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U.S. Trade Rep Asks Calderon To Adopt WTO Government Procurement Guidelines


December 18, 2003
Copyright © 2003 CARIBBEAN BUSINESS. All Rights Reserved.

U.S. Trade Representative (USTR) Robert Zoellick has asked Gov. Sila Calderon to adopt the requirements of the World Trade Organization’s (WTO) Government Procurement Agreement (GPA).

Zoellick’s Sept. 18 letter to Calderon lists 11 GPA obligations Puerto Rico is asked to voluntarily assume, all geared toward making the local procurement procedure fair and open to other GPA participants.

The Puerto Rico Department of Economic Development & Commerce (EDC) is studying the effect of subscribing to the GPA. EDC Secretary Milton Segarra recently met with executives from local business and economic development organizations to discuss their concerns about agreeing to the opening of local government procurement bids to foreign countries.

Puerto Rico’s willingness to comply would be binding only with respect to those countries that accord reciprocal treatment–i.e., those that open their local government procurement to Puerto Rico. But it is noteworthy that the USTR’s request comes when the U.S. is pressing forward on the U.S.-Central America Free Trade Agreement (Cafta) and the Free Trade Agreement of the Americas (FTAA).

"The Puerto Rico Manufacturers Association [PRMA] requested more information on which areas and departments would be considered," said PRMA Executive Vice President William Riefkohl. "We would like to be provided with a list of the goods and services purchased by these five Central American countries [in Cafta]. In addition, we requested a list of which agencies would initially be opened to this procurement reciprocity."

Puerto Rico Products Association President Felipe Hernandez also urged the government to discuss some exceptions.

"Our recommendation is to sign the GPA," said Hernandez. "But we must be clear about protecting some areas that benefit local businesses, such as education. The 37 states that are part of the agreement have also made their exceptions, and Puerto Rico also needs to study this matter."

In light of Gov. Sila Calderon signing Wednesday the new Investment (Preference) Law for Puerto Rican Industries, which establishes public procurement policy for government agencies & services and transfers the Preference Board to the Puerto Rico Industrial Development Co.’s management, Puerto Rico House Vice Speaker Ferdinand Perez has asked that public hearings be held to study the direct and indirect impact of Cafta and the FTAA on the island’s economy.

"I believe it is totally appropriate for the private sector to lead these efforts, creating consensus among the public and political sectors supporting these initiatives," said Perez. "What we would like to find out is how the local economy, the island’s industry, and our work force will be affected by [Cafta and the FTAA] and define a course of action so Puerto Rico can obtain the most benefits."

The U.S. and 27 other countries (including the European Union and Japan) are GPA signatories. In addition, 37 U.S. states have made voluntary commitments to bind their procurement practices to GPA requirements.

Although WTO countries have opened national or federal government procurement to each other on a reciprocal basis since 1979, it wasn’t until 1994 that they agreed to expand the scope of the GPA agreement to include sub-federal and local procurement. Because of the politics of federalism, the U.S. refused to force the states to abide; instead, it seeks voluntary commitments by the states to conform their procurement procedures to the 1994 GPA. Many of the states that have agreed have carved out specific exceptions.

This Caribbean Business article appears courtesy of Casiano Communications.
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