Summer Procurement Wrap-up

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This post highlights developments over the past several weeks relating to government procurement: Russia’s application to join the WTO procurement agreement; the solicitation of public comments on fulfillment of WTO commitments by Russia and China; new Buy American legislation; a U.S. procurement waiver for Moldova; and the World Bank’s procurement reform.

Russia Commences Accession to WTO Procurement Pact: On August 19, the Russian Federation applied for membership in the WTO Government Procurement Agreement (GPA) and promised to submit an offer of the procurement that it will cover under the Agreement in the “coming months”. In doing so, it reported that it had “made great efforts to improve its governmental procurement system in recent years”, citing a new federal procurement law. Russia’s application fulfills a commitment it made when it joined the WTO four years ago.

USTR Seeks Comments on Russia’s and China’s Implementation of WTO Commitments: In an August 17 Federal Register notice, the U.S. Trade Representative (USTR) asked the public for comments, by September 20, on Russia’s fulfillment of its commitments as a WTO member. The comments and a public hearing, which is scheduled for September 30, will provide input into USTR’s annual report to Congress on Russia’s implementation of its WTO commitments. Included in issues to be addressed in the Report are Russia’s progress in acceding to the Information Technology Agreement (ITA) and the GPA.

In a separate August Federal Register notice, USTR sought comments on China’s compliance with its WTO commitments, including government procurement. The comments, along with a planned public hearing, will be used in the preparation of its annual report to Congress on China’s WTO compliance.

New Buy American Legislation: On July 6, Senator Tammy Baldwin (Democratic, Wisconsin) introduced ‘‘Made in America Water Infrastructure Act’’, designed to ensure the use of American-made iron and steel in public water systems. The proposed legislation would impose a Buy American requirement on projects funded by the Drinking Water State Revolving Fund under the Safe Drinking Water Act. It specifies the iron and steel products, such as hydrants and values, which must use American-made material. Foreign-produced products could be used in certain circumstances, which are similar to the exceptions found in other Buy American measures: application of the requirement would be inconsistent with the public interest; American-made products are not available in sufficient quantity or satisfactory quality or at unreasonable cost. The cost would be considered unreasonable if use of U.S.-produced products would increase the cost of the overall project by more 25%.

The legislation would also direct the Environmental Protection Agency (EPA) to provide an opportunity for the public to comment on requests to waive the Buy American requirement, and require EPA to publish a written justification if it granted a waiver. According to Senator Baldwin, between 1997 and 2015, the State Revolving Fund provided more than $27.9 billion in low interest loans to more than 12,000 projects, which would be required to use American-made iron and steel under the legislation. The bill has been referred to the Senate Committee on Environment and Public Works.

USTR Waives Buy American Act for Moldova: On July 29, USTR published in the Federal Register its waiver of the Buy American Act and other domestic purchasing requirements for the Republic of Moldova, which became a GPA member in July. The waiver, authorized by the Trade Agreements Act of 1979, enables the U.S. to accord national treatment to Moldova’s goods and services in federal procurement.

World Bank Implements Procurement Reform: On July 1, the World Bank implemented its new Procurement Framework, following a multi-year review and consultation process. The new Framework, which governs procurement in Bank-financed projects in 172 countries with a value of $56 billion, will make the Bank’s procurement system “more modern and nimble”. Under the new Framework, borrowing countries may be able to use their own procurement systems for a Bank-financed project if they meet certain conditions.

A post next week will look at recent developments relating to the Trans-Pacific Partnership (TPP) agreement.

Jean Heilman Grier

August 30, 2016

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    Book: The International Procurement System Government procurement required 40 years and substantial efforts to become part of the international trade regime, even though it comprises a significant part of the global economy. The international system requires governments to balance protectionist forces favoring local suppliers against the pressures of liberalization, which expand procurement markets and lower prices.