Last week in Brussels and Strasbourg was a bit of a whirlwind but I’m still embarrassed this is my first account of what happened! In fact, for that I’ll defer to Brent Patterson’s detailed blog entries from the various meetings, events and news we collected as part of the Trade Justice Network delegation to the sixth round of CETA negotiations. I want to talk about just one article I read in European Voice on my way back to Hamilton called “Commission seeks revamp of public procurement rules.” But before that a quick word about the state of play.
Officially, the trade talks in Brussels last week were probably a dud — there were too many outstanding structural issues that the EU and Canada have to deal with before they can move forward. These include ongoing debates at the Council of the EU (the political decision making body of the EU comprised of elected representatives from all member states) on whether to pursue an investor-to-state dispute process in CETA, and if yes then whether to use the NAFTA model or to be even more aggressive and far reaching in how foreign investment is protected from legislative and regulatory expropriation.
The Council of the EU’s Trade Policy Committee was also expected to vote Friday on whether the European Commission should adopt the Canadian way of negotiating services commitments (everything is covered unless otherwise stated). Currently EU member states must list the service sectors (ex. electricity distribution, postal services, sanitation, professional services, etc) they want to cover, and everything else is automatically excluded. It’s the safer way to do it and ensures future social policy is not automatically included in the deal.
Because Canada has so few requests in the CETA negotiations, even fewer that stand any chance of being accepted, the Harper government will put a lot of weight on the EU’s decision around this admittedly dull but highly consequential (for public services) procedural question.
EU TO RETHINK PROCUREMENT RULES
During one of our meetings, a member of the EU parliament told the Trade Justice Network group we had it all wrong when we said Canada was going to get very little of what it’s asking in CETA (ex. access for genetically modified foods). In fact Canada would get nothing! he said. His words floated again through my mind as I read this in the January 20 issue of European Voice:
The European Commission is considering updating rules on the awarding of public contracts to encourage the public sector to favour companies who meet goals on the environment or innovation.
If you’re thinking this exactly what the EU appears to be trying to discourage in Canadian provinces, territories and cities through the CETA procurement chapter, you’re right. That chapter is one of the EU Commission’s main priorities in the Canadian negotiations. The EU says Canada’s procurement market is not disciplined enough. Local preferences and other offsets to encourage local or sustainable economic development are to be banned under CETA.
But according to the European Voice article, “Critics say that the EU’s rules are hampered by red tape and inflexibility, which can reduce the effectiveness of some public contracts and slow down the whole tendering procedure.” This is exactly what trade lawyer Steven Shrybman has warned Canadian municipalities the CETA procurement chapter will do here here in Canada.
Michel Barnier, the EU commissioner for the internal market, is “known to be keen to use public procurement to support societal objectives, notably those contained in the EU 2020 strategy, such as green procurement and innovation,” continues the article. He will launch a green paper on January 27, which will pave the way for a “complete overhaul of public procurement rules.”
The European Voice article explains that BusinessEurope, a massive coalition of corporate interests across the EU, is opposed to any re-writing of procurement rules to give flexibility to local governments to add local and sustainable preferences. The corporate lobby group is also a big endorser of procurement chapters in EU trade agreements. But why would Canadian municipalities, or the provinces and territories agree to one set of rules for their spending powers in CETA when a year from now the EU may move closer to a progressive procurement system where preferences and offsets are allowed?
They would be crazy to finalize the procurement chapter in CETA without considering how the EU (and the WTO) procurement model restricts how public money is spent, and slows down and complicates the procurement process.
The EU green paper is not all good news. “It will also consider reciprocal arrangements in public procurement at an international level, to eliminate a perceived imbalance in which foreign companies bid for and win contracts in the EU while EU companies encounter difficulties in winning contracts outside Europe,” write European Voice.
This is misleading. First, because European companies bid on and win a considerable number of Canadian procurement contracts as it is. (Incredible as it sounds, exact figures don’t exist, just like during the Buy American debate, which resulted in a lopsided procurement agreement with the U.S.) Second, because according to advisers to the Green political group in the EU, upwards of 97 per cent of EU contracts at any level of government go to internal candidates. EU officials have been unable to provide any hard evidence there are significant barriers in the Canadian procurement market or to prove the European market is considerably more open.
With the EU procurement review set to start in a few days, and legislative proposals predicted by early 2012, the Canadian governments involved in CETA negotiations would do well to shelve the procurement chapter altogether for sub-national governments.
Otherwise, they should give the EU no more than what was offered all signatories to the WTO Government Procurement Agreement in Canada’s revised offers from last February. Offer any more than this and Canadian firms could soon face progressive procurement policies in the EU that support small and local or sustainable businesses, while Canadian governments are incapable of adopting similar policies at home.
