[CTC] U.S. Undecided On Whether To Offer State Procurement In U.S.-EU Talks

[Arthur Stamoulis]

U.S. Undecided On Whether To Offer State Procurement In U.S.-EU Talks

Inside US Trade, April 25, 2013

Undersecretary of State Robert Hormats this week signaled that the  
United States has not decided whether it will offer state-level  
procurement in trade and investment negotiations with the European  
Union, but that it would consult with state governments in the event  
it decides to do so.

At an April 23 event hosted by the Johns Hopkins University School of  
Advanced International Studies, Hormats said the federal government  
would have to consult with the states "if this issue is put on the  
agenda" in the trans-Atlantic talks. "And there will be some  
encouragement by Europe to do that," he said.

Hormats was responding to a question about whether he sensed more  
support among the states for opening procurement markets than there  
has been in the past. Only 37 of the 50 United States are currently  
covered by the World Trade Organization's Government Procurement  
Agreement (GPA). Participation by U.S. states in the GPA or a free  
trade agreement procurement chapter is voluntary.

"This constantly is a challenge to get more states into a voluntary  
thing," Hormats said. "We haven't really had, during this 90-day  
period, conversations with the states."

Hormats was referring to the 90-day consultation period between the  
administration and Congress that commenced when the U.S. on March 20  
formally notified lawmakers of its intent to enter into trade talks  
with the EU.

"We haven't really gotten to that point, but I recognize it's  
something on the minds of Europe," Hormats said. "Also, there are some  
sectors of the economy where the states play an important role, even  
outside the procurement area, so we're going to have to have dialogue  
with the states, no question about that."

The EU demands for the U.S. to open up sub-central procurement to EU  
suppliers were conveyed in the draft negotiating mandate that the  
European Commission sent to member states last month. It said the EU  
is seeking improved procurement access at "all administrative levels,"  
including on sub-central public utilities.

Jean Heilman Grier, the former senior procurement negotiator in the  
Office of the U.S. Trade Representative, earlier this month argued  
that obtaining consent from sub-central utilities in the U.S. to offer  
their procurement in an international negotiation would be a "very  
burdensome, complicated process" (Inside U.S. Trade, April 12).

In addition to the 37 states already covered under the GPA, the U.S.  
made some less comprehensive procurement commitments with the EU in a  
1995 memorandum of understanding (MOU). In that MOU, the U.S. agreed  
to offer EU suppliers treatment no less favorable than that accorded  
to out-of-state suppliers for the Massachusetts Port Authority and the  
states of West Virginia, North Dakota and Illinois.

The MOU also granted EU suppliers treatment no less favorable than  
that accorded to out-of-city suppliers for the cities of Boston,  
Chicago, Dallas, Detroit, Indianapolis, Nashville and San Antonio. But  
it did not include any commitments on procedures or timelines  
procuring entities would have to follow, which are a key component of  
the GPA.

More broadly, Hormats made the case that the strides made in the U.S.- 
EU talks will benefitnot only the two partners, but potentially the  
global trading landscape as a whole.

"[A U.S.-EU deal] can complement and reinforce the multilateral system  
and contribute to the development of global rules in areas where  
progress at the multilateral level has not been possible in the past,"  
Hormats said. "So down the road, the [U.S.-EU deal] has the potential  
to create new international standards that could become the building  
blocks for future progress" in the World Trade Organization.

Hormats later explained this is because if the U.S.-EU deal is as  
ambitious as many observers hope, it will cover issues that are not  
"covered effectively" in the WTO, citing investment and competition  
policy as specific examples.

He echoed the sentiment of many observers that work on regulations  
will present the most significant hurdle in the talks. Hormats made  
clear that negotiators have not yet formed a strategy for tackling  
regulations.

"We are looking for formulas to figure out how to address some of  
these regulatory issues," he said. "What formula we use or what  
construction we use is going to be a very important part of the  
negotiations, but we're not there yet."


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