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.
Program Recording –Instructions on Using Auto-Captioning in 100+ Languages
Tom McSorley, Arnold & Porter (Washington DC) – BioHumanitarian 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))
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.
Counterfeit goods (photo: USCBP)
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 The grounds for that protest may never be known, since the protest was withdrawn on February 24, 2020.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)
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.
Peter Navarro
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.
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)
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
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
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 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:
Ricardo Campello
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:
Robert Anderson
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.
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.
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
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.”).
On February 20, 2019, Dr. Colette Langos, a Senior Lecturer at the University of Adelaide, made a very interesting presentation at GWU Law School, on developments in Australia’s bid protest procedures. She explained that these latest reforms, outlined in her attached slides, were an important part of Australia’s accession to the WTO Government Procurement Agreement.
On January 31, 2019, President Trump issued an Executive
Order encouraging federal grantees to “Buy American” when purchasing iron, aluminum,
steel and certain manufactured products for infrastructure projects funded by
federal grants. Although the Executive Order on Strengthening
Buy-American Preferences for Infrastructure Projects only directs federal
agencies to encourage grantees to “Buy
American,” it also calls for federal agencies to assess whether federal
grantees (including state and local governments) might be required to buy
U.S.-made goods in the future.
“We want American roads, bridges, and railways, and everything else to be built with American iron, American steel, American concrete, and American hands.”
White House economist Peter Navarro, a key proponent of closing
U.S. borders to international trade, published an op-ed
on Fox News before the order was released, explaining and supporting the
order. As the President and Peter Navarro
made plain in the signing
ceremony in the Oval Office, the new order is part of a broader White House
initiative to boost U.S. manufacturing, a central theme in Trump’s reelection
efforts.
The order highlights a gap in trade agreements, because federal
grants are generally excepted from U.S. trade agreements that require open
trade in procurement. See, e.g., WTO Government Procurement
Agreement, U.S.
Annex 7, General Notes, para. 2.
But even though federal grants
are not themselves subject to the trade agreements, state grantees using
federal funds for their own procurements may be covered by those agreements —
and thus may not be able to discriminate against covered foreign vendors when
they procure using federal grant funds. Two-thirds
of the states, for example, are members of the World Trade Organization’s Government
Procurement Agreement, and so have committed not to discriminate in certain
purchases from other members of the GPA.
The new Trump executive order defers to those prior commitments to open
trade in procurement.
The new order calling on grantees to discriminate across borders contrasts sharply with prior White House guidance, through the Office of Management & Budget (OMB), 2 CFR 200.319(b), which requires many grantees to “conduct procurements in a manner that prohibits . . . state, local, or tribal geographical preferences in the evaluation of bids or proposals.” This prior OMB guidance barring grantees from domestic geographic preferences aims to encourage maximum competition in procurements using grant funds; the new order, calling for international discrimination, logically would probably hurt competition.
If grantees follow the President’s admonition and only “Buy
American,” experience suggests that public projects under federal grants may
take longer and cost more. Under Section
1605 of the American Recovery and Reinvestment Act of 2009 — which imposed a
similar “Buy American” requirement — GAO found that grantees
faced severe operational problems when they were forced to comply with similar “Buy
American” requirements. For many of
these same reasons, the National Association of State Purchasing Officers
(NASPO) has opposed
geographic preferences in procurement, because they can undermine competition and
hurt best value.
In her posting on the new executive order, Jean Heilman Grier suggested that this order is a logical successor to Trump’s April 2017 executive order which called for federal agencies to “Buy American and Hire American.” While that earlier order encouraged federal agencies to Buy American whenever they can, this order extends that admonition to federal grantees.
Because of the latticework of policies and agreements which bar or discourage discriminatory procurement by state and local governments, it is unclear exactly what impact this new executive order may have on federal grantees’ purchasing. What is clear, however, is that even the most aggressive “Buy American” requirements in procurement are unlikely to have any serious impact on the nation’s trade deficit. At the federal level, a December 2018 GAO report showed that only roughly 1.5% of federal procurement ($7.8 billion of approximately $500 billion per year) were foreign products — compared to a national trade deficit of $566 billion in 2017. Foreign purchases probably total an even smaller share of state and local procurement, compared to federal purchases from abroad, because trade agreements force open a much smaller portion of state and local public markets. In sum, therefore, no matter how aggressively federal grantees implement the executive order, it is unlikely that the new order, though trumpeted for political reasons, will reduce the U.S. trade deficit in any significant way.
