US embassy cable - 05GENEVA1884

UNCLAS SECTION 01 OF 02 GENEVA 001884 
 
SIPDIS 
 
SENSITIVE 
 
PASS USTR FOR GRIER 
 
E.O.  12958: N/A 
TAGS: ETRD, ECON, WTRO, WTO, Trade 
SUBJECT: WTO GOVERNMENT PROCUREMENT MEETING DURING THE WEEK 
OF JULY 18, 2005 
 
 
REFTEL:  STATE 327601 
 
SENSITIVE BUT UNCLASSIFIED NOT FOR INTERNET DISTRIBUTION 
 
 
1.  (U) Summary and Background:  During the week of July 18, 
2005, the U.S. delegation, led by Jean Heilman Grier, Senior 
Procurement Negotiator, USTR, and including John Liuzzi, 
Department of Commerce, and Robert Kasper, U.S. Mission to 
the WTO, participated in formal and informal meetings of the 
WTO Government Procurement Committee (Committee).  The focus 
of the Committee's work was the revision of the 1994 
Government Procurement Agreement (GPA) text.  While there 
was progress in a number of areas, there remains 
disagreement (in places significant) on certain issues in 
the text.  However, informal USG bilateral discussions with 
a number of GPA parties indicated a general consensus that 
the Committee reach provisional agreement on the revision of 
the GPA text before the Hong Kong Ministerial.  At the 
formal committee meeting, the government of Israel informed 
the Committee that it will again seek continuation of its 
current level of offsets.  The U.S. also participated in 
Quad meetings on July 18 and 19 and bilateral meetings with 
delegates from Israel on its offsets request and Japan 
concerning a government procurement issue involving Japan 
Railway Kyushu.  The next committee meetings are scheduled 
for the week of October 10, 2005.  END SUMMARY. 
 
QUAD MEETINGS 
 
2.  (SBU) The U.S. delegation participated in a Quad meeting 
on July 18, 2005, hosted by Canada.  The Quad discussed US 
proposed revisions of the Committee decisions relating to 
the Indicative Criteria and Arbitration Procedures related 
to the implementation of the Article on Modifications of 
Coverage.  The Quad also discussed a Japanese non-paper on 
Article VIII (conditions for participation) and joint Canada- 
EU work on the Electronic Procurement Provisions in the 
text.  In addition, the quad discussed a Japanese submission 
on horizontal coverage issues, the organization of the 
Committee's work, and the Israeli offsets issue.  On July 
19, the quad met again, at Japan's request, to further 
discuss the relationship of Japan's procurement procedures 
to the revision. 
 
INFORMAL MEETINGS OF THE COMMITTEE ON GOVERNMENT PROCUREMENT 
 
3.  (SBU) Horizontal coverage issues:  on July 18, the 
committee held an informal session on the so-called 
"horizontal coverage issues". The discussion focused on a 
Japanese submission on the need for balance in market access 
commitments, a may 2005 U.S. proposal relating to the 
structure and content of Appendix I, and various issues in 
the text that relate to coverage. 
 
4.  (SBU) Revision of the text:  the Committee held informal 
drafting sessions from July 19 through 21 on the revision of 
the text of the GPA.  The only new submission was the U.S. 
proposed revisions of two draft Committee decisions relating 
to implementation of the Article of the Agreement on 
Modifications of Coverage.  Canada and the EC also offered 
improvements in the electronic procurement provisions of the 
text.  The discussions helped narrow the differences and 
remove brackets, as well as highlight areas where parties 
have flexibility and that could be a basis for compromises. 
The parties generally share the aim of reaching provisional 
agreement on the non-market-access-related provisions in the 
revised text before the Hong Kong Ministerial. 
 
INFORMAL BILATERALS WITH GPA MEMBERS ON THE TEXT 
NEGOTIATIONS 
 
5.  (SBU) The U.S. delegation held informal bilateral 
consultations with delegations from Canada, the EC, Hong 
Kong China, and Switzerland relating to the status of the 
negotiations on text revision and means for resolving 
various issues.  The conversations indicated there is 
widespread support for completing the negotiations on the 
non-market-access issues before the Hong Kong Ministerial. 
 
INFORMAL BILATERAL WITH THE GOVERNMENT OF JAPAN 
 
6. (SBU) At the request of the United States, the U.S. and 
Japanese delegations held an informal bilateral discussion 
on Japan railway - Kyushu's use of a GPA exception for 
operational safety of transportation.  The United States 
raised concerns with the appropriateness of JR-Kyushu's use 
of that exception in the construction of a railway station. 
The GOJ delegation promised to look into the matter and 
report back to the USG. 
 
ISRAELI OFFSETS 
 
7. (SBU)  At the request of Israel, the U.S. delegation held 
a bilateral discussion on Israel's plans to request another 
extension of its obligation to reduce its level of offsets. 
(NOTE: In December 2004, the committee agreed to allow 
Israel to extend its level of offsets at 30 percent through 
2005, rather than reduce it to 20 percent as called for in 
Israel's appendix.)  Israel provided a summary of a study 
that it had conducted on its use of offsets.  In the 
bilateral, and later in the formal meeting of the committee, 
Israel contended that the business opportunities for its 
industry resulting from the offset provisions constitute the 
main benefit of its membership in the GPA.  The United 
States said that it could not comment until Israel made a 
concrete proposal, which Israel said would be forthcoming. 
However, the United States reiterated its position that it 
regards offsets as a transitional measure and not a 
permanent element of any party's coverage; and the USG 
stated that Israel should present a plan for phasing out its 
offsets. 
 
FORMAL COMMITTEE MEETING 
 
8. (SBU) The committee held a formal meeting on Thursday, 
July 21 in which it reviewed the status of modifications to 
the GPA appendices and the status of accessions and 
entertained a presentation by Israel concerning its 
continued use of offsets in government procurement.  The 
Committee also adopted a new schedule for market access 
negotiations since no offers were submitted by the May 2005 
deadline indicated in the Committee's decision on modalities 
for negotiation on extension of coverage and elimination of 
discriminatory measures and practices (GPA/79).  The new 
schedule calls for the submission of market access offers 
prior to the October 2005 meeting of the Committee, but not 
later than the Hong Kong Ministerial.  The Committee also 
agreed to aim to conclude the negotiations by the end of 
2006. In reviewing the work on the revision of the text, the 
chair emphasized the importance of parties coming to the 
next meeting with sufficient flexibility and authority to 
resolve the remaining text issues. 
 
Next meetings of the Committee 
 
9. (SBU) The Committee will convene again the week of 
October 10, 2005 with the goal of finalizing the revision of 
the non-market-access-related provisions of the text.  The 
Chair has recommended that the Committee spend a full four 
days that week on the text issues. Shark