US putting barrier on UK’s bid to rejoin WTO procurement deal, EU says

29 November 2018 5:39pm

29 November 2018. By Joanna Sopinska and Zosia Wanat.

The UK's bid to join a 46-country trade agreement on mutually open government procurement markets has hit a setback after the US formally objected to its accession being delayed until the Brexit transition period ends, according to an internal EU note seen by MLex.

There are currently 19 parties signed up to the Agreement on Government Procurement, a multilateral pact among World Trade Organization members, with the EU representing its 28 member countries as a single party. The UK wants to rejoin the agreement as an independent country after Brexit.

On Tuesday, the 46 members backed in principle the UK's final offer of procurement activities that it would open to GPA member countries, intended to replicate its current market-access commitments.

But now “consultations” will continue among the GPA members on the final draft accession decision, according to a Geneva-based official present at the meeting. “Discussions will include how to refer to the withdrawal agreement between the UK and EU,” the official said.

The reason for the decision being blocked from moving to the next stage of the approval process is the US delegation refused to back an EU proposal to postpone the UK's accession until the end of its Brexit implementation period. 

The US officials said they were not authorized to back any decision that would deviate from the standard GPA accession template.

It comes despite the US telling the WTO that “having the UK participate in a seamless manner in the GPA was a top priority for the US,” according to the official.

The US move also comes in the same week as President Donald Trump told reporters that the withdrawal agreement "sounds like a great deal for the EU" and hinted that it might affect the UK’s trade with the US.

MLex understands that the US administration needs more clarity on how the UK procurement system will work under the withdrawal agreement before allowing the accession process to advance.

The EU diplomatic note seen by MLex argues that “substantial” US interests could be at stake if the UK's withdrawal agreement is approved due to it specifying that the UK wouldn't rejoin the GPA until after the transition period.

The US is concerned that this would mean the UK’s market-access offer could become outdated due to changes on the international public procurement market. It could also hamper the conclusion of a UK-US free-trade agreement, for which the US has already started formal preparations.

Divorce deal

The withdrawal agreement, approved by EU national leaders last Sunday and due for a vote by UK lawmakers on Dec. 11, sets a 21-month transition period during which the UK would continue to be bound to the EU’s trade policy, common external tariffs and standards.

The agreement also provides a safety net for British companies bidding for international government procurement contracts by allowing the UK to rely on the EU’s preferential access to third markets through its GPA membership.

In other words, if the withdrawal agreement is approved, the UK would be covered by the current EU lists of schedules for public procurement access until the end of the transition period on Dec. 31, 2020 — or as much as two years later under an option for the UK to extend the period.

But there is pressure on the UK to get the decision on GPA accession sealed as soon as possible to limit uncertainty for UK companies such as Rolls-Royce and Vodafone about their post-Brexit access to the GPA public procurement market, worth around 1.5 trillion euros ($1.7 trillion) a year.

The GPA commits parties to open their public procurement markets to each other’s suppliers on a basis “no less favorable than domestic suppliers” and to comply with a set of rules that promote fairness and transparency in public procurement.

The UK opened its GPA negotiations in June by submitting to parties an initial market access offer and replies to a checklist on its national government procurement legislation.

EU amendment

The EU said it would “quickly” send the WTO Secretariat its proposal for an amendment to the UK’s draft accession decision, to be passed on to the GPA members.

This will give the US and other members additional time to look into it and prepare a position for the next meeting, tentatively scheduled for Dec. 14.

Brexit Special Report