International Trade – Page 2 – Public Procurement International

GW Law Webinar – A Tumultuous Year for Trade

https://youtu.be/FAHevXarxzk

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.

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.

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:

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.

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.

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 (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.

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.

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.

Protectionism in the Pandemic – Webinar – April 21, 2020

Register here

Tuesday, April 21, 2020, 9:00 ET/14:00 UK/15:00 CET/21:00 CST

Governments around the world are imposing trade controls that may cut off access to life-saving equipment. GW Law held an open webinar on protectionism in the COVID-19 pandemic – the barriers to imports and exports that threaten to deepen the pandemic. The program materials are below.

https://youtu.be/-y1c5w8R0jM

Program Recording –Instructions on Using Auto-Captioning in 100+ Languages

Program Slides Download

Program Chat Download

Background article (with key resources) for this webinar

The April 21, 2020 webinar had registrants from over 25 countries and five continents

The panelists discussed:

Understanding barriers to trade in COVID-19 critical supplies;
A new U.S. government order banning exports of essential medical supplies;
How humanitarian supplies can be shipped despite US export sanctions;
US threats to withdraw from the WTO Government Procurement Agreement; and,
Emerging approaches to assessing trade barriers’ economic impacts.

Presented with the kind cooperation of the National Foreign Trade Council

Panelists

Simon Evenett, University of St Gallen (Switzerland) – Bio COVID-19 Trade Report

Robert Anderson, Hon. Professor, U. Nottingham (WTO-retired) – Bio – Works – 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) (draft – forthcoming, Public Procurement Law Review)

Jean Heilman Grier, Djaghe Consulting (Washington DC) – Bio Works – Perspectives on Trade: ‘US Temporarily Lifts Procurement Ban’

Tom McSorley, Arnold & Porter (Washington DC) – Bio Humanitarian aid US Export Controls

Zornitsa Kutlina-Dimitrova, European Union – DG for Trade – Bio – Works

Moderators: Christopher Yukins, GW Law School; Vanessa Sciarra, National Foreign Trade Council; Laurence Folliot Lalliot (University of Paris Nanterre (joining from Dakar))

Resources on COVID-19 and Procurement

Previous Webinars (and recordings)

Fighting Fraud in COVID-19 Sourcing – Webinar – April 9, 2020

Straight Talk: Emergency Procurement in the COVID-19 Pandemic – April 2, 2020

Public Contracts and the Coronavirus – Online Colloquium – March 24, 2020

Trump Administration’s Fight Against Counterfeit Trade May Impact GSA’s Electronic Marketplaces Initiative — Which Is No Longer Stalled by Protest

As a result of its January 2020 trade deal with China, under which the United States agreed to find new ways to stop counterfeit goods in online marketplaces, the Trump administration has stepped up its fight to stop counterfeit goods from China – and that fight may have a direct impact on a pending GSA procurement (no longer under protest) to open commercial online marketplaces to federal purchasers.

In a recent piece, Jason Miller of Federal News Network asked whether President Trump’s January 31, 2020 Executive Order, Ensuring Safe & Lawful E-Commerce for US Consumers, Businesses, Government Supply Chains, and Intellectual Property Rights, may affect the U.S. General Services Administration (GSA) “electronic marketplaces” acquisition.

GSA’s “electronic marketplaces” procurement was previously stalled by a protest by Overstock.com at the U.S. Government Accountability Office (GAO). The grounds for that protest may never be known, since the protest was withdrawn on February 24, 2020. The “electronic marketplaces” procurement would allow federal officials (users – not necessarily contracting officials) to make billions of dollars in micro-purchases (generally below $10,000) directly from the awardee commercial e-commerce platforms.

President Donald J. Trump (Official White House photo by Shealah Craighead)

The January 31, 2020 Executive Order, which press reports made clear was aimed at counterfeit goods on Amazon and other online marketplaces, said this in relevant part:

Section 1. Policy. E-commerce, including transactions involving smaller express-carrier or international mail packages, is being exploited by traffickers to introduce contraband into the United States, and by foreign exporters and United States importers to avoid applicable customs duties, taxes, and fees.

* * * *

It is the policy of the United States Government that any person who knowingly, or with gross negligence, imports, or facilitates the importation of, merchandise into the United States in material violation of Federal law evidences conduct of so serious and compelling a nature that it should be referred to U.S. Customs and Border Protection (CBP) of the Department of Homeland Security for a determination whether such conduct affects that person’s present responsibility to participate in transactions with the Federal Government.

It is the policy of the United States Government, as reflected in Executive Order 12549 of February 18, 1986 (Debarment and Suspension), and elsewhere, to protect the public interest and ensure the integrity of Federal programs by transacting only with presently responsible persons. In furtherance of this policy, the nonprocurement debarment and suspension system enables executive departments and agencies to exclude from Federal programs persons who are not presently responsible. CBP implements this system by suspending and debarring persons who flout the customs laws, among other persons who lack present responsibility. To achieve the policy goals stated herein, the United States Government shall consider all appropriate actions that it can take to ensure that persons that CBP suspends or debars are excluded from participating in the importation of merchandise into the United States.

It is the policy of the United States Government that express consignment operators, carriers, hub facilities, international posts, customs brokers, and other entities, including e-commerce platform operators, should not facilitate importation involving persons who are suspended or debarred by CBP.

Senior White House trade adviser Peter Navarro said this on CNN on the same day:

The DHS will immediately begin working to combat trafficking in counterfeit and pirated goods by: aggressively applying civil fines and penalties to bad actors, suspending and debarring repeat offenders and treating foreign sellers of goods as responsible parties subject to sanctions.

As this new report documents, the private sector can do much more to combat counterfeit and pirated products trafficking. It sets forth a set of private sector “best practices” that include: significantly enhanced third-party marketplace vetting; limits on high-risk products such as prescription drugs, infant formula and airbag components; rapid notice and takedown procedures; and pre-sale identification of third-party sellers. The administration also wants e-commerce platforms to provide clearly identifiable country of origin disclosures, which brick-and-mortar retail providers are required to provide but online sellers often are not.

These best practices are not meant as mere suggestions. The federal government will use all means necessary to encourage rapid adoption and to monitor progress.

Taken together, these announcements suggest:

GSA’s assessment of the electronic marketplaces bidders may include the “best practices” outlined by Peter Navarro. Navarro called on Amazon and other e-commerce platforms to fight counterfeits in the wake of the recent U.S. trade agreement with China, and he again cited those “best practices” in an interview with the Washington Post, in which he sharply criticized Amazon and others for not having adequate protections against counterfeiters. GSA’s “Statement of Objectives” for the electronic marketplaces procurement already calls on the e-marketplaces to control supply chain risk; the revised solicitation was not explicit as to whether these new anti-counterfeit concerns would also be part of the technical evaluation and/or the contracting officer’s responsibility assessment for award.
The Trump administration’s focus on preventing counterfeits suggest that federal users buying directly with government purchase cards may be required, or at least strongly encouraged, to use the e-commerce platforms eventually approved under GSA’s “electronic marketplaces” initiative. Federal users, in other words, may be discouraged from making direct purchases outside the GSA-approved platforms.
Mass debarments of vendors on the e-commerce platforms — which are very possible, because the government has no other ready means (e.g., past performance or technical evaluations, responsibility determinations, etc.) to protect itself when federal users make rapid purchases from the e-commerce platforms — may begin with Customs and Border Protection (CBP) debarments:
- CBP may target for debarment any third-party vendor on an e-commerce platform that “knowingly, or with gross negligence, imports, or facilitates the importation of, merchandise into the United States in material violation of Federal law.” While the Executive Order focuses on counterfeits and contraband, in principle a wider array of importing firms may be at risk if they facilitate violations of federal law.
- The e-commerce platforms themselves may be targeted for debarment, on the same grounds. Since each user micro-purchase is a new purchase, debarment (a bar against purchasing) may in effect disable an e-commerce platform from selling to further federal purchasers.

Colloquium: What Happens If the U.S. Leaves the WTO Government Procurement Agreement?

Tuesday, February 18, 2020, 9 to 11 am – GWU Law School, Law Learning Center, 2028 G Street NW, Room LLC006

WTO Government Procurement Agreement Members and Observers

According to press reports, the Trump administration is mulling an executive order that would trigger U.S. withdrawal from the WTO Agreement on Government Procurement (GPA). This free colloquium will assess the United States’ potential withdrawal from the GPA, which would deprive U.S. suppliers of a key point of access to public procurement markets internationally — although the GPA, experts note, has set global standards and opened an estimate $1.7 trillion dollars annually in business opportunities. The United States could forfeit access to important public procurement markets in Canada and many other countries, and the United States could lose its leadership role (which dates back to World War II) in shaping global standards in public procurement, even as more countries (such as Brazil) are joining the GPA.

Colloquium will be held downstairs at the GWU Law Learning Center – 2028 G Street NW (photo: Google)

Resources

Flyer-Colloquium-GPA Withdrawal Download

Jean Heilman Grier, Consequences of Potential U.S. Withdrawal from GPA (Djaghe.com)

Robert Anderson & Christopher Yukins, Withdrawing the United States from the WTO Government Procurement Agreement (GPA): Assessing Potential Damage to the U.S. and Its Contracting Community, 62 Gov. Contractor para. 35 (Feb. 12, 2020)

Acetris Health LLC v. United States (Fed. Cir., Feb. 10, 2020) (Dyk, J.)

Panelists

Jean Heilman Grier is a leading internationally recognized expert on the World Trade Organization’s (WTO) Government Procurement Agreement (GPA), bilateral and regional agreements, international trade negotiations and international procurement systems. She has more than 30 years of experience in international trade as a U.S. trade negotiator, lawyer, adviser and consultant, including as the government procurement negotiator for the U.S. government. For a decade, she represented the United States in the WTO Committee on Government Procurement where she played a leading role in the revision of the GPA and accessions to the Agreement. Since 2013, she has been the Trade Principal with Djaghe, LLC., where she advises and provides technical assistance to governments, international organizations, businesses and trade groups on international procurement and trade issues. She writes extensively on international procurement and other international trade topics, and maintains a blog, Perspectives on Trade, at http://trade.djaghe.com; there, she recently published a piece on the impacts that the United States leaving the GPA could have.

Robert Anderson is a teacher and independent researcher on matters relating to the multilateral trading system, competition policy and government procurement. He previously worked in the Secretariat of the World Trade Organization from 1997 through 2019, and held the position of Counsellor and Team Leader for Government Procurement and Competition Policy in the Organization from 2005 through 2019.

Current academic positions include that of Honorary Professor in the School of Law at the University of Nottingham (United Kingdom). Mr Anderson also is an external faculty member at the World Trade Institute, the University of Bern (Switzerland); the University of Rome Tor Vergata (Italy); and the Catholic University of Lyon (France). He also has been a guest speaker, on multiple occasions, in relevant courses of the George Washington University Law School (United States).

Roundtable Participants: Michael Bowsher QC (Monckton Chambers, London) – Andrea Sundstrand (University of Stockholm) – Pascal Friton (Blomstein, Berlin) – Paul Lalonde (Dentons, Toronto) – Colette Langos (University of Adelaide) – Christopher Yukins (GWU Law School)

Program information: Cassandra Crawford, ccrawford@law.gwu.edu

Brazil Update: Government Will Seek to Exclude Health and Defense Sectors from GPA

BY RICARDO CAMPELLO – Guest Author

A major Brazilian newspaper has reported that the Brazilian Federal Government wants to exclude from Brazil’s commitments under the WTO Government Procurement Agreement (GPA) Brazilian procurements for defense and health-related goods and services (link to the article in Portuguese). It is also said that, for now, Brazil`s accession proposal contemplates only procurements by the federal government. State and local governments’ procurements would not be included.

Compared to other procurement defense markets, Brazil`s is not that big. In 2019, the budget of the Federal Government`s Ministry of Defense was approximately USD 25 billion, but more than half of this was used to pay personnel expenses (according to the Federal Government`s website: http://www.portaltransparencia.gov.br/funcoes/05-defesa-nacional?ano=2019). The money spent with goods and services (not necessarily weapons or defense-specific) was around USD 3 billion.

Ricardo Campello –
GWU Law LLM Candidate

The budget of the Brazilian Ministry of Health is bigger — around USD 35 billion in 2019 (according to the Federal Government`s website: http://www.portaltransparencia.gov.br/funcoes/10-saude?ano=2019). This is due mainly to Brazil`s public healthcare system, called “SUS,” under which citizens are entitled to receive almost any treatment for free (including drugs, medical devices and medical procedures). A substantial portion of these funds goes to pay for healthcare-related goods and services. It is a huge procurement market.

The official reason for the exclusion of these sectors is that they are too strategic. But strategic how? The newspaper piece does not clarify. Is it a question of national security strategy? Or are these sectors strategic for industrial policy purposes? And is this true for absolutely all procurements of these departments of the Federal government? Also, why would enhancing competition and, consequently, reducing corruption and the government`s procurement costs – all potential outcomes from Brazil`s accession to GPA – not be desired in these strategic sectors? The GPA has flexibilities for developing countries to protect their industrial bases by making the transition to the GPA’s free markets smoother. Why not use these tools instead of excluding entire procurement sectors from coverage?

Finally, the newspaper piece also noted that discussions regarding GPA coverage between the Federal Government and GPA members is just part of the necessary negotiations. Brazil’s Congress will have to approve Brazil`s accession to the agreement as well. As one can see, the Brazilian government’s announcement that it will seek to join the GPA is just the beginning of a long and complex negotiation process, both internationally and nationally. There is a lot more to come.

Editor’s Note: For the United States, trade with its allies in defense items – materiel, services and research/development – is normally opened (and opened comprehensively) through separate reciprocal defense procurement agreements. Thus, while the United States may resist Brazil’s efforts to protect its public health markets under the GPA, the United States may prove willing to reserve defense issues to negotiation of a separate Brazil–U.S. reciprocal defense procurement agreement, which has been raised as a possibility by industry.

In Startling Reversal, Brazil Announces It Will Seek to Join WTO Government Procurement Agreement

In a surprising break from decades of protectionism regarding its public procurement markets, Brazil has announced that it will seek to join the World Trade Organization (WTO) Government Procurement Agreement (GPA). Accession to the GPA (see J. Heilman Grier, The WTO Government Procurement Agreement (Djaghe 2020)) could open Brazil’s public procurement markets, which have been estimated to total over US$150 billion annually, to competition from other GPA members; it would also give Brazilian exporters access to the public markets in other GPA members, including the United States. If it overcomes concerns in Brazilian industry and succeeds in acceding (China’s accession has been pending for over a decade), Brazil would be one of the first major low-cost producers to join the GPA, which could cause shifts in public procurement markets worldwide.

George Washington University Law School LLM candidate and Brazilian attorney Ricardo Campello commented:

The Brazilian Minister of Economy, Mr. Paulo Guedes, announced yesterday (January 21, 2020) during the World Economic Forum in Davos that Brazil will formally request to join the GPA as a full member (since 2017, Brazil has had an “observer” status). The announcement was reported in Brazil`s biggest newspaper for corporate matters, called “Valor Econômico” (link to the article in Portuguese). As reported, the request is being prepared and can be submitted soon, maybe even before the end of the Forum. Joining the GPA will help Brazil to incorporate best procurement practices and will also be a full attack against corruption, said Mr. Guedes. When asked about the possible impact to local companies, Mr. Guedes answered that Brazil can no longer have this type of mentality which only contributes to the exploitation of Brazilian consumers and taxpayer funds by local companies. In this regard, it`s mentioned that the fact that Brazil will soon no longer be able to have price preferences in favor of local suppliers against European companies, due to the free-trade agreement signed between Mercosur and the European Union, contributed to the decision to join the GPA. This is the first time Brazil`s government officials have expressed the country`s intention to join the GPA as a full member. As Brazil`s Senate is currently discussing the country`s new procurement system, it would not hurt to consider the GPA’s requirements in such discussions.

Robert Anderson, formerly Senior Counsellor and Team Leader for Government Procurement at the World Trade Organization and now Honorary Professor at the School of Law of the University of Nottingham (UK), commented as follows:

The announcement yesterday by the Brazilian Minister of the Economy, Mr. Paulo Guedes, during the World Economic Forum in Davos, that Brazil will seek to join the WTO Agreement on Government Procurement (GPA) represents a huge step forward for Brazil. Joining the GPA will align Brazil’s procurement system with best practices internationally, provide Brazilian suppliers with unfettered access to huge markets for goods and services in the US, Europe and elsewhere, and send a powerful signal to the global community regarding Brazil’s determination to grapple successfully with past corruption and supplier collusion problems in its procurement system. It will establish Brazil as an important thought and practice leader in this area across Latin America and the developing world. The announcement also shows the continuing vitality of the GPA itself, which was modernized in 2012 and continues to gain new members, year by year. Minister Guedes’ announcement will be enthusiastically welcomed by advocates of good governance and procurement reforms across the globe.

ABA Public Contract Law Section – International Procurement Committee – Presentation on International Trade Agreements – October 10, 2019 – Noon to 1:30 pm

Join a special presentation on the United States’ international trade agreements in procurement. Chris Yukins and Allen Green will present on their chapter in The Contractor’s Guide to International Procurement (American Bar Association 2018) (Erin Loraine Felix & Marques Peterson, eds.). They will give an overview of international trade agreements, and discuss recent “Buy American” developments in the Trump administration. The program will be held at the Dentons law firm, 1900 K Street NW, from 12-1:30 pm. Lunch will be served.

Call-in information: +1-877-211-3621 Passcode: 788 499 1844

Program Presentation Download

International Trade Agreements and U.S. Procurement Law

Chapter by Christopher R. Yukins & Allen B. Green, in The Contractor’s Guide to International Procurement (American Bar Association 2018) (Erin Loraine Felix & Marques Peterson, eds.)

Available at: https://ssrn.com/abstract=3443244

Some of the most difficult issues in U.S. procurement law stem from the nation’s several centuries of accumulated protectionist measures, and from a patchwork of trade agreements meant to contain that protectionism. These conflicting measures reflect a push-and-pull in U.S. procurement policy, between those who favor closed procurement markets and those who favor open competition; the compromises reached between the two camps have created a Byzantine set of rules and requirements. At the same time, though, this area of law holds a special promise for the future of procurement, for cross-border agreements currently offer the readiest means of erasing anti-competitive differences between national rules, by bringing many nations to a common standard of international best practice. To make sense of this complex area, this chapter proceeds in three parts. Part II reviews the major pieces of protectionist legislation passed by Congress, focusing first on the Buy American Act of 1933; this discussion also references some of the most important implementing regulations. Part III reviews the most important U.S. trade agreements which have limited the force of that protectionist legislation, including the World Trade Organization’s Agreement on Government Procurement (GPA). Because barriers to procurement can also arise from structural factors — “non-tariff barriers to trade” which, in practice, may protect domestic vendors — this part also explains how the trade agreements mitigate those non-tariff barriers. Finally, Part IV concludes by offering some practical suggestions for those working in this field, and suggests a possible road ahead for cooperation in international procurement markets.

Yukins, Christopher R. and Green, Allen, International Trade Agreements and U.S. Procurement Law (2018). Chapter 9 to The Contractor’s Guide to International Procurement (American Bar Association 2018) (Erin Loraine Felix & Marques Peterson, eds.); GWU Law School Public Law Research Paper No. 2019-55; GWU Legal Studies Research Paper No. 2019-55. Available at SSRN: https://ssrn.com/abstract=3443244

Professor Piga Urges Italian Support for Small- and Medium-Sized Businesses in Response to Trump Buy American Initiative

In an editorial published in Italian newspaper Il Sole 24 Ore, Professor Gustavo Piga of the University of Rome – Tor Vergata, an activist in Italian politics and and a leader in the international procurement community, responded to an article by Christopher Yukins assessing the Trump administration’s latest Buy American initiative. Professor Piga argued that, though the actual impact of the Trump order might be minimal (as Professor Yukins pointed out), Italian policymakers should emulate U.S. support for small businesses, which the U.S. undertakes through protectionist preferences. Professor Piga closed: “GliStatiUniti lo insegnano chiaramente: non pensando per le piccole, smettiamo di pensare in grande.” (“The United States clearly teaches this: by not thinking of the small, we stop thinking big.”).