ENGLISH

World Trade

Organization

 

 

WT/WGTGP/7

15 July 2003

 

(03-3835)

 

 

 

 

 

 

 

report (2003) of the working group on transparency in

government procurement to the general council

 

 

 

I.                   INTRODUCTION

  1. In the year 2002, the Working Group continued its work under the Chairmanship of Ambassador Ronald Saborío Soto (Costa Rica) pursuant to the mandate provided in the Singapore Ministerial Declaration and paragraph 26 of the Doha Ministerial Declaration (WT/MIN(01)/DEC/1).  Paragraph 26 reads as follows:

26.       Recognizing the case for a multilateral agreement on transparency in government procurement and the need for enhanced technical assistance and capacity building in this area, we agree that negotiations will take place after the Fifth Session of the Ministerial Conference on the basis of a decision to be taken, by explicit consensus, at that Session on modalities of negotiations.  These negotiations will build on the progress made in the Working Group on Transparency in Government Procurement by that time and take into account participants' development priorities, especially those of least-developed country participants.  Negotiations shall be limited to the transparency aspects and therefore will not restrict the scope for countries to give preferences to domestic supplies and suppliers.  We commit ourselves to ensuring adequate technical assistance and support for capacity building both during the negotiations and after their conclusion.

  1. As agreed at an informal meeting of the Working Group which took place on 29 January 2003, in addition to the work mandated by paragraph 26, the Working Group had a focus, at each of its meetings in 2003, on the matters of:  (a) transparency-related provisions in existing international instruments on government procurement and national procedures and practices;  and (b) technical assistance and capacity-building.
  2. At the Working Group's meeting held on 7 February 2003, the Working Group discussed transparency-related provisions in existing international instruments on government procurement and national procedures and practices.  In particular, comments were made on items I (definition and scope of government procurement), VIII (domestic review procedures) and XI (WTO dispute settlement procedures)[1] in the informal note by the Chairman entitled "List of Issues Raised and Points Made" contained in JOB(99)6782 of November 1999.  Further, the Working Group discussed technical assistance and capacity building as called for by paragraph 26 of the Doha Ministerial Declaration.
  3. At the meeting held on 18 June 2003, the Working Group continued its discussion of transparency-related provisions in existing international instruments on government procurement and national procedures and practices, and technical assistance and capacity building.
  4. This section of the Report provides an overview of the substantive work done in the Working Group in 2003, pursuant to the mandate given in paragraph 26 of the Doha Ministerial Declaration (WT/MIN(01)/DEC/1).  By its very nature, such an overview cannot reflect everything that was said and capture all nuances of the discussion such as can be found in the detailed records of the Working Group's meetings during the year (WT/WGTCP/M/17 and WT/WGTGP/M/18) and in the written contributions of Members.
  5. This matter was discussed by the Working Group at its meetings of 7 February and 18 June 2003.  Written submissions on this item were provided by the representatives of the United States (entitled "Considerations related to Enforcement of an Agreement on Transparency in Government Procurement");  the European Communities (entitled "Domestic Review Mechanisms Related to Transparency in Government Procurement");  Korea (entitled "Work Ahead up to the Cancun Ministerial");  and the European Communities (entitled "Positive Effects of Transparency in Government Procurement and Its Implementation").  They were circulated in documents WT/WGTGP/W/38, 39, 40 and 41 respectively.[2]  The representatives of AustraliaBrazilCanadaChileChinaChinese TaipeiColombiaCubaDominican RepublicEgyptEuropean CommunitiesHong Kong, ChinaHungaryIndiaJapanKoreaMalaysiaMoroccoPakistanPeruPhilippinesPolandNigeriaSri LankaSwitzerlandThailandUnited States;  and Venezuela made oral statements or posed questions.
  6. At both meetings, the Working Group took up the items on the Chairman's "List of Issues Raised and Points Made" (JOB(99)6782 of November 1999).  Discussions focused on Items I (Definition and Scope of Government Procurement), VIII (Domestic Review Procedures), XI (WTO Dispute Settlement Procedures) and XII (Technical Cooperation and Special and Differential Treatment for Developing Countries).  Set out below is a summary of the Working Groups' discussions on these matters.
  7. In addition to the above-mentioned issues, the Working Group touched on a number of more general issues.  With respect to the issue of the importance of transparency in government procurement for international trade, it was noted that all Member governments purchased goods and services both domestically and abroad.  The view was expressed that, consequently, there was a significant amount of international trade generated by public entities when, in the exercise of their sovereign powers, they decided to purchase internationally.  Given the impact on international trade, rules ensuring transparency should be negotiated in the WTO.[3]
  8. Some of the benefits considered to be associated with a future multilateral agreement on transparency in government procurement that would accrue to procuring entities as well as to participating bidders were identified.  First, it was suggested that transparency would result in enhanced efficiency and increased innovation.  Specifically, public procurement applied in a transparent environment with a clear set of rules defined in advance and respected by all parties might allow tendering companies from both developed and developing countries to foster enhanced competition, which would, in turn, stimulate innovation amongst bidders.  Second, a multilateral agreement would result in better value-for-money.  In particular, transparent tendering should lead to effective competition between bidders (in some cases from foreign bidders), reduce the level of bids, and this would reduce the amount of public expenditure.  Third, transparency rules would encourage domestic and foreign investment and partnerships between local and foreign suppliers.  This benefit was considered to be of particular importance for developing countries that were trying to develop their markets.  Fourth, a transparency agreement would have the effect of reducing corruption.  It was suggested that this was a welcome side-effect for all countries.[4]  Fifth, ensuring transparency in government procurement was a core element of good governance and that this, in turn, was essential to economic development.[5]  Finally, an agreement on transparency in government procurement would result in the establishment of a minimum set of rules applicable world-wide that would have the effect of introducing legal certainty to existing procurement procedures.[6]  Reference was also made to a number of Members' experience with transparent procurement regimes.  In this regard, it was noted that the enhancement of transparency in government procurement attracted more international bidders and foreign investment.[7]  The view was expressed that transparency in government procurement should not be perceived as politically controversial given the numerous benefits that flowed from transparency in government procurement and given that the issue of market access did not arise.[8]
  9. The view was expressed that, despite the theoretical and actual benefits associated with transparency in government procurement, this was not necessarily a sufficient basis upon which to create multilateral rules in the area.[9]  Reservations regarding binding obligations in the area were expressed, particularly because the issue at stake was only one of transparency.[10]  The point was made that, while the benefits of transparency could not be denied by any Member, it was necessary to demonstrate and understand how an agreement on transparency in government procurement would enhance relations among WTO Members and how one Member applying enhanced transparency in government procurement affected and benefited its trading partners in the WTO.[11]
  10. With regard to the nature of a multilateral agreement on transparency in government procurement, the suggestion was made that a multilateral agreement on transparency in government procurement did not need to be a complex undertaking.  It was noted that the Doha Ministerial Declaration had narrowed the scope of a possible agreement on transparency in government procurement by limiting the parameters to transparency aspects and by providing explicitly that such an agreement should neither restrict domestic preferences nor require market access commitments.[12]  Recognizing difficulties for developing countries to implement a future agreement on transparency in government procurement, it was suggested that such an agreement be simple, focusing on core principles such as transparency in procurement opportunities and other elements as illustrated in the items in the Chairman's "List of Issues Raised and Points Made" (JOB(99)6782 of November 1999).[13]  An agreement should encompass a robust principles-based approach both with respect to transparency and due process aspects but which, at the same time, was not prescriptive and which did not confer a right to challenge tender outcomes.  Such an agreement could be the first step towards a genuine multilateral instrument designed to facilitate companies' access to information about procurement opportunities, processes and practices and, at the same time, could provide the benefit of a more competitive procurement market.[14]
  11. It was questioned whether the elements that were the subject of discussion within the context of the Working Group related exclusively to issue of transparency.  The point was made that even with respect to those elements that were purely related to issues of transparency, clarification was needed as to whether they pertained to procurement procedures or, rather, to procurement activity in general.[15]  A related point was made that a transparency agreement should not interfere with substantive decisions made by procuring entities, such as the evaluation of offers, decision-making processes, provision of relief to unsuccessful tenderers, and review of procuring entities' decisions, etc.[16]
  12. It was noted that, while foreign access might be granted to procurement markets in some cases, the Working Group's mandate did not entail a market access component.  Clarification was sought as to whether progression from a transparency agreement to one aimed at securing market access in the future would be sought.  Clarification was also sought about whether it was proposed that a future agreement on transparency would be applied without distinction between tenders open to international bids and those that were not.[17]  In response, it was noted that, while the future agreement on transparency in government procurement should be applicable without distinction between bids open to foreigners and those that were not, this would not impinge upon the right of governments to decide what ultimately would remain exclusively reserved for national bidders.[18]
  13. With regard to the issue of the relationship between transparency in government and the reduction of corruption, the view was expressed that corruption existed in all countries, even notwithstanding the application of transparency rules.  Nevertheless, transparency rules enhanced the ability of countries to combat this problem.[19]  In response, the point was made that, while reducing corruption was a laudable objective for all national governments, it should not be a principal objective, nor should it be built into any possible agreement on transparency in government procurement.  This was a moral issue, and that moral, social and similar kinds of issues were not the domain of the WTO.  Rather, such issues should be addressed by each Member in accordance with its own respective legislation.  It was also questioned how a multilateral agreement could assist Members in combating such practices.[20]  In response, it was noted that the rationale underlying a future agreement on transparency in government procurement would not be to reduce corruption.  Nor would a future multilateral agreement contain specific provisions on corruption.  Rather, the reduction of corruption would be a side-effect of the agreement.[21]
  14. In taking up the items in the informal note by the Chairman "List of Issues Raised and Points Made" contained in JOB(99)6782 of November 1999, comments were made in relation to item I, being the definition and scope of government procurement.  On the one hand, the point was made that the substance of the Working Group's discussion was transparency in the procurement process, irrespective of whether this related to contracts for goods, services or a combination of both.  The view was expressed that, accordingly, since a future agreement would not have a market access component, it should have a broad coverage extending to goods, services and construction services.  Additionally, given the difficulty associated with distinguishing between procurement that should or should not be subject to transparency rules and that procurement regimes in most countries applied the same rules to procurement of both goods and services, it was important that the whole system, including goods and services, be transparent.[22]
  15. Another view was that any eventual agreement on transparency in government procurement should be limited in scope to procurement of goods only and should not include procurement of services or any combination of goods and services.  In this regard, transparency in procurement of services went beyond the Working Group's mandate.  Re-opening the issue of transparency in procurement of services might be counter-productive and that the Group should instead seek to build on the progress made in discussions relating to transparency in relation to goods procurement.[23]  However, it was recognized that procurement of goods often entailed procurement of services and there was a need to take account of this possibility.[24]  It was further suggested that there might be a need to provide flexibility for developing countries with respect to the procurement of services[25] given that smaller developing countries did not procure significant quantities of services.[26]
  16. With respect to the issue of the application of thresholds in the context of a possible agreement on transparency in government procurement, the view was expressed that thresholds should be included in an agreement on transparency in government procurement.  The point was made that a transparency agreement would become too onerous without the inclusion of thresholds, particularly for developing countries.  In the absence of thresholds, the agreement would apply even to the smallest of procurements.[27]  Higher thresholds might apply for developing countries or, at least, for the least-developed countries, if that was considered the way to accommodate such countries' concerns in the future.[28]  However, there was also a view questioning the relevance of thresholds in the context of transparency in government procurement.  There should be a commitment to transparency and openness even for small tenders.[29]  In response, the view was expressed that while it might theoretically be the case that transparency should be applied irrespective of the magnitude of the procurement in question, thresholds might be a way to provide flexibility to accommodate developing countries' needs.[30]
  17. As regards the level of government that might be covered by a transparency agreement, in response to a statement that a transparency agreement should be applicable at the federal level as well as the sub-federal and municipal levels, the view was expressed that a multilateral agreement on transparency in government procurement should be limited to procurement by federal entities and should not extend to procurement by entities at the sub-federal level because, inter alia, local entities encountered capacity problems.[31]
  18. Comments were also made on items VIII and XI of the Chairman's "List of Issues Raised and Points Made"[32], concerning domestic review procedures and WTO dispute settlement procedures respectively.  Some general comments were made in relation to both domestic review procedures and the application of WTO dispute settlement procedures.  In addition, separate and specific comments were made in relation to the two compliance mechanisms.  In relation to domestic review procedures, discussions touched, inter alia, on the pros and cons associated with domestic review procedures;  the degree of precision of provisions on domestic review procedures, if any, in a WTO transparency agreement;  and the scope of application of domestic review procedures under a WTO transparency agreement.  In relation to WTO disputes settlement procedures, the issues discussed included the question of whether such procedures should apply to a transparency agreement and the circumstances in which the DSU might apply.  Comments were also made about the interaction between domestic review procedures and the application of the WTO Dispute Settlement Understanding.
  19. Some general comments were made covering both domestic review procedures and the application of WTO dispute settlement procedures.  Referring to submissions that had been made in relation to this item[33], the view was expressed that a strong case had been made for ensuring adequate enforcement mechanisms.[34]  The existence of provisions on domestic review in other WTO agreements clearly highlighted the widespread applicability of that concept to trade matters.  Procurement involved domestic implementation of trade-related matters and, in that sense, procurement rules were similar to the rules contained in other WTO agreements.[35]  Accordingly, domestic review procedures and the DSU should be among the core elements of a future transparency agreement in government procurement.[36]
  20. Another view was that domestic review procedures and the application of the DSU had nothing to do with transparency.  They were outside the scope of an agreement that dealt with transparency.  As long as those two elements were on the negotiating table, there would be no consensus at the Cancun Ministerial Conference to negotiate an agreement in this area.  It was stressed that any eventual agreement on transparency in government procurement should be limited in scope, should not be prescriptive, and should not contain provisions on domestic procurement review that could be used to question the decisions of Members' governments, administrations and procuring entities.[37]
  21. In response, the point was made that the provisions on domestic review procedures and dispute settlement would be determined by the rules that might emerge from the negotiations.  It was acknowledged that such rules had to be consistent with Members' governance objectives.  It was difficult to delve into domestic review and dispute settlement issues except in a rather general way until Members knew the content, coverage and elements of a transparency agreement.[38]
  22. It was noted that there was perhaps an unnecessary fear that the Working Group would try to develop a one-size-fits-all model in relation to enforcement mechanisms.[39]  Members should work towards identifying the models of enforcement mechanisms that could be appropriately applied to a transparency agreement[40] and that worked best for them based on their legal traditions, experiences and background.[41]  Many countries had used the UNCITRAL Model Law as a guide for development of their respective procurement systems.  Others had used the World Bank Guidelines while others had developed their laws in other ways.[42]
  23. With respect to the pros and cons associated with domestic review procedures, the view was expressed that such procedures were important for the proper functioning of a procurement system, not only for foreign suppliers but also for domestic constituencies.[43]  The establishment and maintenance of a transparent procurement system provided confidence to potential suppliers that they would be treated fairly in the procurement process.  When procurement processes became clouded and decisions were perceived not to follow a logical outcome, suppliers could lose confidence in the system.[44]  Based on the experience of countries that already had domestic review procedures, it was suggested that such procedures provided credibility.  They also assured suppliers that, if they had a complaint against a decision of a procuring entity, they would have the means for having that decision reviewed by an impartial body.  Most Members already had domestic review procedures in place, not because the WTO had imposed an obligation requiring them but, rather because such Members had determined that it was in their best interest.  On the basis of the foregoing, it was suggested that domestic review procedures should be part of a transparency agreement.[45]
  24. Another view was that domestic review procedures had nothing to do with transparency.  Therefore, they were outside the scope of an agreement that dealt with transparency.[46]  Further, domestic review procedures might be susceptible to abusive challenges that were aimed at delaying the procurement process and could result in the re-commencement of the procurement process if, as a result of such a challenge, the original process was declared null and void.  With this perspective, the view was expressed that suppliers' rights had to be balanced against the interest of governments to conduct efficient procurement processes and the need to guarantee an efficient allocation of public resources.[47]  Another view was that suppliers did not normally use domestic review procedures very often – possibly because they wished to avoid problems arising with procuring entities in future tenders.  In response, the view was expressed that suppliers were perfectly aware of their legislative rights and they exercised them to the extent possible without fear of being sidelined in future procurements.[48]
  25. In relation to the degree of specificity that provisions, if any, on domestic review procedures should have in a WTO transparency agreement, the view was expressed that domestic review obligations should be strong but non-prescriptive.[49]  An agreement on transparency in government procurement could include simple and flexible provisions on domestic review procedures that took into account and accommodated independent administrative or judicial tribunals and review procedures that currently existed in various Member countries.[50]  Adequate domestic administrative, audit and judicial mechanisms were already in place in many countries to ensure that all participants in the procurement process acted in conformity with the applicable rules and procedures.  It was suggested that the need for the establishment of a domestic review mechanism would arise only if a Member's pre-existing system did not guarantee the overall transparency of government procurement.[51]
  26. In response, the question was raised as to whether an agreement on transparency in government procurement should impose common obligations with respect to domestic review procedures or whether Members should be left to establish their own procedures.  Opposition was voiced to common obligations, common procedures and common mechanisms with respect to domestic review commitments.  It was noted in this regard that domestic review provisions contained in existing WTO Agreements did not require that all Members have or apply common rules but, rather that the rules were consistent with their commitments in the WTO.[52]
  27. In counter-response, it was stressed that the agreement should set out general obligations or principles and each Member would then have to implement them in the way that worked best within its domestic system.[53]  This approach would be an effective way of ensuring that the general principles were applied while simultaneously accommodating disciplines contained in pre-existing domestic procedures.[54]  Responding to this view, it was noted that most WTO Members had reasonable and adequate administrative, arbitral and/or judicial mechanisms to suit their domestic needs and level of development, which ensured that all players in the procurement process acted in conformity with the relevant rules and procedures.  Accordingly, the stipulation of any mandatory rules or prescriptive guidelines in a transparency agreement would not be acceptable.  The primacy of domestic laws and procedures had to be preserved and there should be no requirement to change them.[55]
  28. As to what would be the scope of application of domestic review procedures under a WTO transparency agreement, the view was expressed that such procedures should ensure that all suppliers participating in a procurement had the legal right to challenge that process, independently of whether that procurement was covered by the agreement.  For example, even if a procurement was subject to a national preference and even if only a Member's national suppliers had the right to have recourse to domestic review, the limitation of the scope of the agreement to transparency should not affect the ability of a national supplier to challenge procurement decisions in such cases.[56]
  29. In response, the view was expressed that Members should be allowed to limit the implementation of transparency rules, including the domestic review procedures.  It was questioned why all suppliers should be provided with the opportunity to challenge procurement processes given that the work of the Working Group had nothing to do with market access.[57]  Consistent with the Doha mandate, which explicitly excluded domestic preference schemes, enforcement mechanisms in a transparency agreement could not be used to challenge such schemes.[58]  More specifically, if a national procurement system allowed governments to maintain domestic preferences, the right to challenge a procurement procedure should be limited to national suppliers.[59]  Even if the domestic rules provided that suppliers had a right to challenge a procurement decision, a foreigner should not be able to invoke a WTO transparency agreement in cases where the tender did not fall under the scope of the agreement.[60]
  30. In counter-response, the point was made that, although the transparency agreement would exclude market access, government authorities in WTO Members did not meet their procurement needs only through domestic suppliers but also through foreign suppliers.  Therefore, foreign suppliers' interests should also be protected.  It was suggested that the transparency agreement should require Members to make available domestic review procedures for both domestic and foreign suppliers who were concerned that a particular procurement had not been in compliance with the transparency provisions of the agreement.[61]
  31. The view was expressed that in the absence of reassurance that domestic review procedures would not question the decisions of domestic authorities, the inclusion of such procedures in a transparency agreement could not be accepted.[62]  Further, while domestic review provisions existed in a number of WTO agreements, those agreements were not related to transparency.  A transparency agreement would essentially require making available certain information on Members' relevant rules, regulations and procedures.  Accordingly, domestic challenge procedures did not have their place in a transparency agreement.[63]
  32. The point was made that the establishment of domestic review mechanisms was an area where developing countries might be able to seek technical assistance for capacity building.[64]
  33. In relation to the application of WTO dispute settlement procedures in the area of transparency in government procurement, the view was expressed that an agreement on transparency in government procurement would be an important addition to the rules-based international trading system and its obligations should be subject to the same types of enforcement procedures as existing commitments in other WTO agreements.[65]  Without a link to the DSU, a transparency agreement would not be effective.  Members would simply ignore the requirements of the agreement knowing that they would suffer no detriment for having done so.[66]
  34. Another view was that the dispute settlement mechanism in whole or in part should not apply to a transparency agreement.[67]  Members had to abide by the mandate given to the Working Group, namely to clarify and define transparency rather than identifying what would transpire in cases where Members did not abide by transparency rules.[68]  Further, the nature of an agreement on transparency in government procurement would be inherently different from any existing WTO agreement.  Unlike other WTO agreements, an agreement on transparency in government procurement, which – in terms of the Doha mandate – would allow Members to continue to discriminate in favour of national suppliers, would not seek to address trade relations among Members.  The WTO dispute settlement mechanism was based on the presumption that a violation of an obligation would have an effect on the trade of Members whereas, in the context of an agreement on transparency in government procurement, there could be no such presumption.  In addition, under the DSU, the way to correct non-compliance was through compensation or retaliation.  It would be difficult to base any dispute settlement mechanism applying to transparency in government procurement on that premise because there would be no violation of trade rights.[69]  Similarly, existing enforcement mechanisms had been devised to ensure fair trade and to avoid the creation of unnecessary obstacles to trade, which were market access issues.  Without obligations on market access, an agreement on transparency in government procurement should not be treated like other WTO agreements.[70]
  35. In response, the view was expressed that, similar to other WTO agreements, a transparency agreement would contain obligations and requirements and an enforcement mechanism was needed in order to make those obligations and requirements meaningful.[71]  Further, it was suggested that as well as having market access as their principal focus, many WTO agreements included transparency elements.  The agreement on transparency in government procurement would be similar to other WTO agreements in this respect.  The WTO agreements that had transparency elements did not carve out the transparency elements to provide that such elements were not subject to WTO dispute settlement procedures.  Any Member could challenge another Member's implementation of such transparency provisions.  Further, while accepting that the agreement was about transparency, and not about market access, the point was made that if a Member did not implement any of the provisions of the transparency agreement, Members would not be seeking concessions or retaliation, but compliance.[72]
  36. It was suggested that while there was a need for enforcement measures, that did not mean that they had to be identical to the existing rules in the DSU.  There could be specific provisions on implementation of the DSU tailored to the scope of the transparency agreement.[73]  There were already a number of WTO agreements with specific provisions relating to the application of the DSU, for instance, Article XXII:4 of the plurilateral Agreement on Government Procurement dealing with consultations and dispute settlement with regard to cross-retaliation.[74]  It was suggested that the Working Group consider the flexibilities provided in the provisions of the DSU and in other agreements, for instance Article 17 of the Anti-dumping Agreement.[75]  It was also suggested that there may not be a need for sanctions or suspension of concessions or cross-retaliation to ensure that the agreement was enforced.[76]  Members should identify provisions that might be more difficult for Members to implement and, perhaps, such provisions could be subject to transition periods.[77]
  37. It was suggested that certain provisions of a transparency agreement could be phased in for developing countries and that, consequently, the application of the DSU for such countries would also be phased-in.[78]  It was suggested that the Working Group should assess which provisions could be problematic to implement for some countries and that a flexible approach should be adopted to phasing-in those provisions.[79]
  38. As to the circumstances in which the DSU might apply under a transparency agreement, the view was expressed that the DSU would be available for systemic failures to comply with or a high level of disregard to the agreement, for instance, if there were refusals to ever publish a notice, or refusals to ever make information available about procurement methods.[80]  Nevertheless, based on Members' experience with transparency provisions in other WTO Agreements, it was suggested that the likelihood of a transparency provision being challenged in the DSU was very low.[81]
  39. In response, while it was acknowledged that in all probability a case under the agreement on transparency in government procurement would not be raised under the DSU, if Members included any provisions relating to application of the DSU in the agreement, they had to be absolutely clear as to what could potentially happen in the event that non-compliance was established.  For example, a Member could be found by a panel and the Appellate Body to be in systematic violation of a commitment in the transparency agreement.  However, it might not be in a position to comply with the recommendation of the DSB to bring its legislation into conformity with the agreement because of the refusal of its congress to adopt the relevant legislation.[82]  Responding to this scenario, it was suggested that if there were a case where a Member reported to the WTO that it could not change its laws, other Members would not rush to take that Member to dispute settlement as that was not going to be in any Member's interest.  Members would be more likely to determine how they could work together in an attempt to address the problem at issue.  The overall goal was not to retaliate and penalise Members;  it was to develop a common set of transparency obligations that would apply across the membership of the WTO.[83]
  40. As regards the interaction between the domestic review procedures and the application of the WTO Dispute Settlement Understanding, the view was expressed that the respective roles of the two mechanisms that served different purposes should be made explicit in the future agreement.[84]  Domestic review procedures and the application of the DSU were two distinct phases in a dispute resolution process and there was not much scope for their interaction.[85]  Further, domestic review procedures and WTO dispute settlement procedures served different purposes, and there could be no overlap between the two.[86]  The transparency agreement should contain provisions allowing a supplier to challenge, through domestic procedures, a procurement in breach of the provisions related to transparency of the procurement process.  At the WTO level, the DSU would only apply to the implementation of the transparency provisions in the agreement.[87]  It was also suggested that the transparency agreement could explicitly provide that resort to the DSU would not be available to challenge how a procurement authority had handled a specific procurement or to overturn a contract decision.[88]  The DSU would not be available to WTO Members to question national authorities' procurement decisions.  Members could invoke WTO dispute settlement procedures only for repeated failures to comply with the rules in the agreement or to implement its basic obligations.  If there was a question about how a procurement was being conducted, it would be up to the relevant supplier to take that issue up under the domestic review mechanism.[89]
  41. Clarification was sought as to whether a transparency agreement would require the exhaustion of domestic review procedures before any recourse could be made to WTO dispute settlement procedures.[90]  The point was made that, until the full contours of an agreement had been determined, the issue of the link between domestic review procedures and application of the DSU could not be fully examined.[91]
  42. With respect to the issue of special and differential treatment, the view was expressed that exceptions from transparency obligations should apply in certain circumstances and longer implementation periods should be provided.[92]  However, it was pointed out that transitional periods or other types of flexibilities contained in the Uruguay Round agreements had proven to be inadequate for effectively addressing complex and multi-dimensional issues facing developing countries.[93]  Traditional ways of ensuring special and differential treatment that had been proposed in this area were inadequate as they did not allow developing countries the needed policy flexibility.[94]  There were still a number of Uruguay Round agreements that Members had not been able to implement due to lack of technical assistance, and, in fact, some Members had still not understood the commitments which they had signed up to.  Therefore, the Working Group had to give serious attention to the issue of technical assistance, developing new ways of addressing the concerns of developing countries as well increasing efforts to try to make the process move forward beyond Cancun.[95]  It was suggested that a more holistic approach to the issue of special and differential treatment for developing countries was needed.[96]
  43. The need for technical assistance during and after the negotiations – as was agreed in the Doha Declaration – was emphasized.  It was an important element in ensuring that such countries would be in a position to implement a multilateral agreement of transparency in government procurement.[97]  Commitment was also expressed to providing support through the WTO and other institutions.[98]
  44. While the commitment to provide technical assistance and capacity building was welcomed[99], it was suggested that the provision of technical assistance by some proponents might be tied to an eventual agreement on transparency in government procurement or to the demonstration of a readiness to negotiate.  The point was made that, if donors of technical assistance were genuine about helping the developing countries, transition economies and LDCs to improve their government procurement regimes through making them more transparent and more efficient, then technical assistance should be provided even in the absence of an agreement or in the absence of an agreement to negotiate.  In this regard, technical assistance should not be aimed at helping countries to understand the elements of a transparency agreement, what it would mean and its implications.  Rather, it should be aimed at assisting with the establishment of a more efficient government procurement regime though the adoption of procurement rules that would enhance transparency.[100]  In response, the point was made that technical assistance was already being provided through multilateral and bilateral channels when genuine requests for technical assistance were made.  Technical assistance had been provided to various developing countries to help them develop and modernise their procurement systems for a long period of time independently of the work undertaken in the Working Group to develop a transparency agreement.[101]
  45. Reflecting on the work undertaken by the Working Group during the past six years and on the way forward, the view was expressed that the study phase had been valuable and fruitful.  In particular, it had enabled Members to identify advantages of a transparency agreement as well as some difficulties, which confronted members in the lead-up to negotiations.[102]  The study phase had been completed because the elements were clear and the differences of positions were clear.  What remained was for work to commence on negotiations.  It was necessary in this respect to make "bridges" during the negotiation phase.[103]
  46. In response, the point was made that the identification of elements by the Working Group as reflected in the informal note by the Chairman's "List of Issues Made and Points Raised" (JOB(99)6782 of November 1999) did not imply any form of agreement, or tacit understanding, or consensus to include those elements in a future agreement.[104]  While some level of consensus had emerged in relation to several of the elements in the informal note by the Chairman containing the "List of Issues Raised and Points Made"[105], the work of clarifying the issues had not yet been completed.[106]  The Working Group was not in a pre-negotiation stage but still in an educational and clarification stage.[107]  In order to have a mandate in Cancun to negotiate, there needed to be agreement in the Working Group on the elements of a future transparency agreement and, pursuant to paragraph 26 of the Doha Ministerial Declaration, there had to be an explicit consensus to move on to negotiations.[108]
  47. However, the point was also made that divergence of views existed in relation to most issues.  It was suggested that these issues, which were systemic in nature, could have serious implications in terms of the costs associated with implementation, the effect on national policy, and flexibility.  Such issues included the scope and coverage of an agreement on transparency in government procurement (that is, inter alia whether the agreement should be limited to goods or include services and concessions), the meaning of "transparency", the relationship between transparency and particular procurement methods, the application of domestic review procedures and the DSU mechanism and the form that special and differential treatment would take.  It was suggested that some elements were not concerned with transparency and should not be a part of an agreement on transparency in government procurement.[109]  Before entering into a negotiating phase, there needed to be a clear conception of what would be involved if there was to be any discussion to launch negotiations on a future agreement on transparency.[110]
  48. The view was expressed that it was not necessarily the case that negotiations could not proceed before convergence on all elements had been achieved.  It was suggested that achieving such convergence was the purpose of negotiations and not of the study phase.[111]  The view was also expressed that the existence of divergence of views on some issues should not be, in itself, an impediment to moving forward.  Rather, a certain consistency in approach was required.[112]  A similar view was that all that was necessary before Members moved to negotiations was the identification of the core issues at stake.  Agreement could then be reached through negotiations.[113]
  49. The view was expressed that the Doha Declaration clearly stated that negotiations on transparency in government procurement would take place after the Cancun Ministerial Conference on the basis of Ministers' decisions on modalities of negotiations, and that the negotiation would be treated as part of the single undertaking.[114]  It was suggested that this view was supported by the Doha Ministerial Declaration, the relevant section of which read "…a decision on modalities of negotiations…"[115] rather than "…a decision on negotiations…".  Further, the view was expressed that the Doha Ministerial Declaration clearly stated that a decision on modalities would be taken at the Fifth Ministerial Conference and not after that.[116]
  50. In order to ensure that a multilateral agreement on transparency in government that was acceptable to all could be negotiated, it was suggested that it was crucial to adjust the level of ambition and to address the interests of developing countries in an effective and balanced manner.[117]  In order to take full account of the concerns, burdens and obligations of developing and LDCs, S&D, TA and support for capacity building should be fully reflected in the negotiations process.[118]
  51. It was suggested that the following steps were necessary in the context of the Working Group in the lead-up to the Cancun Ministerial Conference.  First, it was necessary to reiterate that an agreement on transparency in government procurement would only be limited to transparency;  it would exclude market access commitments and would have no impact on Members' rights to use government procurement to support domestic enterprises and purchasing national goods.  Secondly, the elements of the agreement needed to be identified.  Thirdly, the Working Group should establish a timetable for an agreement on transparency in government procurement, which did not specify a deadline for the conclusion of the agreement.  Finally, S&D treatment should be ensured for developing countries, given that the respective levels of development of government administrations amongst Members differed.  In particular, exceptions from transparency obligations should apply in certain circumstances and longer implementation periods should be provided.[119]
  52. The point was made that developing countries wanted to be able to properly participate in the negotiation process.  However, they lacked sufficient skills to negotiate at the current point in time.  Before an agreement on transparency in government procurement was considered, such countries wanted to be clear about what would be entailed.  The agreement had to be a win-win agreement that was beneficial to all and was truly balanced.[120]
  53. With respect to the future implementation of a transparency agreement, it was noted that many countries, including developing countries, already had transparency rules in place.  It was suggested that, accordingly, the implementation of any future multilateral agreement should not be a major difficulty for those countries.  It was further suggested that for those countries that did not have a procurement system in place, the costs that might be associated with the introduction of such a system would be far outweighed by the resulting benefits.[121]  Another view was that the cost of implementation of any agreement on transparency in government procurement might be extremely high.  The point was made that as long as Members did not know exactly how the future agreement would look like and, in particular, what the scope and coverage would be, it was difficult to have a precise idea of the costs involved in the setting up of transparency system.[122]
  54. The view has been expressed, on the one hand, that the four Singapore issues, including transparency in government procurement, were part of the Single Undertaking.[123]  The contrary view has also been expressed that the Singapore issues were not part of the Single Undertaking and, therefore, required a negotiating mandate.[124]  Yet another view expressed was that the debate as to whether the Singapore issues were part of the Single Undertaking was not productive for the work of the Working Group[125] and was beside the point.  In this regard, the point was made that Ministers had agreed to a work programme that included these issues which had given rise to expectations amongst delegations that their concerns would be addressed irrespective of whether or not they were part of the Single Undertaking.[126]
  55. The WTO Secretariat informed the Working Group at each of its meetings of the technical assistance and capacity building activities undertaken by it as well as those activities foreseen in the period leading up to the Cancun Ministerial Conference.  The main focus of the Secretariat's activities was on regional events organized in cooperation with the multilateral development banks.  In addition, a number of broader technical co-operation activities organised by the Secretariat had a government procurement component, and a limited number of national seminars had been held.  An Information Session was held in Geneva on the morning of 19 June 2003 on technical co-operation and capacity building activities of inter-governmental organisations in the area of government procurement at which a number of inter-governmental organisations shared information on activities undertaken by them.  That Information Session was followed on the afternoon of 19 June 2003 by a workshop on capacity-building in government procurement at which a number of developing countries shared information on their respective experiences and needs.[127]  Further information on the Secretariat's technical assistance activities can be found in Section B of the minutes of the Working Groups Meetings (WT/WGTCP/M/17 and WT/WGTGP/M/18).
  56. The point was made that a number of countries lacked capacity in this area.  Some did not even have procurement laws.  The view was expressed that, accordingly, the provision of technical assistance through seminars and conferences was insufficient.  A concerted effort was needed to provide technical assistance on a case-by-case basis rather than making it general or adopting a one-size-fit-all approach.  Such an approach would ensure that such assistance would really build capacity, it would help countries to participate in the current and possibly future process at the WTO on this issue.[128]
  57. The Working Group considered requests for observer status from three international intergovernmental organizations (OECD, SELA and the Organization of the Islamic Conference) and agreed to revert to these requests in the light of the ongoing consultations in the framework of the General Council.[129]

II.                issues discussed in the working group

A.                 transparency-related provisions in existing international instruments on government procurement and national procedures and practices

Definition and Scope of an Agreement on Transparency in Government Procurement
Domestic Review Procedures and WTO Dispute Settlement Procedures
Special and Differential Treatment, Technical Assistance and Capacity Building
Status of the Working Group's Work and the Way Forward

B.                 technical assistance and capacity building

C.                 observer status of international intergovernmental organizations

__________




[1] M/17, para. 4.

[2] Hereinafter in the Report, documents issued in the series WT/WGTGP/W/- series are referred to as "W/…";  documents issued in the WT/WGTGP/M/- series are referred to as "M/…".

[3] M/18, para. 5.

[4] M/18, paras. 6 and 23.

[5] M/18, para. 41.

[6] M/18, para. 17.

[7] M/18, para. 19.

[8] M/18, para. 5.  See also M/18, paras. 24, 30 and 31.

[9] M/18, paras. 20 and 22.

[10] M/18, para. 21.

[11] M/18, para. 10.

[12] M/17, para. 3.

[13] M/18, para. 16.

[14] M/18, paras. 17 and 21.

[15] M/17, para. 9.

[16] M/18, para. 48.

[17] M/18, para. 25.

[18] M/18, paras. 7, 26 and 30.

[19] M/18, para. 38.

[20] M/18, para. 39.

[21] M/18, paras. 38 and 40.

[22] M/17, para. 10.

[23] M/17, paras. 8, 9 and 11.

[24] M/17, paras. 6 and 7.

[25] M/17, para. 6.

[26] M/17, para. 6.

[27] M/18, para. 11.

[28] M/17, paras. 5 and 6;  M/18, para. 8.

[29] M/18, para. 28.

[30] M/18, para. 29.

[31] M/18, para. 27.

[32] JOB(99)6782, November 1999.

[33] WT/WGTGP/W/38 and 39.

[34] M/17, para. 26.

[35] M/17, para. 17.

[36] M/17, paras. 18 and 19.

[37] M/17, para. 23.

[38] M/17, paras. 18 and 35.

[39] M/17, para. 65.

[40] M/17, para. 17.

[41] M/17, para. 65.

[42] M/17, para. 65.

[43] M/17, para. 18.

[44] M/17, para. 20.

[45] M/17, paras. 20, 21, 25 and 36.

[46] M/17, para. 23.

[47] M/17, para. 36.

[48] M/17, para. 37.

[49] M/17, para. 33.

[50] M/17, paras. 33, 56 and 64.

[51] M/17, para. 34.

[52] M/17, paras. 59 and 61.

[53] M/17, paras. 57 and 64.

[54] M/17, para. 57.

[55] M/17, para. 58.

[56] M/17, para. 74.

[57] M/17, para. 54.

[58] M/17, para. 49.

[59] M/17, para. 51.

[60] M/17, para. 75.

[61] M/17, para. 52.

[62] M/17, para. 23.

[63] M/17, para. 27.

[64] M/17, para. 48.

[65] M/17, paras. 14 and 19.

[66] M/17, para. 66.

[67] M/17, paras. 30 and 31;  M/18, para. 43.

[68] M/17, para. 30.

[69] M/17, para. 16.

[70] M/17, para. 25.

[71] M/17, para. 26.

[72] M/17, para. 32.

[73] M/17, paras. 66, 71 and 74.

[74] M/17, para. 71.

[75] M/17, para. 72.

[76] M/17, para. 71.

[77] M/17, paras. 32 and 71.

[78] M/17, para. 45.

[79] M/17, paras. 32, 45 and 71.

[80] M/17, paras. 29 and 66.

[81] M/17, para. 66.

[82] M/17, para. 67.

[83] M/17, para. 68.

[84] M/17, para. 38.

[85] M/17, para. 39.

[86] M/17, para. 41.

[87] M/17, paras. 47 and 74.

[88] M/17, para. 41.

[89] M/17, para. 43.

[90] M/17, para. 40.

[91] M/17, para. 44.

[92] M/18, para. 43.

[93] M/17, paras. 79 and 82.

[94] M/17, para. 80.

[95] M/17, paras. 79 and 83.

[96] M/17, para. 81.

[97] M/18, para. 9.

[98] M/18, paras. 32 and 33.

[99] M/18, para. 35.

[100] M/18, para. 36.

[101] M/18, para. 37.

[102] M/18, para. 3.

[103] M/18, paras. 15, 16, 18 and 46.

[104] M/17, para. 94.

[105] JOB(99)6782 of November 1999.

[106] M/18, paras. 12, 19, 48 and 49.

[107] M/17, paras. 3, 77, 78, 86, 90 and 92.

[108] M/17, paras. 77, 78 and 85.

[109] M/18, paras. 12, 19, 48 and 49.

[110] M/18, para. 13.

[111] M/18, para. 18.

[112] M/18, para. 50.

[113] M/17, paras. 84 and 94.

[114] M/17, para. 91;  M/18, paras. 41 and 46.

[115] (WT/MIN(01)/DEC/1), para. 26.

[116] M/17, para. 91.

[117] M/18, para. 41.

[118] M/18, para. 41.

[119] M/18, paras. 43 and 45.

[120] M/18, para. 47.

[121] M/18, paras. 5, 7 and 32.

[122] M/18, para. 33.

[123] M/17, para. 91.

[124] M/17, para. 87.

[125] M/17, para. 89.

[126] M/17, para. 88.

[127] M/17, paras. 96 and 98;  M/18, para. 51.

[128] M/18, para. 52.

[129] M/17, para. 100.

Ibrahim Alhudaithy

Riyadh 11682

P.O.Box 89058

Alhudaithy@yahoo.com

 

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Education

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  • University of Durham, Department of Law, Durham, UK, Doctor of Philosophy at Law, July 2006
    • Case Western Reserve University, School of Law, Cleveland, Ohio, USA

     Master of Law (LL.M.) with Honours, May 1999

  • Intensive English programme, University of Missouri, Columbia, Sep. 1995 to February 1996
  • King Saud University, College of Administrative Sciences, Law Dep. Riyadh, Saudi Arabia, Bachelor of Law, 1985

 

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Employment Experience

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  • Assistant Professor, Law Department, Riyadh Committee College, 23/6/1828. Sep. 2007.
    • The Head of the Legal Dep., King Saud University, 1/7/1428, Sep. 2007.
  • Law Department, King Saud University, Legal Advisor, Lawyer, and the head of the contract department. 1989-2007. Duties Included:

-          Research and draft memoranda on a variety of topics, including: construction and public works contracts, and other employee contracts.

-          Draft ordinance, resolutions and other necessary legislation.

-          Represent the University in front of administrative court and Sahriah court in lawsuits.

-          Participated in the tender committee and disciplinary committee.

  • Law department, Saudi Telecom. Attorney at law. 1986-1989. Duties Included:

-          Litigation support and legal research and analysis for contracts, labor and employee dispute settlements, and civil litigation.

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Committees

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  • Member of Tender’s Examination Committee.
  • Member of Specifications Committee.
  • Member of Investigation Committee.
  • Member of Student's Investigation Committee.

 

 

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Research

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-Rights of Sub-contractors under Saudi Procurement Regulations. (Not published yet).

- Opening and Evaluating Tenders under Saudi Procurement Regulations, The International Construction Law Review, (Pt 4, 2004), pp.459-474.

- The Characteristics of Saudi Administrative Contracts, Public Procurement Law Review, (2003) 5, pp208-225.

- Historical Review of Saudi Administrative Contracts, Public Procurement Law Review, (2002) 11, pp186-198.

 

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Other Experience

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  • won several literary competitions such as award for a short story in 1990 and first prize of the Abha Club prize for "Poems from Abha" 1987
  • languages: Arabic and English
  • Published several legal studies about the WTO, Government Procurement Agreement and its impacts on Saudi Government Procurement.
  • Trained and experienced at performing computerized legal research on Lexis, and Westlaw.