<html><body style="word-wrap: break-word; -webkit-nbsp-mode: space; -webkit-line-break: after-white-space; "><h1 class="title" style="-webkit-hyphens: manual; "><font size="3"><span style="-webkit-text-size-adjust: auto; background-color: rgba(255, 255, 255, 0); ">U.S. Undecided On Whether To Offer State Procurement In U.S.-EU Talks</span></font></h1><p><span style="-webkit-text-size-adjust: auto; background-color: rgba(255, 255, 255, 0); ">Inside US Trade, April 25, 2013</span></p><p><span style="-webkit-text-size-adjust: auto; background-color: rgba(255, 255, 255, 0); ">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.</span></p><p><span style="-webkit-text-size-adjust: auto; background-color: rgba(255, 255, 255, 0); ">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.</span></p><p><span style="-webkit-text-size-adjust: auto; background-color: rgba(255, 255, 255, 0); ">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.</span></p><p><span style="-webkit-text-size-adjust: auto; background-color: rgba(255, 255, 255, 0); ">"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."</span></p><p><span style="-webkit-text-size-adjust: auto; background-color: rgba(255, 255, 255, 0); ">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.</span></p><p><span style="-webkit-text-size-adjust: auto; background-color: rgba(255, 255, 255, 0); ">"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."</span></p><p><span style="-webkit-text-size-adjust: auto; background-color: rgba(255, 255, 255, 0); ">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.</span></p><p><span style="-webkit-text-size-adjust: auto; background-color: rgba(255, 255, 255, 0); ">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" (<i>Inside U.S. Trade</i>, April 12).</span></p><p><span style="-webkit-text-size-adjust: auto; background-color: rgba(255, 255, 255, 0); ">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.</span></p><p><span style="-webkit-text-size-adjust: auto; background-color: rgba(255, 255, 255, 0); ">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.</span></p><p><span style="-webkit-text-size-adjust: auto; background-color: rgba(255, 255, 255, 0); "><b>More broadly, Hormats made the case that the strides made in the U.S.-EU talks will benefit</b>not only the two partners, but potentially the global trading landscape as a whole.</span></p><p><span style="-webkit-text-size-adjust: auto; background-color: rgba(255, 255, 255, 0); ">"[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.</span></p><p><span style="-webkit-text-size-adjust: auto; background-color: rgba(255, 255, 255, 0); ">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.</span></p><p><span style="-webkit-text-size-adjust: auto; background-color: rgba(255, 255, 255, 0); ">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.</span></p><p><span style="-webkit-text-size-adjust: auto; background-color: rgba(255, 255, 255, 0); ">"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."</span></p><div><span style="-webkit-text-size-adjust: auto; background-color: rgba(255, 255, 255, 0); "><br></span></div></body></html>