000)

Subject: Developing countries and world trade

Given that most developing countries do not have the human resources and technical capacity to manage
is the
the existing WTO agenda and are not participating in the voluntary GPA Working Group,
Commission providing any kind of support that would enable developing countries to participate in this
debate?

(2000/C 374 E/009)

WRITTEN QUESTION E-2662/99

by Glenys Kinnock (PSE) to the Commission

(12 January 2000)

Subject: Impact of procurement liberalisation on developing countries

Has the Commission produced any studies that illustrate the impact of procurement liberalisation on
developing countries? If not, does it intend to do so?

(2000/C 374 E/010)

WRITTEN QUESTION E-2663/99

by Glenys Kinnock (PSE) to the Commission

(12 January 2000)

Subject: Public procurement liberalisation

Is it a correct understanding of the EU negotiating mandate that the EU intends to introduce public
procurement liberalisation into the next WTO round?

If so, how does the Commission intend to square this objective with its commitment to developing
countries, particularly in Article 178 of the Treaty of Amsterdam, which states that its external policies
should be coherent and should not undermine efforts to assist developing countries. Given this legal
obligation, how does the Commission believe that procurement liberalisation will benefit poor countries?

Joint answer
to Written Questions E-2661/99, E-2662/99 and E-2663/99
given by Mr Lamy on behalf of the Commission

(8 February 2000)

Money spent on government procurement (not including defence purchasing) accounts for at least 10-15 %
of gross domestic product (GDP) in most countries. The fact that there are no multilateral rules governing
how this money is spent means that governments are able to maintain procurement policies and practices
which are discriminatory and trade distortive.

Opaque and/or discriminatory procurement procedures adversely affect the longer term development
objectives of countries because they are subsidising uncompetitive industries and creating an environment
conducive to corruption and bribery. This is backed up by empirical research which has been carried out
by other countries and organisations. In addition, the trade liberalising effect achieved by the World trade

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Official Journal of the European Communities

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organisation (WTO) and its predecessor, the General agreement on tariffs and trade (GATT), is reduced
because a substantial proportion of potential trade falls outside the scope of WTO rules.

An open procurement market means achieving best value for taxpayers(cid:146) money. Significant cost savings
occur as a result. This is money that can be used to pursue developmental and other objectives. For that
reason, the Community supports efforts within the United Nations and other international organisations to
persuade countries to use procurement best practices and to make purchases on a best value for money
basis.

The Community(cid:146)s long-standing goal for the WTO of achieving procurement liberalisation on a multi-
lateral basis should be seen as complementary to these other initiatives, as well as the commitment
contained in Article 178 (ex Article 130r) of the EC Treaty not to undermine efforts to assist developing
countries. The Community fully recognises that building the necessary substantive framework of rules in
the WTO will take time and require a pragmatic approach. If the objective is to be achieved, it must be
done on a step-by-step basis.

Transparency is a basic building block of a stable and predictable procurement environment and the
Community(cid:146)s approach in the run-up to the Seattle ministerial conference was therefore to seek to
complete the multilateral work already underway in this area, and subsequently and incrementally build
on it.

The principal difficulty which the WTO faces is political. Countries (cid:129) and not just developing countries (cid:129)
need to be persuaded to stop using procurement as a means to pursue other objectives. Doing this requires
the existence of credible alternative means to pursue those objectives. This is one of the big challenges
currently facing the advocates of open procurement policies.

Several specific country studies have been carried out in the context of bilateral work, and (cid:129) as indicated
above (cid:129) work is also underway in other international organisations such as the UN and the Organisation
for economic cooperation and development (OECD). Up to now, the Commission does not see the benefit
of carrying out additional studies on the benefits of procurement liberalisation for developing countries
either individually or in general, but it is willing to reconsider whether some additional efforts would be
appropriate in order to persuade developing countries of their interest in opening up their procurement
markets.

The difficulties facing developing, particularly least developed countries, in participating in the Geneva
process go beyond the procurement issue. In the specific procurement context, the Community proposed
(GPA)
an initiative, which is currently under consideration by government procurement agreement
members, to grant GPA benefits to least developed countries. On a more technical level, the GPA foresees
technical assistance to developing countries and similar provisions have been proposed in the transparency
work mentioned to above. Indeed, the Community has participated in and co-organised a number of
seminars and conferences, both for individual and groups of countries. A number of Member States are
also active in this area. However, whilst this technical work is of importance, it does not address the
fundamental political difficulties referred to above.

Looking at the issue more widely, the Commission has set up an integrated programme aimed at
supporting the integration of the African, Caribbean and Pacific (ACP) states into the world trading system
under the WTO. This programme foresees financial support for technical assistance, training, negotiating
skills and capacity building. As a first step, the Commission is supporting increased co-ordination in
Geneva between ACP countries through the ACP general secretariat. The Commission has also co-operated
in the past with the WTO Secretariat in funding and providing human resources for meetings and
seminars aimed at a better knowledge and understanding of WTO rules and opportunities under the
multilateral
trading system. The Commission is now exploring together with the WTO and ACP
secretariats other actions in which it may co-operate for the benefit of developing countries.