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Barry McVay's FEDERAL CONTRACTS DISPATCH

DATE: May 9, 2000

FROM: Barry McVay, CPCM

SUBJECT: United States Trade Representative; Annual Report on Discrimination in Foreign Government Procurement

SOURCE: Federal Register, May 8, 2000, Vol. 65, No. 89, page 26652

AGENCIES: Office of the United States Trade Representative (USTR)

ACTION: Notice

SYNOPSIS: Executive Order 13116 of March 31, 1999, Identification of Trade Expansion Priorities and Discriminatory Procurement Practices, requires the USTR to prepare an annual report identifying foreign countries engaging in discriminatory government procurement practices. In this, the second annual report, the USTR found that European Union (EU) discriminatory procurement practices of certain government-owned telecommunications entities remain in effect, so the sanctions specified in Federal Acquisition Regulation (FAR) Subpart 25.6, Trade Sanctions, remain in effect. While there were no other discriminatory procurement practices identified, the USTR is trying to resolve U.S. concerns regarding foreign procurement practices with a variety of countries.

EDITOR'S NOTE: For more on the USTR's request for information on alleged discriminatory procurement practices of foreign governments, see the February 1, 2000, FEDERAL CONTRACTS DISPATCH "Identification of Foreign Countries Engaging in Discriminatory Procurement Practices."

The USTR's February 1, 2000, request also asked for proposed U.S. trade expansion priorities and the identity of foreign country practices which, if eliminated, would be most likely to significantly increase U.S. exports. For more on the USTR's findings, see the May 9, 2000, FEDERAL CONTRACTS DISPATCH "United States Trade Representative; Annual Report on Trade Expansion Priorities."

DATES: This report was submitted to the Committees on Finance and on Governmental Affairs of the United States Senate and the Committees on Ways and Means and on Government Reform and Oversight of the United States House of Representatives on May 1, 2000.

FOR FURTHER INFORMATION CONTACT: John Ellis, Office of the U.S. Trade Representative, 600 17th Street, NW, Washington, DC 20508, 202-395-3063.

SUPPLEMENTAL INFORMATION: Executive Order 13116 reinstituted the provisions of Title VII of the Omnibus Trade and Competitiveness Act of 1988, which established procedures for identifying foreign countries engaging in discriminatory government procurement practices. The executive order requires the USTR to submit a report on the identified countries and practices to several Congressional committees.

In the report, the USTR states that the 1996 identification of Germany for discrimination in the heavy electrical sector has been terminated because Germany implemented legislation in May 1998 that appears to effectively address U.S. concerns. However, the discriminatory procurement practices first identified in 1992 involving telecommunications entities of Austria, Belgium, Denmark, Finland, France, Ireland, Italy, Luxembourg, the Netherlands, Sweden, and the United Kingdom are still being conducted (they are accorded "special and exclusive rights" by their governments), so the sanctions specified in FAR Subpart 25.6 remain in effect, though the EU has taken actions which it claims corrects the problem. The USTR has requested more information from the EU, and will review the issue once it has received the information. (EDITOR'S NOTE: The sanctions do not apply to the Department of Defense.)

While no other procurement practices warrant sanctions, the USTR is concerned about several foreign government procurement practices which it is monitoring:

The report concludes with a section on efforts being undertaken to "expand and strengthen the international rule of law with respect to government procurement." The efforts include: continued negotiation of the Free Trade Area of the Americas; active support for an early conclusion of a WTO agreement on transparency in government procurement; review of the GPA; monitoring and enforcing NAFTA procurement commitments; combating international bribery and corruption; and reducing the use and effects of offsets in defense trade. (EDITOR'S NOTE: For more on reducing or eliminating defense trade offsets, see the March 22, 2000, FEDERAL CONTRACTS DISPATCH "Department of Defense; Offsets in Defense Trade.")

FOR FURTHER INFORMATION CONTACT: Barry McVay at 703-451-5953 or by e-mail to BarryMcVay@FedGovContracts.com.

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