World Trade RESTRICTED
Organization WT/TPR/S/102 26 June 2002(02-3443)
Trade Policy Review Body
TRADE POLICY REVIEWEUROPEAN UNION Report by the Secretariat
This report, prepared for the sixth Trade Policy Review of the European Union, has been drawn up by the WTO Secretariat on its own responsibility. The Secretariat has, as required by the Agreement establishing the Trade Policy Review Mechanism (Annex 3 of the Marrakesh Agreement Establishing the World Trade Organization), sought clarification from the European Commission on the EU's trade policies and practices. Any technical questions arising from this report may be addressed to Mr. Willy Alfaro (tel. 022-739 53 72). Document WT/TPR/G/102 contains the policy statement submitted by the European Commission.
Note:
This report is subject to restricted circulation and press embargo until the end of the meeting of the Trade Policy Review Body on the European Union.
I. Economic environment
(1) Main Characteristics
1. The 15 Member States of the European Union (EU) cover a land area of 3.2 million km2 and have a combined population of 377million (Table I.1). Among the 15, the "euro area" is composed of 12 Member States - Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Spain, and Portugal. The GDP of the EU was some 8,500 billion in 2000 (17% of world GDP)[1], and per capita income was 22,520 in 2000. Thirteen countries have requested accession to the EU (ChapterII(2)); if and when all accede, the EU will gain around 45% in population, 34% in land area, and 7% in GDP.
aEuro, measured on the basis of purchasing power standards (PPS). Source: European Central Bank (2001b); Eurostat (2001); Eurostat, "Gross Domestic Product 2000", Theme 2 – 24/2001; United States Department of Commerce (2001b); WTO (2000b).
Major features of the EU and euro area, 2000
Table I.1
| Area |
Population |
GDP per capita |
Share in GDP (per cent) |
|
(000 km2) |
(million) |
Euro |
PPSa |
Agriculture, forestry and fishery products |
Industry |
Services |
| European Union |
3,191 |
376.5 |
22,520 |
22,520 |
2.0 |
26.0 |
72.0 |
| Euro area |
2,454 |
302.7 |
21,530 |
22,320 |
2.7 |
28.8 |
68.5 |
| Austria |
84 |
8.1 |
25,390 |
24,710 |
1.4 |
32.3 |
66.3 |
| Belgium |
31 |
10.2 |
23,990 |
24,900 |
1.4 |
24.0 |
74.7 |
| Denmark |
43 |
5.3 |
32,980 |
27,070 |
2.3 |
22.7 |
75.0 |
| Finland |
337 |
5.2 |
25,510 |
23,220 |
3.1 |
29.7 |
67.1 |
| France |
544 |
59.3 |
23,250 |
22,250 |
2.6 |
23.3 |
74.1 |
| Germany |
357 |
82.2 |
24,750 |
23,630 |
1.1 |
28.0 |
70.9 |
| Greece |
132 |
10.6 |
11,530 |
15,270 |
8.1 |
23.0 |
68.9 |
| Ireland |
70 |
3.8 |
27,220 |
26,640 |
4.5 |
40.9 |
54.6 |
| Italy |
301 |
57.7 |
20,190 |
22,890 |
2.6 |
26.2 |
71.2 |
| Luxembourg |
3 |
0.4 |
46,370 |
42,860 |
0.6 |
17.8 |
81.6 |
| Netherlands |
42 |
15.9 |
25,180 |
26,270 |
2.6 |
24.2 |
73.2 |
| Portugal |
92 |
10.0 |
11,400 |
16,590 |
3.3 |
26.4 |
70.3 |
| Spain |
506 |
39.4 |
15,360 |
18,250 |
3.3 |
27.6 |
69.2 |
| Sweden |
450 |
8.9 |
27,800 |
22,960 |
1.8 |
28.8 |
69.3 |
| United Kingdom |
244 |
59.6 |
25,690 |
23,340 |
0.9 |
25.4 |
73.7 |
| Memorandum: |
|
|
|
|
|
|
|
| United States |
9,373 |
274.0 |
39,200 |
35,280 |
1.4 |
21.9 |
76.8 |
| Japan |
378 |
126.3 |
40,610 |
25,080 |
1.7 |
33.0 |
65.3 |
aEuro, measured on the basis of purchasing power standards (PPS). Source:European Central Bank (2001b); Eurostat (2001); Eurostat, "Gross Domestic Product 2000", Theme 2 – 24/2001; United States Department of Commerce (2001b); WTO (2000b).
2. Services account for 72% of the EU"s GDP, while agriculture, forestry and fishery products together account for 2%, with the remainder attributed to industry and construction. Agriculture, forestry and fishery products account for 4.3% of the civilian labour force of the EU, industry and construction account for 29%, and services for 67%.[2]
3. External merchandise exports of US$859 billion in 2000 made the EU the largest entity in world merchandise exports (17%), and the second largest world importer (18% of world imports), with US$966 billion of merchandise imports.[3] With respect to external (cross-border) trade in commercial services, the EU had exports of 291 billion and imports of 286 billion in 2000.[4] The EU dominated world foreign direct investment outflows (excluding intra-EU flows) in 2000, accounting for 47% of the total, and attracting 20% of total FDI inflows.[5] The EU held 1,549 billion in foreign direct investment stocks in 2000, about one-half of which are held in the United States.
(ix)Government procurement
67. The Commission continues to give priority to the opening up of public procurement to competition due to its importance in the market for goods and services – some 16% of Community GDP, or over 1,350 billion, in 2000 – and potential benefits in terms of a better use of public monies and a more efficient allocation of resources[6]The Community framework to attain this objective, consisting of harmonizing directives for Member State legislation on procurement adopted in the context of the Single Market, has not been modified during the period under review. To consolidate the existing framework and make substantive amendments to provisions, the Commission issued proposals for two Directives[7], and for a regulation to mandate the use of the "Common Procurement Vocabulary (CPV)" to ensure full comparability of published tenders.[8] Standard forms are to be used as from 1 May 2002 in contract notices published in the Official Journal.[9]
68. An indicator of the extent to which procurement is "open" to competition is the share of procurement that is openly advertised in the Official Journal (Table III.5). According to the latest available figures, some 15% of all procurement in the EU (about 205 billion) was advertised in the Official Journal in 2000, up by almost 100% from 1995. All Member States recorded considerable improvement in this respect, with the exception of Germany, the largest procurement market in the EU, which raised the share of advertised procurement from 5% to 6%, and Portugal, which maintained its share at 15%. In relation to GDP, the share of openly advertised procurement has also risen considerably since 1995 in all Member States, with the exception of Greece, Portugal, and Germany, to reach 2.41% of EU GDP.
Open procurement indicators, 1995 and 2000
Table III.5
| MEMBERSa |
|
EU |
B |
DK |
D |
EL |
E |
F |
IR |
I |
L |
NL |
A |
P |
FI |
S |
UK |
| Openly advertised public procurement (% of total procurement) |
| 1995 |
8 |
7 |
16 |
5 |
34 |
9 |
5 |
11 |
10 |
5 |
5 |
5 |
15 |
8 |
12 |
15 |
| 2000 |
15 |
16 |
21 |
6 |
38b |
25 |
15 |
21 |
18 |
12 |
11 |
13 |
15 |
13 |
20 |
22 |
| Openly advertised public procurement (% of GDP) |
| 1995 |
1.44 |
0.99 |
2.67 |
0.91 |
4.87 |
1.18 |
0.94 |
1.54 |
1.23 |
0.8 |
0.99 |
0.83 |
2.19 |
1.3 |
2.41 |
3.28 |
| 2000 |
2.41 |
2.32 |
3.55 |
0.96 |
4.37 |
3.25 |
2.44 |
2.6 |
2.17 |
1.67 |
2.19 |
2.31 |
2.12 |
2.01 |
3.67 |
3.81 |
aB: Belgium; DK: Denmark; D: Germany; EL: Greece; E: Spain;F: France; IR: Ireland; I: Italy; L: Luxembourg;NL:The Netherlands;A:Austria;P: Portugal; FI: Finland; S:Sweden; UK: United Kingdom.
b1999.
NoteThe term "openly advertised" refers to publication in the Official Journal.
Source: Eurostat, Public procurement 1 and 2, Key Indicators.
69. Suppliers of goods and services from parties to the WTO plurilateral Agreement on Government Procurement (GPA) may tender for contracts (above specified thresholds) in accordance with the commitments assumed by the EU.[10] In addition, the regional trade agreements recently concluded by the EU (Chapter II(4)(ii)) provide for reciprocal access to procurement.
(b)Proposed legislative framework
Current framework70. Under the current legislative framework, three directives concern public supplies, works, and services[11], complemented by a remedies directive.[12] Another directive concerns the procurement by publicly owned entities and private entities with special or exclusive rights operating in the water, energy, transport, and telecommunication areas (utilities directive)[13], also complemented by a remedies directive.[14] The scope of application in each of the directives is established by minimum thresholds for contracts, which correspond where necessary to those in the GPA, while below-threshold contracts are covered by the provisions and principles of the EC Treaty.71. During the period under review, the Commission has pursued a "more systematic, horizontal approach in handling cases of infringement of the public procurement rules rather than just reacting case-by-case to complaints received".[15] This has involved preventing infringements from taking place when major events or infrastructure projects are being prepared, or taking a horizontal approach to a problem detected in one Member State. The Commission continues to have recourse as well to the infringement (Article 226) procedure for dealing with instances where directives have not been transposed; infringement proceedings against Austria, France, Greece, and the United Kingdom concerning failure to transpose legislation, which inter alia take into account certain provisions of the GPA, were concluded upon implementation of the directives in question. The Commission also handled 272 complaints concerning the award of contracts in 2001, including 103 new ones, with progress reported on resolving irregularities.Proposed legislation72. Under the proposed new legislative framework, the first group of three directives would be consolidated into a single directive, covering supplies, works, and services (excluding most defence contracts and those covered by the utilities directive), still complemented by the remedies directive. A single harmonized threshold expressed in euros would apply for each category of contract: supplies and services ( 130,000 for a central purchasing entity and 200,000 for sub-central purchasing entities); and works ( 5,300,000). According to the Commission, the new thresholds would not change the effective scope of application of the procurement rules, and would therefore pose no issues in relation to the GPA. The scope of covered services would extend to telecom services, currently excluded.73. Other proposed substantive amendments to these directives concern the introduction of the new possibilities for relations between the contracting authority and suppliers. One proposal concerns "dialogue" with candidates during the tendering process, which is not allowed under existing procedures, for "particularly complex contracts". Another proposal concerns exempting the award of contracts from the requirements of the Directive when a "framework" agreement has been concluded between the contracting authority and selected suppliers, itself awarded on the basis of the Directive. Other proposed substantive amendments concern greater flexibility for technical specifications, as well as modified award and selection criteria.74. A new utilities directive has also been proposed, whose scope would be reduced to water, energy, and transport, still complemented by the relevant remedies directive. The Commission has justified the exemption for telecoms operators on the grounds that effective competition has been realized in the sector (Chapter IV(4)) and commercial considerations govern procurement decisions.New thresholds would apply: supplies, services and designs ( 400,000); and works ( 5,300,000). The Commission has noted that the objective is to harmonize thresholds for GPA and non-GPA covered procurement, posing no issues in relation to the GPA.75. Provisions common to both sets of proposals are: to extend the scope for electronic tendering to 100% of all covered contracts, shorten the delays for the award procedure in certain circumstances where electronic means are used; and describing the subject-matter of tender by reference to CPV.[16][1] Eurostat, "Gross Domestic Product 2000", Theme 2 – 24/2001.[2] OECD (2001c).[3] WTO (2001), Table I.6.[4] Eurostat News Release 117/2001.[5] DG External Trade (2001). "Facts and Figures" [Online]. Available at: http://europa.eu.int/comm/trade [7 December 2001].[6]European Commission SPEECH/00/185.[7] COM(2000)275 and COM(2000)276. See European Commission Press Release IP/00/461. For background see COM(98)143.[8] European Commission Press Release IP/01/1189.[9] Council Directive 2001/78/EC. See European Commission Press Release IP/01/1271.[10] The GPA was transposed into EC law by Council Decision 94/800/EC. The scope of the EU's commitments concern the procuring entities listed in Annexes 1, 2 and 3 of Appendix I of its Schedule, relating to central government entities, sub-central government entities, and other entities such as utilities, respectively, and subject to minimum thresholds for contract values; and of goods and services and construction services specified in positive lists, found respectively, in Annexes 4 and 5 of AppendixI (WTO document GPA/W/35/Rev.1).[11]Directives 93/36/EC, 93/37/EC and 92/50/EC, amended by Directive 97/52/EC.[12] Directive 89/665/EEC.[13]Directive 93/38/EC, amended by Directive 98/4/EC. In order to open the market for public procurement, the Community amended the directive to extend the scope of utilities operating under conditions of effective competition, notably in energy and telecommunications.[14]Directive 92/13/EC.[15] COM(2001)309, p.88.[16] COM(2001)449. See European Commission Press Release IP/01/1189.