Report from the Commission concerning negotiations regarding access of Community undertakings to the markets of third countries in fields covered by the Directive 2004/17/EC
Date: 2009-10-28
Institutions: European Commission
Subjects: World Trade Organisation, accession to an agreement, award of contract, bilateral agreement, international agreement, market access, public contract, services contract, third country

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 28.10.2009 
COM(2009)592 final 

REPORT FROM THE COMMISSION 

Concerning negotiations regarding access of Community undertakings to the markets of 
third countries in fields covered by the Directive 2004/17/EC 

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REPORT FROM THE COMMISSION 

Concerning negotiations regarding access of Community undertakings to the markets of 
third countries in fields covered by the Directive 2004/17/EC 

Text with EEA relevance 

TABLE OF CONTENTS 

REPORT FROM THE COMMISSION Concerning negotiations regarding access of 
Community undertakings to the markets of third countries in fields covered by the Directive 
2004/17/EC................................................................................................................................. 1 

REPORT FROM THE COMMISSION Concerning negotiations regarding access of 
Community undertakings to the markets of third countries in fields covered by the Directive 
2004/17/EC................................................................................................................................. 2 

1. 

2. 

3. 

INTRODUCTION........................................................................................................ 4 

SUMMARY ................................................................................................................. 4 

PLURILATERAL AND MULTILATERAL NEGOTIATIONS................................ 5 

3.1.  WTO Government Procurement Agreement ............................................................... 5 

3.1.1. 

Introduction ................................................................................................................ 5 

3.1.2.  Current GPA coverage .............................................................................................. 5 

3.1.3.  Accession of new members ........................................................................................ 6 

3.1.4.  Revision of the GPA ................................................................................................... 7 

3.2.  WTO General Agreement on Trade in Services (GATS) ............................................ 9 

4. 

4.1. 

4.2. 

5. 

THE EUROPEAN ECONOMIC AREA ..................................................................... 9 

Introduction .................................................................................................................. 9 

The Enlargement of the EU.......................................................................................... 9 

BILATERAL NEGOTIATIONS ............................................................................... 10 

5.1. 

Concluded Agreements with Procurement Chapters ................................................. 10 

5.1.1.  Switzerland ............................................................................................................... 10 

5.1.2.  Mexico ....................................................................................................................... 10 

5.1.3.  Chile........................................................................................................................... 11 

5.1.4.  CARIFORUM .......................................................................................................... 11 

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5.2. 

Procurement Chapters in the Stabilisation and Association Agreements/Interim 
Agreements ................................................................................................................ 11 

5.2.1. 

Introduction .............................................................................................................. 11 

5.2.2.  Agreements per country .......................................................................................... 12 

5.3. 

Procurement Chapters in Agreements conducted within the Neighbourhood Policy 14 

5.3.1. 

Introduction .............................................................................................................. 14 

5.3.2.  ENP – Negotiations of Comprehensive Procurement Chapters per Country 

(Eastern countries) ................................................................................................... 15 

5.3.3.  ENP – Negotiations of Comprehensive Procurement Chapters (Euro-

Mediterranean area) ................................................................................................ 15 

5.4. 

Ongoing and Future Bilateral Negotiations ............................................................... 15 

5.4.1.  Central America ....................................................................................................... 16 

5.4.2.  Andean Community ................................................................................................. 16 

5.4.3.  African, Caribbean and Pacific Countries............................................................. 16 

5.4.4. 

Iraq ............................................................................................................................ 16 

5.4.5.  South Korea .............................................................................................................. 16 

5.4.6.  Canada ...................................................................................................................... 17 

5.4.7.  China ......................................................................................................................... 17 

6. 

THE WAY FORWARD FOR OPENING PROCUREMENT OPPORTUNITIES .. 17 

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1. 

INTRODUCTION 

The present report takes account of the situation concerning access of Community suppliers to 
the procurement markets of third countries in the fields covered by Directive 2004/17/EC1 and 
on the opening up of service contracts in third countries as is stands on 1 August 2009. This 
report is presented in accordance with Articles 58 and 59 of Directive 2004/17/EC. 

The purchases of entities operating in the utilities sector in the European Union amount to € 
450  billion2.  These  entities  published  calls  for  competition  for  the  procurement  above  the 
Directive's  thresholds  for  some  €  80   billion  in  the  Official  Journal3.  The  EU  can  therefore 
offer  access  to  a  large  market  when  negotiating  opening  of  third  countries  procurement 
markets. 

At  the  same  time,  the  concept  of  utilities  procurement  in  the  EU;  in  the  fact  that  private 
undertakings  with  special  and  exclusive  rights4  are  also  subject  to  the  procurement  rules,  is 
not shared worldwide. As a result, access to purchases of private companies active in the field 
of utilities cannot always be negotiated. 

2. 

SUMMARY 

Because  of  its  political  sensitivity,  government  procurement  has  not  become  a  domain  with 
multilateral obligations within the WTO. 

The  plurilateral  WTO  Government  Procurement  Agreement  (GPA),  which  is  currently 
undergoing a review, remains the crucial instrument for opening up international procurement 
markets. While an agreement on the new text (procedural rules for tendering) was reached in 
December  2006,  market  access  negotiations  have  met  with  a  diverging  level  of  ambition 
among the GPA Parties and are still on going. The European Community, represented by the 
Commission,  advocates  for  an  ambitious  the  opening  of  international  procurement  markets 
and  accordingly  made  in  2005  a  comprehensive  offer  for  the  opening  of  EU  procurement 
markets,  including  the  utilities  sector.  However,  in  light  of  the  reluctance  of  other  GPA 
Parties  to  further  open  their  procurement  markets  to  international  competition,  the 
Commission,  at  the  request  of  the  Council5,  submitted  a  revised  -  more  limited  -  offer  in 
February  2008.  Nevertheless,  the  EC  offer  remains  to  be  the  most  comprehensive,  in 
comparison with the other GPA parties.  

The  EC  belongs  to  the  GPA  Parties  that  strongly  support  accession  of  new  members  to  the 
GPA  with  long-term  strategy  to  turn  the  GPA  into  a  multilateral  Agreement.  Recently,  the 
accession  process  has  been  completed  for  Chinese  Taipei.  Negotiations  with  China,  Jordan 
and the Republic of Moldova are on-going. 

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Directive 2004/17/EC of the European Parliament and of the Council of 31 March 2004 coordinating 
procurement procedures of entities operating in water, energy, transport and postal services sectors 
Data for the EU 25 in 2006, source: Eurostat 
Data for the EU 27 in 2007, source: Tenders Electronic Daily 
Directive 2004/17/EC 
2780th EXTERNAL RELATIONS Council meeting, Brussels 12 February 2007, Nr 6039/07, p.6 

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Within the WTO framework, the EC continues also to promote an agreement on government 
procurement under the GATS.  

The  enlargements  of  the  EU  in  2004  and  2007  added  some  €  55  billion 6  in  additional 
procurement opportunities, out of which some € 10 billion 7 represent purchases in the utilities 
domain.  Following  the  EU  enlargements,  the  corresponding  European  Economic  Area 
enlargement Agreements have been signed. The utilities procurement market within the EEA 
amounts  to  €  460  billion,  out  of  which  about  €  81  billion  represent  procurement  above  the 
thresholds, governed by identical procurement rules (the directives). 

Another  tool  for  the  opening  up  of  procurement  markets  are  the  bilateral  negotiations  with 
third countries. The European Union has concluded Free Trade Agreements with substantial 
procurement  chapters  with  Mexico  and  Chile,  an  Economic  Partnership  Agreement  with 
CARIFORUM8  and  a  bilateral  Agreement  on  procurement  with  Switzerland.  Numerous 
bilateral  negotiations  are  on-going  or  the  negotiations  are  about  to  start.  The  current  EU 
approach towards the negotiations of Free Trade Agreements (FTAs) is to conclude so-called 
new  generation  FTAs,  which  include  detailed  and  comprehensive  procurement  chapters, 
including market access to utilities procurement. 

The  EU  conducts  Stabilisation  and  Associations  Agreements  (SAA)  with  Western  Balkan 
countries,  wishing  to  join  the  EU.  With  regard  to  procurement,  the  SAAs  guarantee  mutual 
national  treatment  and  non-discrimination  of  suppliers  and  asymmetric  market  access.  The 
SAAs also cover utilities procurement. 

3. 

PLURILATERAL AND MULTILATERAL NEGOTIATIONS 

3.1.  WTO Government Procurement Agreement 

3.1.1. 

Introduction 

The  Agreement  on  Government  Procurement  (GPA)  is  to  date  the  only  legally  binding 
agreement  in  the  WTO  focusing  on  government  procurement.  The  current  GPA,  adopted  in 
1994,  entered  into  force  on  1  January  1996.  It  is  a  plurilateral  treaty  administered  by  a 
Committee on Government Procurement, which includes the WTO Members that are Parties 
to the GPA9. The GPA has been concluded by the European Community (EC) on behalf of its 
Member States, by decision of the Council10. 

3.1.2.  Current GPA coverage  

The GPA does not automatically apply to all government procurement of the Parties. Rather, 
the coverage of the GPA is determined with regard to each Party in the GPA Annexes, which 

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Source: Commission's Estimate 
Source: Commission's Estimate 
CARIFORUM comprises Antigua and Barbuda, Bahamas, Barbados, Belize, Dominica, the Dominican 
Republic,  Grenada,  Guyana,  Haiti,  Jamaica,  Saint  Lucia,  Saint  Vincent  and  the  Grenadines,  Saint 
Christopher and Nevis, Surinam, Trinidad and Tobago. 
Canada,  European  Communities,  Hong  Kong,  China,  Iceland,  Israel,  Japan,  Korea,  Liechtenstein,  the 
Netherlands  with  respect  to  Aruba,  Norway,  Singapore,  Switzerland,  Chinese  Taipei  and  the  United 
States. 
Council Decision 94/800 from 22. December 1994, OJ L 336 of 23.12.1994, pg.1. 

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specify  central  and  sub-central  government  entities  as  well  as  public  utilities,  which  each 
Party  has  committed  to  complying  with  the  GPA.  Apart  from  the  EFTA11  countries,  whose 
final offers corresponded to that of the EC, no other Party was able to meet the EC request for 
coverage. Thus, the Community had to adjust its final offer to the degree of market opening of 
the other Parties. Nevertheless, the EC commitments are the most comprehensive in terms of 
procuring  entities  and  their  procurement  as  they  cover  procurement  opportunities  on  both 
central  and  sub-central  levels,  including  the  procurement  of  these  entities  and  of  public 
undertakings active in the domain of utilities. 

All  GPA  Parties,  except  Canada,  offer  some  access  to  their  utilities  procurement.  However, 
the coverage is not uniform and the degree of opening of the utilities procurement to foreign 
competition  varies  from  country  to  country  and  the  coverage  is  plagued  with  derogations, 
either specific or across the board.  

3.1.3.  Accession of new members 

GPA  members,  in  particular  the  EC,  seek  to  transform  the  GPA  from  a  plurilateral  into  a 
multilateral Agreement and thus support new accessions to the GPA. The GPA Parties have 
agreed that the new (provisionally agreed) text of the future GPA should be used as the basis 
for  accession  negotiations  with  candidate  countries.  This  new  text  expands  and  clarifies  the 
transitional  measures  (offsets,  price  preferences,  phasing  in  of  entities  or  sectors,  higher 
thresholds), and tailors them to the needs of developing economies. Albania, Georgia, Jordan, 
the  Kyrgyz  Republic,  Republic  of  Moldova,  Oman,  Panama  and  China  have  taken 
commitments to join the GPA while acceding to WTO.  

3.1.3.1.  The  Separate  Customs  Territory  of  Taiwan,  Penghu,  Kinmen  and  Matsu  (Chinese 

Taipei) 

Chinese  Taipei  applied  for  GPA  accession  in  March  1995  and  the  decision  of  the  GPA 
Committee  providing  for  its  accession  was  adopted  in  December  2008.  Chinese  Taipei 
deposited the instrument of accession on 15 June 2009 and following a decision of the GPA 
committee, Chinese Taipei became a member of the GPA on 15 July 2009. The accession of 
Chinese Taipei is currently going through the national ratification process. It is expected that 
Chinese Taipei shall become a Party to the GPA in the first half of 2009.  

The  Commitments  of  Chinese  Taipei  include  procurement  in  the  domain  of  utilities.  The 
thresholds  have  been  set  to  400.000,-  SDR  for  goods,  400.000,-  SDR  for  services  and 
15.000.000,- SDR for construction services. 

3.1.3.2.  Jordan 

Jordan applied for GPA accession in 2000, submitted its initial  offer in  February 2003 and, 
following the negotiations with the GPA Parties, an updated third revised offer in September 
2008. Jordan is currently updating its legislative framework and procurement systems to the 
GPA requirements. The conclusion of Jordan's accession is a significant priority for the GPA 
Committee in 2009. 

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Norway, Liechtenstein, Iceland 

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3.1.3.3.  China 

China applied for accession to the GPA in December 2007 and its initial offer was circulated 
to Parties in January 2008. In addition, China submitted its replies to the Checklist of Issues 
for  Provision  of  Information  Relating  to  Accession  to  the  Agreement  on  Government 
Procurement  in  September  2008.  The  ongoing  negotiations  focus  on  the  verification  of  the 
compatibility of the Chinese procurement legislation with the GPA and on market access. The 
EC  provided  China  with  a  formal  request  for  improvement  of  the  initial  offer  (including 
utilities sector).  

3.1.3.4.  Republic of Moldova 

In  November  2008,  Republic  of  Moldova  tabled  an  initial  offer,  notified  its  procurement 
legislation  and  started  negotiations  for  its  accession.  Republic  of  Moldova  approached  the 
negotiations with high ambition and its entry could be completed in 2010. 

3.1.3.5.  Other Accessions 

Regarding  other  pending  accessions  to  the  GPA  which  had  been  inactive  for  some  time 
(Albania, Georgia, the Kyrgyz Republic, Oman and Panama) and accession commitments that 
had not yet been acted upon (Armenia, Croatia, the Former Yugoslav Republic of Macedonia, 
Mongolia, Saudi Arabia and the Ukraine), the GPA Parties had asked in December 2008 that 
these be kept under review and requested the Chairman  of  the  GPA  Committee  continue  to 
follow up as needed. 

3.1.4.  Revision of the GPA 

A  commitment  to  further  negotiations  was  "built  into"  the  current  GPA12.  The  purpose  of 
these  negotiations  is  three-fold:  (i)  to  improve  and  update  the  Agreement  in  the  light  of 
developments  in  information  technology  and  procurement  methods;  (ii)  to  extend  the 
coverage  of  the  Agreement;  and  (iii)  to  eliminate  remaining  discriminatory  measures.  The 
negotiations  are  also  intended  to  facilitate  accession  to  the  GPA  by  new  Parties,  notably 
developing  countries.  The  negotiations  under  the  GPA  are  not  part  of  the  Doha  Round  of 
negotiations in the WTO. 

3.1.4.1.  The Provisionally Agreed Text 

In December 2006, negotiators reached an understanding on a significant revision of the text 
of the GPA to make it more user friendly. The provisions have also been updated to take into 
account  new  developments,  including  the  role  of  electronic  tools.  Additional  flexibility  has 
been built in, e.g. shorter time-periods for procuring goods and services of a type available on 
the commercial market place. Special and differential treatment for developing countries has 
been more clearly spelt out, in a manner that, it is hoped, will facilitate future accessions by 
these  countries.  Domestic  review  procedures  for  challenges  by  suppliers  and  the  rules  for 
modification  of  the  lists  of  Parties'  coverage  have  also  been  a  point  of  focus.  On  this  last 
matter, it has been agreed to develop arbitration procedures for resolving differences. 

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Article XXIV:7(b) and (c) 

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The  agreement  of  the  negotiators  is  provisional,  i.e.  it  is  subject  to  legal  verification  and  a 
mutually satisfactory outcome notably on the expansion of coverage of the new GPA (i.e. the 
lists of government entities whose procurement is opened up). 

Agreement  was  also  reached  on  a  process  to  conclude  the  coverage  negotiations.  These 
negotiations will be conducted on the basis of the revised text. 

The  GPA  Parties  have  agreed  that  the  new  text  should  be  used  as  the  basis  for  accession 
negotiations with countries wanting to join the GPA. 

3.1.4.2.  Overview of the market access negotiations 

The  GPA  Parties  started  market  access  negotiations  by  submitting  their  initial  requests, 
followed by the tabling of initial offers. In the course of 2007 and 2008 the initial offers were 
submitted  by  all  but  two  Parties  –  Hong  Kong,  China  and  Liechtenstein13.  Following 
negotiations,  revised  offers  were  submitted  by  the  United  States,  Jordan,  Japan,  Korea,  the 
European Community, Norway, Singapore and Switzerland. 

The  EC  tabled  a  very  comprehensive  initial  offer  in  2005,  offering  the  great  majority  of 
Community  procurement,  including  the  utilities.  In  light  of  the  reluctance  of  some  GPA 
Parties to reciprocate,  the Council requested the Commission to rebalance  the Agreement14. 
The  EC  thus  submitted  to  the  GPA  partners  a  revised  offer  in  February  2008,  which  takes 
account of the possibilities of the other GPA Parties regarding the reciprocal opening of the 
procurement markets. 

The  offer  of  the  EC,  nonetheless,  remains  very  comprehensive,  offering  about  85%  of  the 
above  threshold  procurement  of  the  EU.  For  the  utilities  domain  it  represents  procurement 
opportunities worth almost € 50 billion. Restricti ons for access to the EC procurement market 
are  limited,  based  on  reciprocity  principle  and  target  the  corresponding  restrictions  of  the 
other GPA Parties. 

The opening up of procurement in the domain of utilities remains one of the main offensive 
interests  of  the  EC  in  the  market  negotiations.  The  EC  strategy  to  achieve  this  goal  is 
composed of three main elements:  

To  obtain  greater  coverage  of  procurement  entities  at  sub-central  level.  It  is  at  this  level  at 
which utilities are organised in certain GPA Parties (USA, Canada and Japan) and for which 
some GPA Parties do not offer a substantial coverage.  

The  elimination  of  discriminatory  measures,  in  particular  those  that  withdraw  GPA  Parties' 
coverage  across  the  board  for  all  procurement,  such  as  the  set  asides  for  national  SMEs 
currently maintained by the USA, Japan and Korea. 

The elimination of specific exceptions maintained by certain GPA Parties, which render the 
procurement committed by those Parties inaccessible in practice. An example in the domain 

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Jordan  and  Chinese  Taipei  confirmed  that  the  offers  that  they  had  circulated  in  the  course  of  their 
negotiations  on  accession  to  the  current  Agreement  should  also  be  considered  as  their  offers  in  the 
coverage negotiations. 
2780th EXTERNAL RELATIONS Council meeting, Brussels 12 February 2007, Nr 6039/07, p.6. 

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of  utilities  is  the  operational  safety  clause  whose  extensive  use  precludes  access  to  the 
Japanese railway procurement market. 

3.2.  WTO General Agreement on Trade in Services (GATS) 

Article XIII:1 of the General Agreement on Trade in Services (GATS) excludes government 
procurement  from  the  GATS’  main  market  access  provisions.  However,  Article  XIII:2  of 
GATS  establishes  a  multilateral  negotiating  mandate  on  services  procurement.  The 
negotiations  under  Article  XIII:2  of  GATS  take  place  in  the  multilateral  Working  Party  on 
GATS Rules (WPGR), established by the Council for Trace in Services in 1995. 

The negotiations on the multilateral opening of services procurement are on-going, with the 
EC being the driving force. The EC tabled five communications in the WPGR, the latest of 
which,  issued  in  2006,  puts  forward  a  framework  for  WTO  Members  to  undertake 
commitments in market access and non-discrimination on services procurement and a set of 
common procedural rules for covered procurement. 

4. 

THE EUROPEAN ECONOMIC AREA 

4.1. 

Introduction 

The  EEA  Agreement  provides  in  its  Article  65  and  Annex  XVI  that  the  provisions  of  the 
Utilities  Directive  apply  in  the  EFTA  countries.  As  a  result,  Norway,  Liechtenstein  and 
Iceland  now  provide  access  to  their  utilities  procurement  for  Community  undertakings, 
offering a coverage, which matches the scope of the Utilities Directive 2004/17/EC. 

4.2. 

The Enlargement of the EU 

Under  the  EEA  Agreement,  joining  EU  members  are  to  apply  to  become  party  to  the  EEA 
Agreement (Article 128), under terms and conditions subject to agreement.  

The enlargement of the EEA to include the ten countries that joined the EU in 200415 entered 
into force on 1 May 200416. The latest enlargement of the EU took place on 1 January 2007 
when Bulgaria and Romania joined the EU. The EEA Enlargement Agreement was signed on 
25 July 200717. 

The  enlargement  of  the  EU  in  2004  and  2007  added  some  €55  billion  in  additional 
procurement opportunities, out of which some €10  billion represent purchases in the utilities 
domain. The utilities procurement market within the EEA amounts to € 460 billion, of which 
about  €  81  billion  represent  the  above  thres hold  procurement,  governed  by  identical 
procurement rules (directives). 

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Enlargement of CZ, EE, CY, LV, LT, HU, MT, PL, SI, SK on 1 May 2004 
Agreement  on  the  participation  of  CZ,  EE,  CY,  LV,  LT,  HU,  MT,  PL,  SI,  SK  in  the  European 
Economic  Area  of  14  October  2003  (OJ  N°  L  130  of  29.4.2004,  p.  11;  EEA  Supplement  N°  23, 
29.4.2004, p.1). 
OJ L 221 of 25.08.2007 

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5. 

BILATERAL NEGOTIATIONS 

5.1. 

Concluded Agreements with Procurement Chapters 

5.1.1.  Switzerland 

In  1999  the  EC  concluded  a  separate  package  of  trade  agreements  with  Switzerland,  the  
so-called Bilateral I package18. The Agreement on certain aspects of government procurement 
entered into force on 1 June 200219. 

The  agreement  complements  the  commitments  of  Switzerland  and  the  EC  under  the  GPA. 
The EC and Switzerland mutually grant access to procurement of goods, works and services 
by both public entities and private entities enjoying special and exclusive rights and operating 
in the fields of railway, gas, heat, oil, coal and other solid fuels. In addition, procurement of 
goods,  works  and  services  by  private  entities  enjoying  special  and  exclusive  rights  and 
operating  in  the  fields  of  electricity,  drinking  water,  maritime  or  inland  ports,  airports  and 
urban  transports  are  covered  by  the  Agreement.  As  a  result,  the  Agreement  extends  these 
commitments to the level covered by the EC procurement directives. 

The  Agreement  establishes  a  Joint  Committee  to  ensure  its  effective  implementation  and 
operation.  Meetings  of  the  Joint  Committee  have  regularly  taken  place  since  the  entry  into 
force of the Agreement. 

5.1.2.  Mexico 

The  Economic  Partnership,  Political  Coordination  and  Cooperation  Agreement  (EPA) 
with Mexico entered into force in November 200020. 

The  agreement  provides  for  the  parties’  commitment  to  the  gradual  and  mutual  opening  of 
government  procurement  markets.  It  also  specifies  the  creation  of  a  Joint  Council  with 
members from both parties. 

Pending  the  ratification  of  the  EPA,  an  Interim  Agreement  of  Trade  and  Trade-related 
matters (IA) was approved by the Council in June 199821. The IA, which entered into force 
on 1 July 1998, also provides for procurement provisions and establishes the above mentioned 
Joint Council for the monitoring of the Agreement.  

Regarding  procedural  procurement  rules22,  Mexico  shall  apply  relevant  provision  from  the 
NAFTA Agreement23, whereas the EU shall apply the provision of the 1994 GPA. 

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This package includes negotiations for agreements in seven sectors (Free Movement of Persons, Trade 
in  Agricultural  Products,  Public  Procurement,  Conformity  Assessments,  Air  Transport,  Transport  by 
Road and Rail, Swiss Participation in the 5th Framework Programme for Research). These agreements 
are linked by a termination clause, which means that all agreements came into force together and will 
also come to an end together if any one of them is terminated. 
OJ L 114 of 30.4.2002, p. 430. 
Council Decision 2000/658/EC, OJ L 276 of 28.10.2000; This Decision was amended with the Council 
Decision  2005/202  of  31  January  2005  to  take  into  account  the  accession  of  new  Member  States  in 
2004, OJ L 66 of 12.3.2005 
OJ L 226 of 13.8.1998 
Annex XII Decision 2/2000 
NAFTA – North American Free Trade Agreement 

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In the field of utilities, Mexico opens up procurement of government enterprises in the field of 
railways,  telecoms  and  energy  (petrol  and  gas),  whereas  the  EU's  coverage  includes 
procurement by public authorities and public undertakings in the field of electricity, drinking 
water, urban transport, airports, and maritime or inland ports. 

The Joint Committee on procurement issues meets regularly since the entry into force of the 
Interim Agreement. It also addressed the issue of possible expansion of coverage. 

5.1.3.  Chile 

The  EU-Chile  Association  Agreement  was  signed  on  18  November  200224.  The  entry  into 
force  of  the  entire  Agreement  is  pending,  though  most  of  its  provisions,  including  those  on 
procurement, came into force provisionally on 1 February 200325. 

An Association Council is set up to supervise implementation of the AA and is assisted by an 
Association Committee. 

As far as utilities are concerned, the EU and Chile mutually open up procurement by public 
entities  operating  in  the  fields  of  ports  and  airports. The applicable thresholds are set at the 
same  value  for  both  the  EU  and  Chile  and  correspond  to  those  applicable  in  the  utilities 
directive. 

5.1.4.  CARIFORUM 

In  October  2008  the  EU  signed  an  Economic  Partnership  Agreement  (EPA)  with  13 
CARIFORUM  countries:  Antigua  and  Barbuda,  Bahamas,  Barbados,  Belize,  Dominica,  the 
Dominican Republic, Grenada, Jamaica, Saint Lucia, Saint Vincent and the Grenadines, Saint 
Christopher  and  Nevis,  Suriname,  Trinidad  and  Tobago  and  Guyana.  The  Agreement  is 
provisionally  applied  as  of  29  December  2008.  The  EU  pledged  to  work  with  the  Haitian 
government  and  other  Caribbean  partners  to  ensure  that  the  conditions  for  Haiti  to  join  the 
EPA are in place soon. 

The  CARIFORUM  EPA  commits  its  signatories  to  a  very  complete  set  of  rules  on 
transparency  in  government  procurement  but  does  not  include  any  provisions  on  market 
access.  The  EU  and  CARIFORUM  have  agreed  to  rules  that  would  ensure  that  relevant 
information  is  freely  disclosed  in  order  to  facilitate  fair  and  acceptable  processes  in  public 
tendering.  

5.2. 

Procurement Chapters in the Stabilisation and Association Agreements/Interim 
Agreements 

5.2.1. 

Introduction 

In talks with Western Balkan countries who have expressed the wish to join the EU, the EU 
concludes Stabilisation and Association Agreements (SAA) in exchange for commitments to 
political, economic, trade, or human rights reforms in a country. The country may be offered 
tariff-free access to some or all EU markets and financial and/or technical assistance. 

24 
25 

OJ L 352 of 30.12.2002 
Council Decision 2002/979/EC, OJ L 352 of 30.12.2002, amended with Council Decision 2005/106/EC 
of 22.11.2004 to take account the accession of new Member States of 2004, OJ L 38 of 10.02.2005 

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SAA are part of the EU Stabilisation and Association Process (SAP). The SAA are similar in 
principle to the Europe Agreements signed with the Central and Eastern European countries in 
the 1990s and to the Ankara Association Agreement with Turkey26. 

The  SAAs  must  be  ratified  by  the  associating state and all EU Member States.  Pending  the 
ratification  of  a  SAA,  the  Commission  concludes  an  Interim  Agreement  (IA)  to  allow  the 
trade and trade-related provisions of the SAA to enter into force as soon as possible. 

Since the aim of the SAAs is to help the countries concerned to build their capacity for the 
adoption and implementation of EU law, the reciprocal commitments are usually construed on 
an  asymmetrical  basis.  This  is  also  the  case  for  the  relevant  procurement  provisions.  The 
economic operators of the signatory country, whether established or not in the EC, are granted 
access to contract award procedures in the EC pursuant to the EU public procurement rules as 
of  the  entry  into  force  of  the  SAA,  or  of  the  IA  in  cases  where  the  latter  makes  such  a 
provision. This rule applies also to contracts in the utilities sector once the signatory country 
has adopted the legislation introducing the EC rules in this area.  

EU  companies  established  in  the  signatory  country  are  granted  access  to  contract  award 
procedures in the said country under treatment no less favourable than that granted to national 
companies from the entry into force of the Agreement. 

For  their  part,  EU  economic  operators  not  established  in  the  signatory  country  are  granted 
access  to  contract  award  procedures  in  the  said  country  under  treatment  no  less  favourable 
than that granted to national companies only after a given number of years following the entry 
into force of the Agreement27. 

5.2.2.  Agreements per country 

5.2.2.1.  Albania 

The EU and Albania signed a SAA on 12 June 2006 which entered into force on 1 April 2009.  

Market access will be granted at the latest four years after the date of entry into force of the 
IA. 

5.2.2.2.  Former Yugoslav Republic of Macedonia 

The SAA with the Former Yugoslav Republic of Macedonia was signed on 9 April 2001 and 
entered  into  force  on  1  April  200428.  There  was  no  public  procurement  provision  in  the  IA 
that entered into force in June 200129. 

Market access was granted as of 1 April 2009. 

26 

27 

28 
29 

It shall be noted that there aren't any public procurement provisions in the Ankara AA. A negotiation 
for the extension of the Customs Union to the access to procurement markets has been foreseen by the 
Decision  1/95  (Article  48)  of  the  EC-Turkey  Association  Council,  however,  this  has  not  been  acted 
upon so far.  
The  exception  out  of  this  rule  is  Montenegro,  which  grants  access  to  its  procurement  market  to 
Community undertakings irrespective of the place of their establishment as from the entry into force of 
the Interim Agreement 
OJ L 84 of 20.3.2004 
OJ L 124 of 04.5.2001 

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5.2.2.3.  Montenegro 

On 15th October 2007  Montenegro  signed the SAA and an Interim agreement  on trade  and 
trade-related  matters.  The  latter  entered  into  force  on  1  January  200830  while  the  SAA  will 
enter into force once its ratification process is completed. 

Market access was granted as from the entry into force of the IA. 

5.2.2.4.  Croatia31 

The SAA with the Republic of Croatia entered into force on 1st February 200532.  

Market access was granted as from 1st of February 2008. 

5.2.2.5.  Serbia 

The SAA and the IA on trade were signed on 29 April 2008. The Council, however, decided 
that  the  implementation  of  the  IA  and  the  ratification  of  the  SAA  should  be  subject  to 
unanimous recognition by the Council that Serbia was cooperating fully with the International 
Criminal Tribunal for the former Yugoslavia. The Serbian Parliament ratified the agreements 
on 9 September 2008. 

Market access will be granted at the latest 5 years after the entry into force of this Agreement. 

Upon the entry into force of this Agreement, Serbia shall convert any existing preference for 
domestic economic operators to a price preference. The price preference provisions shall be 
gradually reduced within a period of 5 years. 

5.2.2.6.  Bosnia and Herzegovina 

A  SAA  with  Bosnia  and  Herzegovina  and  an  IA  on  trade  and  trade-related  matters  were 
signed  on  16  June  200833.  The  IA34  entered  into  force  on  1  July  2008  while  the  SAA  will 
enter into force once its ratification process has been completed. 

Market access will be granted at the latest 5 years after the entry into force of this Agreement. 

Upon  the  entry  into  force  of  this  Agreement,  Bosnia  and  Herzegovina  shall  convert  any 
existing  preference  for  domestic  economic  operators  to  a  price  preference.  The  price 
preference provisions shall be gradually reduced within a period of 5 years. 

30 
31 

32 
33 
34 

Signed on 15.10.2007, OJ L 345 of 28.12.2007 
Croatia is a candidate country for the accession to the EU; the accession negotiations are currently on-
going.  Negotiations  on  public  procurement  (Chapter  5)  began  on  16th  December  2008.  Three  closing 
benchmarks, related to legislative alignment, implementation and administrative capacity building have 
been  adopted  by  the  Council.  These  benchmarks  must  be  fulfilled  for  the  successful  closure  of  the 
negotiations in this Chapter. 
OJ L 26 of 28.1.2005 
Council Regulation 594/2008 and Council Decision 2008/474/EC, OJ L 169 of 30.6.2008 
OJ L 169/13 of 30.6.2008 

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5.3. 

Procurement  Chapters  in  Agreements  conducted  within  the  Neighbourhood 
Policy 

5.3.1. 

Introduction 

The  European  Neighbourhood  Policy  (ENP)  was  developed  in  2004,  with  the  objective  of 
avoiding the emergence of new dividing lines between the EU and its immediate neighbours 
by  land  or  sea35  –  Algeria,  Armenia,  Azerbaijan,  Belarus,  Egypt,  Georgia,  Israel,  Jordan, 
Lebanon,  Libya,  Republic  of  Moldova,  Morocco,  Occupied  Palestinian  Territory,  Syria, 
Tunisia and Ukraine. 

The EU offers to its neighbours a privileged relationship, building upon a mutual commitment 
to  common  values  (democracy  and  human  rights,  rule  of  law,  good  governance,  market 
economy  principles  and  sustainable  development).  The  level  of  ambition  of  the  relationship 
will depend on the extent to which these values are shared36.  

The  ENP  builds  upon  Partnership  and  Cooperation  Agreements  (PCAs)  with  the  former 
Soviet  republics,  or  Association  Agreements  (AAs)  in  the  framework  of  the  Euro-
Mediterranean Partnership37), the ENP is not yet ‘activated’ for Belarus, Libya or Syria since 
no such Agreements are yet in force. 

PCAs  and  AAs38  foresee  co-operation  in  the  field  of  public  procurement,  to  develop 
conditions for open and competitive award of public contracts. 

The central elements of the ENP are the bilateral ENP Action Plans. These set out an agenda 
of political and economic reforms with short and medium-term priorities. Implementation of 
the  ENP  Action  Plans  is  underway;  it  is  jointly  promoted  and  monitored  through  sub-
Committees. 

On the basis of ENP in order to enhance and deepen relations with Ukraine, Belarus, Republic 
of Moldova, Armenia, Georgia and Azerbaijan, the Council adopted the Eastern partnership 
initiative on 20th March, 200939. 

The Eastern Partnership implies also negotiations of new enhanced (association) agreements 
(including  deep  and  comprehensive  free  trade  agreements  which  combine  rules  on  market 
access  with  regulatory  approximation  to  the  acquis)  with  those  countries  which  are  willing 
and able to enter into a deeper engagement.  

35 

36 

37 

38 

39 

Although Russia is also a neighbour of the EU, our relations are instead developed through a Strategic 
Partnership covering four "common spaces". 
The ENP remains distinct from the process of enlargement although it does not prejudge, for European 
neighbours, how  their  relationship with  the  EU  may  develop  in  the  future,  in  accordance  with Treaty 
provisions. 
The  legal  basis  for  the  EU's  relations  with  the  Palestinian  Authority  is  the  Interim  Association 
Agreement  on  Trade  and  Cooperation  signed  with  the  Palestinian  Liberation  Organization  (PLO)  on 
behalf of the Palestinian Authority. 
With Armenia: art. 48; with Azerbaijan, art. 49; with Egypt: art. 38; with Georgia: art. 50; with Israel: 
arts.  1  and  35  (précising  the  aim  of  a  mutual  opening  of  the  procurement  markets  of  undertakings 
operating in the utilities sectors); with Jordan: art. 58; with Lebanon: art. 39; with Republic of Moldova: 
art. 54; with Morocco: art. 41; with the Occupied Palestinian Territories: art. 34; with Tunisia: art. 41; 
with Ukraine: art. 55. 
Communication  from  the  Commission  to  the  European  Parliament  and  the  Council  –  Eastern 
Partnership {SEC (2008) 2974} 

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5.3.2.  ENP  –  Negotiations  of  Comprehensive  Procurement  Chapters  per  Country 

(Eastern countries) 

5.3.2.1.  Ukraine 

Negotiations on a new enhanced agreement with Ukraine officially started on 5 March 2007. 
The negotiations of the deep and comprehensive FTA, as an integral part of the AA, started in 
February 2008. 

Negotiations are still ongoing and aim at the gradual and reciprocal opening of procurement 
markets in all areas (including utilities and concessions) on the basis of progressive legislative 
approximation with the EC Directives, accompanied with institutional reform in Ukraine. The 
extent  of  market  access  is  linked  to  the  level  of  regulatory  and  administrative  reform 
achieved.  

5.3.2.2.  Georgia, Armenia 

Fact finding missions (to Georgia in October 2008 and to Armenia in February 2009) marked 
the start of the preparatory process for negotiations of the deep and comprehensive FTAs. The 
assessment of Georgia's and Armenia’s preparedness to start the negotiations is under way. 

5.3.3.  ENP  –  Negotiations  of  Comprehensive  Procurement  Chapters 

(Euro-

Mediterranean area) 

5.3.3.1.  Syria 

The AA has not yet entered into force, though its text was finalised in 2004. As a difference 
from the other AAs, it entails detailed procedural procurement rules and also a comprehensive 
mutual market access, including utilities procurement. The EU continues the talks with Syria 
towards the signature of the Agreement. 

5.3.3.2.  Libya 

The  EU-Libya  FTA  negotiations  started  in  September  2008.  Both  parties  ambition  public 
procurement provisions that go beyond  the WTO GPA  text  as  the  EU  suggests  gradual  and 
mutual access to the works concessions and the use of the larger Community definition of the 
utilities sector. Negotiations are on-going.  

5.4. 

Ongoing and Future Bilateral Negotiations 

In  October  2006  the  European  Commission  issued  the  "Global  Europe:  Competing  in  the 
World"40  Communication,  which  spells  out  the  EU’s  external  agenda  for  improving  its 
competitiveness in the global economy. As a central part of this new trade policy framework, 
a  new  generation  of  FTAs  aims  to  complement  the  EU's  strong  commitment  to  the 
multilateral trading system by focusing on areas not currently covered by multilateral WTO 
rules, public procurement is among them. The key economic criteria for the new generation of 
FTAs are market potential (economic size and growth) and the level of protection against EU 
export  interests  (tariffs  and  non  tariff  barriers).  The  EU  also  takes  account  of  potential 
partners' negotiations with EU competitors and the likely impact of this on EU markets and 

40 

Global Europe: Competing in the World (COM(2006) 567 final) 

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economies.  In  terms  of  content  these  new  generation  FTAs  seek  to  be  comprehensive  and 
ambitious  in  coverage,  aiming  at  the  highest  possible  degree  of  trade  liberalisation  while 
strengthening sustainable development and taking into the development needs of our trading 
partners. 

5.4.1.  Central America 

At the EU-Latin America and Caribbean summit in 2004, the EU and the Central American 
region agreed to negotiate a new AA, and these negotiations were launched in 2007. The trade 
part of the agreement contains a chapter on public procurement with provisions on rules, in 
particular concerning transparency, and market access. The utilities' procurement is included. 
The latest round of the negotiations was completed in Brussels, in June 2009, but following 
the uncertain political situation in Honduras, the negotiation has been suspended.  

5.4.2.  Andean Community 

Following  a  failure  of  the  region-to-region  negotiations  of  a  comprehensive  AA  (including 
political  dialogue,  cooperation  and  trade)  between  the  EU  and  Andean  Community,  trade 
negotiations  in  view  of  concluding  a  multi-party  trade  agreement  started  in  February  2009 
with  Colombia,  Ecuador  and  Peru.  This  agreement  shall  contain  a  chapter  on  public 
procurement  with  provisions  on  rules,  in  particular  concerning  transparency,  and  market 
access,  the  utilities'  procurement  is  included.  The  fourth  round  was  completed  in  Bogota  in 
June.  

5.4.3.  African, Caribbean and Pacific Countries 

Regional negotiations with the six regions (West Africa, Central Africa, Eastern and Southern 
Africa, the Southern African Development Community, Caribbean, Pacific) were launched in 
October  2003  with  a  view  to  establish  EPAs.  EPAs  are  intended  to  be  WTO-compatible 
trading  arrangements  consolidating  regional  integration  initiatives  within  the  ACP  and 
fostering the gradual integration of the ACP into the global economy on the basis of an open, 
transparent and predictable framework for goods and services. 

5.4.4. 

Iraq 

Negotiations between the EU and Iraq, in view of the adoption  of a  Trade  and  Cooperation 
Agreement,  were  initiated  in  November  2006.  The  EU  and  Iraq  seek  to  establish  a  WTO-
compatible  regime  which  will  also  encourage  trade  with  and  investment  in  Iraq.  The  TCA 
shall contain also a very comprehensive public procurement chapter based on the GPA rules, 
which  shall  lead  to  substantial  mutual  opening  of  EU  and  Iraq's  procurement  markets, 
including in the utilities' procurement. 

5.4.5.  South Korea 

The  FTA  with  South  Korea  is  the  first  of  the  new  generation  of  Global  Europe  agreements 
that the EU started to negotiate in May 2007. Regarding procurement, the FTA shall add to 
the mutual commitments, which  the  EC  and  Korea  have  within the framework of the  GPA. 

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Therefore  the  procurement  chapter  focuses  on  opening  market  access  to  the  works 
concessions41 which are not covered by the GPA.  

5.4.6.  Canada 

The EU and Canada formally launched the negotiations for a Comprehensive Economic and 
Trade Agreement (CETA) on 6 May 2009.  

The  scoping  exercise  conducted  early  2009  highlighted  that  any  agreement  should  aim  at 
achieving  full  coverage  of  central  and  sub-central  government  procurement  in  all  sectors, 
including  utilities,  to  ensure  treatment  no  less  favourable  than  that  accorded  to  locally-
established suppliers. Language on transparency should be added in order to provide insight 
into  laws,  regulations,  procedures  and  practices,  in  such  a  way  as  to  provide  business 
communities with easily accessible information on public procurement. It was agreed that the 
starting  point  on  procedural  commitments  should  be  the  text  of  the  WTO  GPA.  The  first 
round of negotiations will take place in October 2009. 

5.4.7.  China 

In accordance with the conclusions of the December 2005 meeting of the General Affairs and 
External  Relations  Council,  the  EU  is  negotiating  a  partnership  and  cooperation  Agreement 
(PCA)  with  China  in  order  to  further  improve  the  framework  for  bilateral  trade  and 
investment relations, including the area of government procurement, and to upgrade the 1985 
EC-China Trade and Economic Cooperation Agreement.  

6. 

THE WAY FORWARD FOR OPENING PROCUREMENT OPPORTUNITIES 

The  EU  has  always  supported  the  trend  towards  global  free  trade  and  it  has  recognised  the 
increasing economic interdependence of markets across borders. If properly addressed, these 
developments have the potential to increase the wealth of the global economy. Globalisation 
clearly puts pressure on Europe to reform its economy and become more competitive. Europe 
needs  to  respond  to  this  pressure  internally  but  it  also  must  pay  growing  attention  to  its 
external front. The Internal Market can only deliver fully on its key internal priorities if these 
priorities are adequately addressed on the world scene. 

The  EU  has  been  traditionally  an  open  economy  and  an  advocate  of  free  trade.  For 
procurement, this premise translates in a low degree of protectionism. The EU's approach is 
not entirely shared worldwide. Public Procurement has traditionally been a domain subject to 
political  pressure  consisting  of  preference  for  domestic  suppliers  over  their  foreign 
competitors. Thus, within the WTO, government procurement has not become a domain with 
multilateral  obligations.  Most  of  the  EU's  major  trading  partners  operate  restrictive  public 
procurement practices which discriminate against EU suppliers. The current economic crisis 
increased the use of such practices.  

Public  procurement  is  an  area  of  significant  untapped  potential  for  EU  exporters.  EU 
companies are world leaders in areas such as transport equipment, public works and utilities. 
But  they  face  discriminatory  practices  in  almost  all  our  trading  partners,  which  effectively 
close off exporting opportunities. 

41 

BOT (Build-Operate-Transfer) concessions for Korea. 

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The EU’s efforts to overcome the existing trade barriers are twofold. The EU tries to conclude 
FTAs with comprehensive procurement chapters, based on procurement rules similar to those 
of the EU (new generation FTAs). Further, as a party to the GPA, the EC actively negotiates 
with  accessions  candidates,  with  the  view  to  transforming  the  GPA  into  a  multilateral 
Agreement.  

During  the  negotiations  of  procurement  chapters,  the  EU  offers  a  legally  certain,  non 
discriminatory access to a  large procurement market, which  indeed  positively  contributes to 
the leverage the EU has in the negotiations. At the same time, the leverage is somewhat offset 
by the general openness of the EU, since the other parties are aware that even the procurement 
opportunities  which  are  not  offered  as  a  part  of  the  finally  negotiated  deal  will  not  be 
sheltered with a wall, which would be impossible to penetrate.  

The EU has always based its negotiations on formal reciprocity. In situations, where certain 
parties could not meet our expectations regarding market access, the notion of reciprocity has 
had to be interpreted more strictly. This is the case of the on-going GPA negotiations, where 
the EC had to revise its offer to reflect the willingness and possibilities of the other parties to 
open up their procurement to foreign competition.  

The  reflection  on  economic  reciprocity  (assessing  the  actual  value  of  the  third  party's 
procurement  market)  should  continue  as  part  of  the  reflection  on  strengthening  the  EU’s 
negotiation position.  

Further, in cases where important trading partners profit from the general openness of the EU, 
but  have  no  intention  to  move  towards  reciprocity,  the  EU  could  reflect  on  introducing 
carefully targeted restrictions on access to parts of the EU procurement market, to encourage 
these partners to offer reciprocal market opening42. 

The  reasonable  and  appropriate  use  by  individual  European  contracting  authorities  of 
measures  already  available  to  them  in  EU  procurement  legislation,  specifically  for  utilities' 
procurement, would also strengthen the EU's negotiating position.  

42 

This approach would not be considered for poorer developing countries. 

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