[CTC] TTIP: EU bids to break US resistance on access to its public procurement market

[Arthur Stamoulis]

TTIP: EU bids to break US resistance on access to its public procurement market

April 27, 20169:22 am <http://www.vieuws.eu/eutradeinsights/ttip-eu-bids-to-break-us-resistance-on-access-to-its-public-procurement-market/>
It has been always clear that clinching a deal on public procurement between the EU and the US will be a tough nut to crack for TTIP negotiators.

For decades public procurement, both at federal and state level has been a strong defensive interest for the US.

Each administration has refused to relax strict national laws that guard access to the US market by foreign bidders, including European companies. “This hasn’t changed much,” an EU source said, referring to ongoing TTIP talks.

Under the Buy America Act of 1982, transit-related procurements valued over US$100,000, for which funding includes grants administered by the Federal Transit Authority (FTA) or Federal Highway Administration (FHWA) are subject to up to 100% of US content requirements.

Similar conditions apply for airport projects that receive funds from the Federal Aviation Administration. They require that all steel and manufactured products have 60% US content and that final assembly occurs in the US.

The Jones Act affects maritime transportation and civilian shipbuilding. While not directly related to government procurement, the Jones Act prevents European companies from participating in maritime services by, requiring that goods being traded between US ports be carried in a vessel built in the US and controlled by at least 75% US ownership. The crew must also be American. US military shipbuilding is also restricted under the Byrnes-Tollefs on amendment.

The US federal authorities also use the Berry amendment to protect their military and paramilitary supplies, which have to be 100% US-made products.

The EU entered the TTIP talks in 2013 with a strong offensive interest in making the US relax its stringent rules, both at the federal and the state level. But, almost three years into the talks EU officials admit they are still far from reaching this “ambitious” goal.

“We don’t hide our strong disappointment with the public procurement offer the US put on the table in late February,” an EU official said. According to sources, it does not provide for a relaxation of strict domestic content requirements at the state level and adds only five “minor” federal agencies to the list of those that will be required to open their bids to EU companies on the basis of national treatment.

The two key agencies, namely the FTA and FHWA, which fund high-budget public transport projects, will remain subject to the Buy America Act, sources say. The same will apply to the National Railroad Passenger Corporation (AMTRAK), which provides passenger train service in the US.

EU officials make clear that what has been offered so far by the US “is not enough.” “We want the US to improve its public procurement offer in coming weeks,” he added.

EU negotiators see the need for progress in particular on two issues. First, they want the US to remove the domestic content requirements that are attached to federal funds given to state and local governments for highway, railway and transit projects.

“Federal money grants should not be subject to the Buy America Act,” an EU source said.

Secondly, the Commission wants the US to add the FTA, the FHWA and AMTRAK to the list of agencies that will be required to open their bids to EU companies on the basis of national treatment.

“We don’t want the US to get rid of the Buy America Act. We want them to allow EU companies to be able to supply their products under the same rules as the US producers do,” an EU official said.

“Let’s turn Buy America into ‘Buy Transatlantic’ Act,” he added, underlining that by doing so the US will still be able to protect its market from other third-country bidders.

But the US is reluctant to allow any major changes in its current public procurement rules. Despite pressure from EU Trade Commissioner Cecilia Malmström and the EU member states, it is not ready to revise its public procurement offer, insisting that the remaining sticking points should be solved during the end game talks (last phase of negotiations).

In a letter sent to the Commission President Jean-Claude Juncker in March, the US Ambassador Anthony Gardner firmly disagreed with the claim that the EU public procurement market is more open than the US.

“The European Commission believes, incorrectly in our view, that the EU government procurement market is far more open than ours,” Gardner said in a letter seen by EU Trade Insights.

“We disagree,” he added, citing the policy paper published in late February by Professor Patrick Messerlin of Sciences Po, who concludes “the EU public procurement markets are definitely not more open than those of its main partners.”

Messerlin argues that the “real-life” data show that the level of openness of both the EU and the US “towards third countries (non-EU and non-US) in public procurement is around 4-5%, depending on the set of data.”

However, Messerlin’s assessment has sparked strong criticism.

In a policy brief published on 9 March by the Centre for European Policy Studies (CEPS), Lucian Cernat, Chief Economist in DG Trade at the European Commission and Zornitsa Kutlina-Dimitrova, senior economist in the Chief Economist and Trade Analysis Unit of DG Trade slammed Messerlin’s assumptions as being based on too narrow a data set and therefore misleading (see article <http://www.vieuws.eu/eutradeinsights/ttip-experts-clash-over-what-is-real-openness-of-eu-and-us-public-procurement-markets/>).

Commenting on the differences in assessment of the “real openness” of the EU and US public procurement markets, an EU official regretted that the negotiators are “wasting” their time on this “futile discussion on figures” instead of focusing on “achieving additional market access opportunities.”

In what appears to be tough horse-trading, the US argues that European companies have been and continue to be “very successful” in competing for both large and small US government procurement contracts.

In a letter to Juncker, Gardner cited five examples of such companies, including French firm Koelis, which in 2014 won a commuter rail contract in Massachusetts valued at up to $4.3 billion.

But EU negotiators point out that these companies are mostly big ones based in the US, which can navigate the US requirements and conditions.

In addition, the US complains about not having “guaranteed” access to the EU public procurement market in services at the sub-central level and about derogations used by the EU member states in areas such as water, rail and transportation services.

Replying to this criticism, EU officials hint that access to EU public procurement in services will remain limited unless the US improves its own offer.

Market access in public procurement as well as in services and goods tops the agenda of the 13th TTIP negotiating round, which was launched on 25 April in New York City (see article <http://www.vieuws.eu/eutradeinsights/13th-ttip-round-eu-to-push-for-concessions-in-public-procurement/>).



13th TTIP round: EU to push for concessions in public procurement

April 22, 20166:58 pm <http://www.vieuws.eu/eutradeinsights/13th-ttip-round-eu-to-push-for-concessions-in-public-procurement/>
The EU will be pushing for concessions to “balance the level of ambition” of the market access offers at the next TTIP round starting on 25th April in New York City, particularly in the area of public procurement, a senior EU official has said.

“It is not a secret that we are very disappointed with the US public procurement offer. EU Trade Commissioner Cecilia Malmström has publicly made clear that there is a need for an exchange of new offers,” the EU official explained.

Meanwhile, the US is not ready to present a new offer at this stage of talks, insisting instead on solving the remaining sticking points during the end game talks.

“We have to be sure that the offers on the table have a comparable level of ambition,” the  EU official added on a broader note, indicating that the EU is ready to move forward on services by going beyond what it had offered in the EU-Canada agreement (CETA) “only if” the US goes beyond what it had agreed to in the TPP (Trans-Pacific Partnership between the US and eleven other Pacific Rim countries, including Canada, Japan, Australia, Mexico and Singapore).

On tariff liberalisation, the EU official made clear that the upcoming round of talks would focus exclusively on the 97% of the tariff lines that were provided by both sides for full liberalisation on the day of the entry into force of the agreement or after a period of 5 or 7 years. He specified that the remaining 3% in the EU’s offer covers the “most sensitive” agricultural products only. According to sources, the US offer also includes non-agricultural products such as cars.

Despite pressure from the US to cut down the number of products excluded from full liberalisation, the EU has been sticking to its guns. “We will be ready to discuss the 3% of tariff lines only if we have more clarity on public procurement, geographical indications and sanitary and phytosanitary measures,” the EU official said.

The negotiators will also focus next week on consolidating texts of most advanced chapters, an EU diplomat told this website. To this end, the 50-member EU delegation for talks in the New York City will include a large group of lawyers, the source explained.

According to the same source, the Commission has singled out seven areas where substantive consolidation is not yet possible due to the need for further technical work. These include: technical barriers to trade (TBT); intellectual property rights (IPR) and geographical indications (GIs); sustainable development; sanitary and phytosanitary (SPS) measures; investment protection; institutional structures; and energy and raw materials.

On regulatory cooperation, the negotiators will focus on consolidating the texts that were already proposed and on drafting those that concern regulatory cooperation in nine sectors (cars, pharmaceuticals, chemicals, textiles, information communication and technology products, pesticides, engineering, and medical devices).

The work on sectoral proposals is most advanced in the area of pharmaceuticals, where the Commission has finished drafting the text, according to EU sources. Talks are least advanced on engineering, they said.

On rules, the negotiators will focus on removing remaining brackets from the three most advanced chapters, namely SME cooperation, trade facilitation, and state-to-state investment protection. Further discussions will be held on proposals for sustainable development and investment protection (investor to state) after the recent exchange. Finally, on energy and raw materials, the EU will continue insisting on the inclusion of a “meaningful” separate chapter in the agreement, the EU source said.

High-level TTIP talks

The start of the 13th TTIP round, on 25 April will coincide with a working dinner between US Trade Representative Michael Froman and EU Trade Commissioner Cecilia Malmström on the sidelines of the Hannover Trade Fair. The two officials will also take part in two panel discussions on TTIP earlier the same day.

The same day, four EU leaders, including German Chancellor Angela Merkel, UK Prime Minister David Cameron, Italian Prime Minister Matteo Renzi, and French President Francois Hollande, will meet US President Barack Obama. According to sources, TTIP is likely to be part of their discussions. A day before, after joint opening of the fair trade, Obama and Merkel will hold a bilateral meeting.

The European and American officials hope that the high-level talks between Obama and the EU leaders will inject much-needed political momentum into the negotiations.
-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://lists.citizenstrade.org/pipermail/ctcfield-citizenstrade.org/attachments/20160427/3923b1f9/attachment.htm>