Christopher Yukins to Address Brussels Conference on EU Foreign Subsidies Regulation

On June 7, 2023, GW Law School’s Prof. Christopher Yukins will address a Brussels conference, organized through Utrecht University, “Challenges for Public Procurement in Europe and Beyond: Concept Programme.” He will address the EU Foreign Subsidies Regulation (FSR), which will impose heavy disclosure requirements on vendors from abroad — including vendors from the United States — competing for EU Member State public procurements. The U.S. Chamber of Commerce has recommended that members of the WTO Government Procurement Agreement (GPA) be exempted from the FSR; Professor Yukins discusses that proposed exemption in his brief presentation (click here for slides).

For background materials and a prior webinar on the FSR, click here

UNCITRAL Days in Africa Workshop on Public Procurement Law Harmonisation

On November 3, 2022 panelists joined with Professor Geo Quinot and Professor Sope Williams from Stellenbosch University, South Africa, for a very interesting discussion of public procurement and international trade across the African continent.

Professor Dominic Dagbanja Slides

Professor Christopher Yukins Slides

Trade Policy in Procurement in the Biden Administration

Assessing the Trade Agenda for Government Procurement in the Biden Administration,” paper presented by Chris Yukins at the Thomson Reuters Government Contracts Year in Review Conference (Feb. 2021)

The attached paper, prepared shortly before President Biden was inaugurated, discussed key trade issues for the incoming administration in public procurement. The piece reviewed major trade measures in procurement taken during the Trump administration – most of which were predictable from the time Trump was elected.  The paper turned to the major trade challenges that face the Biden administration, in areas as diverse as climate change, cybersecurity and the protectionism in post-Brexit Europe, and then assessed how the Biden administration might address these challenges, especially given Joe Biden’s support for “Buy American” policies during the 2020 campaign. The paper also assessed how the new administration might cooperate on these difficult issues with the United States’ allies abroad.  The paper concluded that the Biden administration’s main challenge was restoring confidence abroad in the United States as a responsible trading partner in procurement; once that goal was met, the paper argued, the more technical issues of trade in procurement would be much easier to address.

The paper’s concerns that the new administration might take a protectionist turn, per Joe Biden’s campaign promises, soon proved well-founded. On January 25, 2021, only a few days after entering office, President Biden signed an executive order calling for strengthened “Buy American” policies in U.S. procurement. Commenting on the order, The Economist wrote that while the order was “protectionist in spirit,” the United States’ existing trade commitments “mean that Mr Biden’s measures may not have much effect.” For background on the executive order– including the history of the Trump administration trade policies in procurement, and questions raised by the new order — please see the slides attached here.

The denouement to the Biden executive order suggests that, in the short term at least, the Biden administration will not go beyond the tighter Buy American Act requirements imposed by the Trump administration

The denouement to the Biden executive order suggested that, while it called for closer scrutiny of waivers and exceptions to the Buy American Act, in the short term at least the Biden administration would not go beyond the tighter Buy American requirements launched by President Trump in July 2019 under Executive Order 13881. President Trump’s order calling for stricter “Buy American” requirements was published as a proposed implementing Federal Acquisition Regulation (FAR) rule on September 14, 2020 (85 FR 56558), and the final FAR rule was published on January 19, 2021 (86 FR 6180).  The final Trump rule, in keeping with his executive order, aggressively tightened domestic content requirements under the Buy American Act. President Biden took office the next day, on January 20, 2021.  President Biden issued his “Buy American” executive order (EO 14005) several days later, on January 25, 2025.  On or about that same date, the Biden administration undertook a FAR review to assess whether the Trump regulations needed to be reconsidered. By February 25, 2021 (roughly one month later) the Biden administration concluded that no further changes were needed to the “Buy American” regulations. FAR Case 2021-004, closed 2/25/21.  The Biden administration thus appeared to close the book on further changes to the FAR “Buy American” rules, at least temporarily — perhaps at least until the broader policy reviews called for by the Biden order (such as a review of the “Buy American” exception for commercial information technology) are concluded.

Webinar – European Commission White Paper on Foreign Government Subsidies – December 1, 2020

King’s College London and GW Law will be presenting a free webinar on the European Commission’s “White Paper” on foreign government subsidies, which would impose new EU measures to address foreign subsidies, including in public procurement.

Program information

Comment on European Commission White Paper That Could Exclude “Subsidized” Foreign Vendors from EU Public Procurement

In a guest post in the International Economic Law and Policy Blog, Professors Andrea Biondi and Michael Bowsher QC, King’s College London, Professor Christopher Yukins, George Washington University, Dr Luca Rubini, University of Birmingham, and PhD candidate Gabriele Carovano, King’s College London, addressed a European Commission “White Paper” which proposes (among other measures) to exclude foreign competitors from EU procurements if those vendors receive government “subsidies” (very broadly defined) that boost their ability to compete for public contracts in the European Union.

The European Commission’s proposal could harm U.S. vendors that receive support from the U.S. government — such as COVID-19 relief — because European competitors might claim that U.S. firms were receiving barred government subsidies.

The European Commission’s proposal would define government “subsidies” to include any “financial contribution by a government . . . of a non-EU State . . . which confers a benefit to a recipient . . . and which is limited, in law or in fact, to an individual undertaking or industry.” The commentators pointed out the European Commission’s proposal could badly harm U.S. vendors that receive “subsidies” — which some might argue includes CARES Act relief (related to COVID-19) from the U.S. government — in no small part because European competitors could claim that vendors from abroad were receiving subsidies, and thus in effect disable competition from the United States and other nations.

On June 17, 2020, the European Commission published the “White Paper” that called for  “levelling the playing field as regards foreign subsidies.” The White Paper has several modules, only one of which (Module 3) addresses public procurement directly.  Module 1 would establish a general regulatory instrument to address distortive effects of foreign subsidies, and Module 2 would specifically address distortions caused by foreign subsidies which facilitate the acquisition of EU companies.

The academics submitted their comments to the European Commission as part of the public comment process.  While they were generally supportive of Modules 1 and 2, the academic commentators were sharply critical of Module 3, which the Commission described as follows:

Foreign subsidies could also have a harmful effect on the conduct of EU public procurement procedures. This issue is addressed under Module 3. Foreign subsidies may enable bidders to gain an unfair advantage, for example by submitting bids below market price or even below cost, allowing them to obtain public procurement contracts that they would otherwise not have obtained. Under this Module, the White Paper proposes a mechanism where bidders would have to notify the contracting authority of financial contributions received from non-EU countries. The competent contracting and supervisory authorities would then assess whether there is a foreign subsidy and whether it made the procurement procedure unfair. In this case, the bidder would be excluded from the procurement procedure.

The academic commentators noted:

While foreign subsidies may distort the market regarding undertakings (Module 1) and the acquisition of undertakings (Module 2), foreign subsidies in public procurement markets in effect reduce the costs of public services – and so should be separately assessed.  Distortions that may be caused by foreign subsidies (displacing higher-cost local producers, for example) are regularly resolved through sustainability measures allowed by the European procurement directives. . . .  The framework proposed under the White Paper may . . . displace the legislative regime contemplated by the existing procurement directives, and thus up-end the careful policy decisions that are reflected in those directives.

. . . Module 3 would exclude – disqualify – vendors from public procurements in the European Union, on the grounds that the vendors have received a subsidy from a foreign government.   In practical terms the proposal would revise the European Union’s procurement directives by adding an additional ground for exclusion – foreign subsidy – without a normal legislative process.  In doing so, the proposal could raise costs for Member States, impair competition in procurement markets across the European Union, open the door to strategic interference by competitors, delay and disrupt ongoing procurements, deprive Member States of best value in their public procurements, and undermine Europe’s relations with key trading partners internationally.

. . . [T]he proposal would defer to the European Union’s obligations under free trade agreements, but assumes – incorrectly – that those obligations are well-defined under instruments such as the WTO Government Procurement Agreement.  They are not.  For example, the United States covers tens of billions of dollars in preferences by a single sentence in the GPA annexes, which states that the United States’ obligations do not extend to “any set aside on behalf of a small- or minority-owned business.”  If the European Commission and Member States, in implementing the proposed measures, read that reservation narrowly and excluded U.S. vendors because other procurement preferences were considered government subsidies not reserved under the GPA, trade relations with the United States and other important trading partners could be badly disrupted.

GW Law Webinar Discussed European White Paper

The White Paper was addressed in a GW Law webinar on EU-U.S. trade, and was discussed in detail in an October 8, 2020 webinar sponsored by Wolters Kluwer, the publishing house.  While the public comment period on the White Paper has closed, Eddy De Smijter, Head of the International Relations Unit in DG Competition at the European Commission, made clear during the October 8 session that the Commission continues to welcome informal comments on the proposal.

Book Discussion – “Joint Public Procurement and Innovation: Lessons Across Borders” – September 24, 2020 (webinar)

Held on Thursday, September 24, 2020
Session Recording – Captioning available in 100+ languages – instructions for auto-translate

Join an online discussion of a recently published book on new approaches to procurement, Joint Public Procurement and Innovation: Lessons Across Borders (Bruylant 2019). Selected chapters from the book are available here.

Clockwise: Professors Gabriella Racca, Jean-Bernard Auby, Christopher Yukins, Laurence Folliot Lalliot

Introductions

Jean-Bernard Auby University SciencePo, Paris, France

Gabriella M. Racca University of Torino, Italy

Christopher R. Yukins George Washington University, USA

Laurence Folliot-Lalliot Paris Nanterre University, France

Discussants: Caroline Nicholas, Paulo Magina (photo: Flickr-Lisbon Council), Rozen Nogellous, Stéphane De La Rosa

Discussion

Caroline Nicholas Senior Legal Officer, UNCITRAL

Rozen Noguellou University Paris 1, France

Paulo Magina Head of the Public Procurement Unit, OECD

Stéphane De La RosaUniversity Paris-Est Créteil, France

GW Law Webinar – A Tumultuous Year for Trade

Thursday, 3 September 2020

This year has seen an unprecedented rise in trade barriers – both direct and indirect – involving public procurement.  Join a free 60-minute webinar sponsored by George Washington University Law School’s Government Procurement Law Program, to hear leading experts on emerging trade barriers affecting grants and procurement.

Cybersecurity Controls and the Section 889 “Huawei” Ban:  Scott Sheffler (Feldesman Tucker) and Tom McSorley (Arnold & Porter) will discuss two important measures that the U.S. government is taking to address security risks – the U.S. Department of Defense’s Cybersecurity Maturity Model Certification (CMMC), and the governmentwide interim procurement rule and final grants guidance banning Huawei and other Chinese companies under Section 889 of the National Defense Authorization Act for FY2019

These measures, driven in part by the broadening role of foreign firms in the U.S. government’s supply chain, and in part by the specific challenges posed by Huawei and other Chinese high-technology firms to U.S. security, impose substantial compliance burdens on contractors and grantees in U.S. procurement. For many in the U.S. government, it would be “nothing less than madness to allow Huawei to worm its way into one’s next-generation telecommunications networks,” and Section 889 and parallel initiatives (such as the “Clean Network” initiative) are intended to shield the United States.

In practical terms, the Cybersecurity Maturity Model Certification (CMMC) and Section 889 may make it very difficult – if not impossible – for foreign vendors to compete in U.S. markets

In practical terms, the CMMC and Section 889 may make it very difficult – if not impossible – for foreign vendors to compete in U.S. markets, raising questions under the United States’ international free trade agreements and reciprocal defense procurement agreements. (The vulnerabilities in the U.S. government’s information technology supply chain are the subject of an upcoming GAO report, and a separate private-sector study is assessing barriers to procurement trade generally.) Although the Trump administration, bowing to industry pressure and the Defense Department’s concerns, extended the Section 889 implementation deadline to September 30, 2020 for Defense Department contractors, the compliance burdens remain quite serious.

Trump Buy American in Ypsilanti crowd photo
Donald Trump in Ypsilanti, Michigan

Trump Administration’s “Buy American” Order for Medicines – and the Biden Plan:  From its start, the Trump administration has adopted a broad range of “Buy American” measures, including a recent change to federal grants rules which says that grantees should, when possible, buy U.S. goods. Although even some supporters have criticized the Trump administration’s “Buy American” efforts as ineffective, Trump’s protectionist rhetoric has undoubtedly affected the international debate over free trade in procurement.

In response to the COVID-19 pandemic, on August 6, 2020 President Trump issued an executive order for “on-shoring” the manufacture of essential medicines bought by the U.S. government.  The order calls for limiting U.S. market-opening commitments under the World Trade Organization (WTO) Government Procurement Agreement (GPA) and free trade agreements – a process which could trigger months of renegotiations with trading partners and result in limiting U.S. access to foreign markets.  Jean Heilman Grier, former procurement negotiator at the Office of the U.S. Trade Representative, has written on the Executive Order.  

Democratic candidate Joe Biden

Jean Grier has also written on Democratic candidate Joe Biden’s own Buy American plan, which also calls for broader U.S. domestic preferences. Jean Grier will join Robert Anderson, former lead at the WTO on GPA issues, to discuss trade, procurement and the upcoming U.S. elections.  Jean’s recent posts: (1) Trump’s Buy American Order for Medicines, (2) Buy American legislation, and (3) Biden Buy American Plan.

Impact of the Pandemic: Of course controversial trade measures have been driven in part by the COVID-19 pandemic.

By Rosario “Charo” Gutierrez (USAF)

Robert Anderson co-wrote an article with Anna Mueller of the WTO on the constraints and flexibility afforded by the WTO’s Government Procurement Agreement. For their part, co-moderators Laurence Folliot Lalliot and Christopher Yukins co-wrote a piece in Concurrences, the competition periodical, on the pandemic’s lessons for international markets, including especially the pandemic’s disruptive effect on protectionism. While the pandemic exacerbated economic nationalism and trade barriers, the pandemic also pointed up the sometimes mortal dangers of cutting off international supply chains.

European Trade Measures:  Roland Stein (of the BLOMSTEIN firm, Berlin) and Professor Michal Kania (University of Silesia/Poland) will discuss important developments in access to European procurement markets: 

EU Flags on Castle Street Hull

White Paper — Possible Exclusion of Subsidized Foreign Firms:  Following on 2019 guidance from the European Commission to member states on abnormally low bids from vendors from outside the European Union, in June 2020 the Commission issued a white paper on “levelling the playing field as regards foreign subsidies.”  The white paper launches an EU-wide consultation on how to address foreign subsidies which distort EU procurement markets; among other measures under consideration, member states might exclude vendors that receive foreign subsidies.  The white paper notes that the EU continues to assess the proposed International Procurement Instrument, a measure which has received cautious support from European industry and which would allow member states to raise new barriers against vendors from nations (including potentially the United States and China) that do not cooperate in EU efforts to open procurement markets.

Brandenburg coat of arms

Exclusion for Non-Domestic Content:  Article 85 of EU Directive 2014/25/EU, which governs utilities’ procurement, says that a bid may be rejected if more than 50% of the products being offered would come from nations that have not entered into a free trade agreement with the EU (such as China) – a rarely enforced restriction which, as codified in German law, was recently applied by an important German court, the Brandenburg higher regional court.

Program Moderators: Professor Christopher Yukins (GW Law School) and Professor Laurence Folliot Lalliot (Université Paris Nanterre).

Protectionism in a Pandemic: Does It Make Sense?

The first phase of the COVID-19 pandemic brought a new wave of trade controls, as countries imposed new barriers against trade in vital supplies such as masks and ventilators.  Now as the COVID-19 pandemic enters its next phase – as the disease recedes in some populations, and attacks others with new ferocity – a simple but critical question has come into focus:  do trade barriers make sense in a pandemic?

One striking aspect of the pandemic has been the global supply chain needed for supplies essential to fight the virus.  In an April 2020 report, the World Trade Organization highlighted the global sources for medical supplies, and the World Health Organization and other international organizations have stressed the need for international cooperation in fighting the COVID-19 pandemic.

Zornitsa Kutlina-Dimitrova

Concerns over new protectionism in the United States arose earlier this year, when the Trump administration signaled that the United States might withdraw from the WTO Government Procurement Agreement (GPA) in response to a GAO study which suggested that European exporters enjoy lop-sided access to the federal procurement market.  Lucian Cernat and Zornitsa Kutlina-Dimitrova, trade economists at the European Commission, have responded that the U.S.-EU trade balance in procurement, if read broadly, is actually much more favorable to the United States. 

Robert Anderson

Robert Anderson (previously at the WTO) has pointed out that leaving the GPA could do permanent damage to the postwar trade regime in procurement, and Jean Heilman Grier (a former staffer at the Office of the U.S. Trade Representative who has written extensively on the GPA) has argued that leaving the GPA could severely disadvantage the United States in future trade negotiations.  [Editor’s note: Robert Anderson’s assessment of the flexibilities already available to member parties in times of crisis is available here:  Keeping markets open while ensuring due flexibility for governments in a time of economic and public health crisis: the role of the WTO Agreement on Government Procurement (GPA).] The U.S. business community (including the National Foreign Trade Council) has also lodged strong objections to leaving the GPA. Perhaps as a result of the many voices of opposition, the Trump administration’s initiative to leave the GPA has quieted, at least for now.

Jean Heilman Grier

Another potential Trump administration initiative would impose new trade controls to force pharmaceutical companies to bring their production to the United States.  This initiative, long pressed by senior White House trade advisor Peter Navarro, appears to have faded as well.

The Trump administration instead took a focused approach to trade controls, when on April 10, 2020 the Federal Emergency Management Agency imposed export controls under the Defense Production Act on personal protection equipment, including certain masks and gloves.  At the same time, companies such as 3M were being savaged by President Trump for shipping emergency supplies abroad, even when (as 3M made clear) those shipments might be critical to other countries’ efforts to fight the pandemic.    

Tom McSorley

But even the Trump administration’s most aggressive export controls, such as those aimed at Iran, Cuba, Venezuela and other sanctioned nations, will not necessarily block life-saving supplies.  As Tom McSorley and his colleagues have pointed out, exceptions built into the U.S. export regime will still allow humanitarian supplies to reach Iran and other nations under U.S. sanctions.  The FEMA ban on exports of PPE also allows for exceptions – under FEMA’s approval – for humanitarian purposes, Tom McSorley and his colleagues have noted. [Editor’s update: FEMA’s exceptions to the export ban — including a blanket exception for shipments to Canada and Mexico — are published in draft form here.]

Even more striking was the Trump administration’s decision to waive certain import controls – long the heart of Trump’s “Buy American” rhetoric – on vital items in short supply, from N95 masks to bleach. In normal times, the U.S. General Services Administration, which runs “schedule” contracts used by federal agencies for tens of billions of dollars in annual sales, complies with the Trade Agreements Act (TAA) by banning supplies from countries that have not entered into free trade agreements with the United States (“non-TAA” countries).  Because of acute shortages in fighting the pandemic, however, GSA has temporarily lifted that ban for certain supplies.  [Editor’s note: Jean Grier’s summary of this development is at Perspectives on Trade:  ‘US Temporarily Lifts Procurement Ban’] The Trump administration’s abrupt volte face suggests that trade controls can raise dangerous barriers in times of crisis.

Even more striking was the Trump administration’s decision to waive certain import controls – long the heart of Trump’s “Buy American” rhetoric – on federal procurements of vital items in short supply

Simon Evenett – University of St. Gallen (Switzerland)

U.S. trade controls in the pandemic are part of a broader trend around the world, as nations try to reshape trade flows to husband supplies needed to address the COVID-19 disease.  Those trade controls, which Simon Evenett of the University of St. Gallen calls “sickening-thy-neighbor” measures, raise serious humanitarian and political questions now that some countries no longer need equipment that is desperately sought in other nations.  With the pandemic receding, New York will now share ventilators it no longer needs with Maryland and Ohio; should the United States do the same for Senegal, or for new hotspots such as Sweden?  And what role should international institutions, such as the WTO, the World Bank and the OECD, play in facilitating international cooperation rather than trade barriers – global cooperation, as Laurence Folliot Lalliot has argued, that will be needed to save lives. (An update: EU Commissioner Phil Hogan on April 16, 2020 called for a temporary international ban on tariffs for vitally needed COVID-19 supplies, and made clear that European Union cannot “on-shore” its manufacturing in the long term — it will continue to rely on an international supply chain for key medical supplies.)

Laurence Folliot Lalliot – University of Paris Nanterre

Solving that puzzle – weighing protectionism in the pandemic – may require a new set of policy metrics.  Zornitsa Kutlina-Dimitrova of the European Commission has argued that trade restraints make little sense when weighed against the secondary economic effects (e.g., the industrial atrophy, the isolation from innovation) that trade controls cause.  Her research bears special attention now, when human lives – not just dollars – weigh in the balance.

Editor’s note:  Join a free GW Law webinar on Tuesday, April 21, 2020 at 9:00 ET/14:00 UK/15:00 CET/21:00 CST.  Simon Evenett, Robert Anderson, Jean Heilman Grier, Tom McSorley and Zornitsa Kutlina-Dimitrova (invited) will convene before a worldwide audience to discuss “Protectionism in the Pandemic.”  The program will be moderated by Laurence Folliot Lalliot, Vanessa Sciarra of the NFTC and Christopher Yukins.  Program information and registration.