SECTION II - CHAPTER I

SECTION I I

COMPARATIVE SCHEDULE OF GOVERNMENT PROCUREMENT RULES IN INTEGRATION AGREEMENTS IN THE AMERICAS

CHAPTER I : GENERAL CONSIDERATIONS

1.1 Membership/ Entry into Force/ Future negotiations

WTO

The WTO Government Procurement Agreement (GPA) is one of the so called Plurilateral Agreements, since it applies to only those members who have signed it. Twelve countries have signed the Agreement, mostly developed countries, including the European Community that counts as one. The United States and Canada are the only two Western Hemisphere countries that are signatories to the WTO GPA.

The Government Procurement Agreement entered into force on January 1, 1996. It provides coverage for most central and sub-central levels of government and sets out a bid challenge mechanism for private firms pertaining to the signatory countries.

The Agreement provides for further negotiations with the object of improving the GPA and to achieve the greatest possible extension of its coverage. Negotiations shall be undertaken no later than the third year from the date of its entry into force. However, the General Agreement on Trade and Services (GATS), contains a provision calling for negotiations on government procurement of services to be initiated before January 1, 1997.

IDB

The IDB´s Basic Procurement Policies and Procedures apply to the procurement of goods, works, and related services in tenders derived from the execution of projects that are financed by the Bank. Prospective bidders from the Bank?s member countries have the opportunity to participate under equitable, fair and open procedures in the provision of goods, works and services.

The following countries are members of the Bank: Argentina, Austria, Bahamas, Barbados, Belgium, Belize, Bolivia, Brazil, Canada, Colombia, Costa Rica, Chile, Croatia, Denmark, Dominican Republic, Ecuador, El Salvador, Finland, France, Germany, Guatemala, Guyana, Haiti, Honduras, Israel, Italy, Jamaica, Japan, Mexico, The Netherlands, Nicaragua, Norway, Panama, Paraguay, Peru, Portugal, Slovenia, Spain, Suriname, Sweden, Switzerland, Trinidad & Tobago, United Kingdom, United States, Uruguay, Venezuela. The Bank should be consulted regarding eligibility for procurement of the other successor republics of the former Socialist Federal Republic of Yugoslavia.

There are also certain eligible territories and dependencies: Netherlands Antilles (Aruba, Curção, Bonaire, St. Maarten, Saba and St. Eustatius) - participate as departments of the Netherlands; Guadeloupe, French Guyana, Martinique and Reunion - participate as departments of France; and Puerto Rico - participates as an Associated State or one forming part of the United States.

The legal relationship between the Bank and its Borrowers is governed by loan contracts. These contracts also regulate important aspects of the procurement process. Since the legal relationship between the Borrowers and suppliers of works, goods and related services is governed by the bidding documents and the provisions of the respective contracts between those parties, no supplier or entity that is not a party to the Bank?s loan contracts can derive rights or demand payments on the basis of these loan contracts.

The responsibility for execution and administration of projects rests with the Borrowers, including the entire procurement process, from the preparation of the bidding documents to the awarding and management of contracts. The bank oversees the procurement process to ensure that its rules and procedures are followed (paragraph 2.3 of the BPPP).

MERCOSUR

The Agreement does not provide for any provisions on government procurement. However, there is no special exception to the general principle of national treatment and nondiscrimination for goods and services.

In December 1994 the Common Market Council instructed MERCOSUR?s Trade Commission, through Decision No. 2094, to create a Technical Committee No. 4 on "Public Policies which Distort Competitiveness". The Committee was to identify policies which may affect competitiveness within MERCOSUR. Among other topics, the Committee will treat the major themes regarding procurement practices. To this date, the Committee has met in seven opportunities but has only proceeded to the exchange of national legislation on the subject.

Finally, government procurement is under analysis in the Ad Hoc "Services" Working Group which is in the process of elaborating a Framework Agreement for MERCOSUR.

NAFTA

The agreement expands upon the obligations of the WTO by adopting lower thresholds and a negative list approach to the coverage of services procured by the listed entities. Consequently, all services are covered unless specifically exempted.

Parties have undertaken to commence further negotiations to expand the agreement by December 31, 1998. Consultations to obtain commitments, on a voluntary and reciprocal basis from provincial and state governments will take place prior to those negotiations.

The Agreement entered into force in January 1994.

ANDEAN GROUP

The Agreement does not cover Government Procurement. However, the "New Strategic Design of the Andean Group", approved by the Commission on August 31, 1995, establishes some guidelines on the subject. The document stresses the necessity of adopting legislation in the area of government procurement based on the parameters and taking as a reference the Government Procurement Agreement of WTO.

CENTRAL AMERICAN COMMON MARKET

The Agreement does not cover Government Procurement. However, the countries pertaining to the Common Market are studying the possibility of negotiating a future Agreement on Services where the subject could be addressed.

However, the Central American Agreement on Fiscal Incentives to Industrial Production (Law No. 3142 of July 26, 1963) in its Chapter XI, Article 42 states that: The Governments, autonomous or decentralized government institutions, municipalities and all public entities of the Contracting Parties will give preference in their procurement to products of the Central American industry, provided that the price of these products is equal or inferior to those imported and their quality is comparable. To the effect of price comparison, the price of the imported product (not Central American) will be composed of 50% of the import tariffs, related duties and other import costs, even when the procuring entity is exempted from their payment.

CARICOM

In February 1994 the Council approved the "Promotional Program for Increasing Procurement of Regional Goods and Services by Member States from within the Community" and an action plan is being developed. The aim is to make national tendering procedures and notices known by creating a central regional information coordinating agency.

GROUP OF THREE ACCORD

Coverage and thresholds are similar to the NAFTA Chapter on Government Procurement. However, obligations under the Agreement for Colombia and Venezuela are less than Mexico?s. For example, tendering procedures only apply for Colombia and Venezuela provided that they are consistent with their respective national legislation. Consequently, most of the tendering procedures provisions do not apply for those countries. Bid challenge procedures are not applicable for Colombia and Venezuela either.

The Agreement contains a stipulation for further negotiations, but it does not provide a specific date as to their commencement.

BILATERAL AGREEMENTS WITH MEXICO

Mexico has signed three bilateral trade agreements with countries belonging to the Western Hemisphere--Bolivia, Costa Rica and Chile. The Mexico-Bolivia and Mexico Costa Rica Agreements are similar in form and substance. Nevertheless, they contain some differences regarding their transition mechanisms that are less stringent in the Mexico-Bolivia Agreement than in the Mexico-Costa Rica Agreement. For Mexico, transition mechanism rules remain the same in both agreements. Regarding the Agreement with Chile, it is related to other agreements signed by that country. Consequently, for purposes of this study, the Mexico-Chile Agreement is classified as a Chile bilateral agreement. Both Agreements entered into force on January 1, 1995.

BILATERAL AGREEMENTS WITH CHILE

Chile has signed five similar ?commercial complementation? agreements with countries belonging to the Western Hemisphere-- Bolivia, Colombia, Ecuador, Venezuela and Mexico. All agreements, except for the one with Bolivia, contain the same provision. It states that an administrative commission will, within the first year subsequent to the agreement?s entry into force, define the scope and terms that will regulate government procurement purchases among the signatory countries. For that effect, it will consider the criteria established in the GATT procurement code.

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