29 July (1) Full opening of all U.S. procurement markets at the federal, state, and local level

Transcription

1 Comments of the Federation of German Industries (BDI): Key problems/interests of EU companies in U.S. public procurement and corresponding key issues for the negotiations on public procurement within TTIP 29 July 2015 Preliminary remarks: The Federation of German Industries (BDI) is the umbrella federation of all important sector federations of German industries and industry-related services, representing more than 100,000 companies of diverse sectors and size. As is the case for numerous German companies among them large as well as many small and medium sized entities BDI is active not only at the national and European level, but also worldwide. It commands a wide network in practically all key markets and international organizations. The following key aspects sum up the experiences and positions of all sectors of German Industry. 1. Key priorities for the negotiations (1) Full opening of all U.S. procurement markets at the federal, state, and local level The first overall key priority of the EU in the TTIP negotiations should be that public procurement in the United States is fully opened at all levels of government as well as for utilities (federal, state and local level). It is of the utmost importance to obtain territorial procurement commitments from all states in the United States, particularly from the 13 that are not covered by the GPA at present. (2) Eliminating the negative impact of Buy American/local content provisions Secondly, highest priority should also be given to eliminating the negative impact that Buy American provisions have on EU companies across the United States. The same applies for further local content provisions which discriminate against foreign bidders. In order to overcome the very negative implications of the Buy American rules with respect to EU companies, the agreement might stipulate that products, works or services provided by companies from the EU meet the relevant Buy American criteria, preventing all discrimination from existing and future provisions (such as the Buy American Provision in the context of the American Recovery and Reinvestment Act of 2009 for instance). (3) Increased transparency as well as open and predictable procedural requirements Apart from the key issues mentioned above, our member associations and member companies have specifically identified more transparency and open and predictable procedural requirements as a further important priority. In general, a lack of uniform procurement criteria and procedures is an impediment to effective access regarding government procurement. In the United States, suppliers are confronted with a complexity and uniqueness of rules even at the level of federal government procurement, and even for non-classified work. At the federal

2 level, the variety of regulations (Federal Acquisition Regulation (FAR)) and considerable further regulation like the Defense Federal Acquisition Regulation Supplements (DFARS) present significant challenges. The procurement chapter of TTIP should address issues such as non-discrimination, legal and contractual remedies, as well as ethics/anti-corruption. The EU and United States should promote best-practices such as self-cleaning mechanisms and product-linked award criteria. Although procurement has become a strategic tool, the award criteria must be linked to the subject of the contract in any case. Important sector specific exemption: Procurement necessary for the protection of essential security interests, relating to the procurement of arms, ammunition or war materials, or to procurement indispensable for national security or national defence purposes, should not be opened in the TTIP negotiations, given the very special conditions of this sector. This exemption corresponds to the fact that this sector is also excluded from the Government Procurement Agreement of the WTO (GPA). 2. Key industrial sectors of interest for German Industry Our companies are active and interested in acting as suppliers / service providers in all industrial sectors, among others especially - energy - transportation (including urban transportation systems) - airports - construction - innovative infrastructure systems - environmental protection - healthcare - manufacturing - automobile industries - automotive industries - information and communication technologies/services - many further advanced and innovative technologies 3. U.S. Procurement area of vital interest for German Industry German companies are actively interested in public procurement in all U.S. states, on the state and local level. Many of our companies take part in public tenders in the United States, often via local entities at the federal, state, or local level. The companies report that especially - United States government procurement opportunities and - government funded projects, but also - state and local public procurement (including utilities) opportunities

3 can be highly attractive for EU/German bidders. Among these sectors - at the state level, all states, whereby Texas, California and Louisiana have been mentioned explicitly with a view to the necessity of further market opening; furthermore market opening is needed for all those states not yet covered by the GPA; - at local level, especially all big cities with considerable urban transportation, construction and infrastructure projects and purchases of industrial equipment, and diverse further goods and services like New York City, Chicago, Washington, D.C., Boston, Los Angeles and further important cities; - in the utilities sector: also many attractive areas, especially regarding water, sewer, energy, transportation, construction and further sectors. 4. Procuring entities of importance - at the federal level: Apart from the military / homeland security entities like U.S. Department of Defense U.S. Army Corps of Engineers U.S. Department of Veterans Affairs U.S. Department of Homeland Security (important note insofar: See the recommendation for an exemption from the negotiations regarding procurement necessary for the protection of essential security interests, relating to the procurement of arms, ammunition or war materials, or to procurement indispensable for national security or national defence purposes, cf. page 1 of this paper) the following purchasing entities are of vital interest: U.S. General Services Administration (GSA) U.S. Department of State U.S. Department of Energy U.S. Department of Health and Human Services (this catalogue is not exhaustive) - at the state and local level: see remarks above under no Most important problems for EU/German companies in U.S. public procurement (1) Structural lack of market access at the state and local level EU state and local procurement is still often not open for suppliers / service providers from the EU. This constitutes an unacceptable structural barrier in comparison to the principally

4 wide openness of EU markets at regional and local levels provided by the EU directives and respectively by the GPA. This situation is also mirrored by the fact that 13 U.S. states are not covered by the GPA. In addition to the lack of access at the local level, this demonstrates a fundamental imbalance of market openness in public procurement as compared to the EU, which has to be overcome. In this regard we would like to remind the TTIP negotiating parties that the joint U.S.-EU High Level Working Group on Jobs and Growth (HLWG) has explicitly recommended for public procurement that the goal of negotiations should be to enhance business opportunities through substantially improved access to government procurement opportunities at all levels of government on the basis of national treatment in the final report of the HLWG (cf. HLWG recommendations from 11 February 2013, page 3). Accordingly, the TTIP negotiations were initiated by the United States President and the Presidents of the European Council and the European Commission explicitly on the basis of these recommendations (cf. Joint Statement of U.S. President Barack Obama, former President of the European Council, Herman Van Rompuy, and former President of the European Commission, José Manuel Barroso, dated 13 February 2013). Given these common goals at the outset of the negotiations, any agreement that does not remove the before-mentioned structural barriers regarding access to procurement opportunities at state and local levels could not be called a substantial improvement. The outcome of the CETA negotiations between the EU and Canada clearly shows that a farreaching market opening in public procurement, not only at central level but also at subcentral level, is possible. (2) Structural discrimination by Buy American and further local content clauses The second, equally important key problem for EU companies is the continued use of Buy American clauses at various levels of U.S. procurement. These clauses discriminate against non-u.s. companies. They do not have any parallel in EU procurement law. In addition, local content provisions further discriminate against foreign bidders. Examples for such provisions are requirements for local hiring of new employees, which have been reported in the transportation sector. It has been reported from companies of diverse industrial branches and size that Buy American provisions are a considerable problem with regard to procurement for all sectors and states. Thereby, the applicability of Buy American requirements can vary from state to state and from project to project. Buy American Clauses constitute a severe barrier to market access because they widely exclude companies acting as suppliers from outside the United States that offer products or products with certain parts not produced within the United States. Even for EU companies operating inside the United States, a multitude of problems arise: EU Companies report that even their local entities have problems in understanding the requirements of Buy American provisions, particularly under which conditions it is possible to supply from Europe to the United States. The Buy American provisions therefore form a structural access barrier to public procurement opportunities in the United States, which has to be overcome in the TTIP chapter on public procurement.

5 As far as we understand, the Canada-U.S. Agreement on Government Procurement of 12 February 2010 shows that it is possible to reach ambitious free trade agreements with the United States in which the United States grants exemptions from their Buy American provisions to companies of the other party of the agreement. (3) Difficulties caused by a lack of transparency and predictability respectively clarity of procedural requirements Difficulties arise at state/local level with a view to partly limited transparency and unpredictable procedural requirements, including mid-procurement process changes in certain cases. Specific issues have included a lack of transparency/clarity regarding funding sources, contract terms and conditions. This makes risk evaluation especially difficult.