A last-minute move by the United States to pull back its offer of adding the state of Georgia to the list of sub-central entities it binds to the Government Procurement Agreement (GPA) has thrown the renegotiation of the GPA into turmoil and threatens the ability of signatories to reach a final deal by the Dec. 15-17 World Trade Organization ministerial in Geneva.
In bilateral coverage talks with the European Union last week, the U.S. had informally offered to bind Georgia to the GPA, but very quickly rescinded that offer, ostensibly because Georgia's state government decided it did not want to sign up, sources said.
A spokeswoman for Georgia Governor Nathan Deal said Georgia never agreed to sign the GPA, but had agreed to review whether to participate. However, the governor ultimately opted not to participate, and the spokeswoman did not elaborate on his reasons for that decision.
Participation by U.S. states in the GPA is voluntary, meaning the U.S. federal government cannot obligate states to sign up. Currently, 37 U.S. states bind some of their procurement to the GPA, although the level of coverage varies by state.
Because the addition of Georgia was seen as the primary improvement being offered by the U.S. in the bilateral coverage talks, its withdrawal has led EU member states to question the value of the U.S. offer, according to a member state official.
One informed source said the U.S. has now returned to the level of coverage contained in its 2010 offer, which the EU views as insufficient.
This unexpected turmoil in the bilateral talks between the U.S. and the EU -- which sources had considered to be on the verge of conclusion -- prompted the World Trade Organization secretariat to postpone until the week of Dec. 5 GPA meetings in Geneva that had originally been scheduled for next week.
Those bilateral and plurilateral meetings of the Government Procurement Committee are seen as the last chance for negotiators to reach agreement on a revised GPA that ministers can sign off on at the December ministerial.
Two EU member state officials held out the possibility that a final decision by EU ministers on whether to accept the U.S. and Japan offers and conclude the GPA deal may be put off until a Dec. 14 council meeting in Geneva.
But another member state official stressed that the commission technically does not need any formal decision by the council in order to conclude the revised GPA because the commission is already negotiating on the basis of a council mandate.
Nicholas Niggli, who chairs the Government Procurement Committee, announced the postponement of next week's meetings in a Nov. 22 note to delegations. "The progress toward the final settlement in GPA coverage negotiations among [the U.S., EU and Japan] has not been as fast or as smooth as had been hoped," he said.
Niggli also said that, if needed, he would consider inviting trade ministers to Geneva ahead of the Dec. 15-17 ministerial to resolve any outstanding issues that remain.
In addition to the last-minute complications in the U.S.-EU talks, the EU and Japan remain unable to conclude their bilateral negotiations, Niggli said at a Nov. 22 press conference at WTO, according the Geneva sources.
In the coverage talks, the EU has pressed Japan to remove effective barriers to foreign participation in railway sector procurement and reduce the threshold above which the GPA's non-discrimination disciplines apply to local public works projects.
The EU has demanded that the United States bind additional sub-central and federal entities to the GPA and to remove an exemption from its GPA coverage for highway and mass transit procurement.
In his note, Niggli said that he had consulted with the Geneva ambassadors of GPA parties on Nov. 22 and they remain committed to completing the revised GPA in time for the December ministerial.
During that consultation, GPA parties also acknowledged that there is "nothing to be gained" from postponing the conclusion of the talks until after the ministerial and that, on the contrary, any further delay beyond the ministerial will make a deal "more elusive," Niggli said.
He asked delegations to conclude all aspects of their negotiations and to circulate final coverage offers vetted with trading partners prior to the Dec. 5 meeting. Bilateral meetings on Dec. 4-5 will provide parties an opportunity to "fine-tune" their positions, and plurilateral meetings will commence on Dec. 6.
By that date, Niggli intends to seek confirmation that the main elements for a conclusion of the talks are in place, according to his note.
The European Commission informed EU member states of the informal U.S. offer and subsequent withdrawal of Georgia at a Nov. 18 meeting of the Trade Policy Committee, sources said. The TPC is a technical-level working group of the Council of Ministers, which represents member state governments.
After learning of the most recent developments in the talks with U.S. and Japan, member states remained divided about whether to conclude the GPA by the December ministerial based on the current concessions or rethink their strategy in order to secure further concessions, according to one member state official.
Member state officials will likely discuss the GPA again at a TPC meeting scheduled for next week, where they expect to hear an update from the commission on the talks with U.S. and Japan and discuss the details of a final EU offer, sources said.
