Trade Law Implications of Procurement Practices in Sustainable Energy Goods and Services1 This sheet is a Q&A based summary of the issues paper ‘Trade Law Implications of Procurement Practices in Sustainable Energy Goods and Services’ (2012) by Alan Herve and David Luff, produced by ICTSD in collaboration with the Peterson Institute for International Economics and the Global Green Growth Institute. Why are Government Procurement and the WTO’s Government Procurement Agreement Important in the Relationship between Trade and Sustainable Energy? Governments are a major consumer of goods and services, including those focussed on sustainable energy, and can therefore play an important role in steering the consumption of sustainable energy. Traditionally, government procurement has generally been used as a policy tool to favour domestic producers. Therefore, because of their effect on trade, these practices have been addressed in WTO law and more particular in the Government Procurement Agreement (GPA). The Model Law on Procurement of Goods, Construction and Services of the UN and other regional non-binding instruments are an attempt to regulate public procurement as well. Additionally, many Free Trade Agreements (FTAs) include “WTO-plus” obligations to regulate public procurement. As the GPA is a plurilateral agreement, it only creates rights and obligations for WTO Members who have signed the agreement. Each party to the GPA has specified which government entities will be covered by the rules of the agreement. Can Governments Proactively Favour Sustainable Energy Goods and Services to the Exclusion of their Non-Sustainable Counterparts? Favouring the procurement of Sustainable Energy Goods and Services, SEGS, may be seen in some situations as discriminatory practices. If a procuring country is party to the GPA and the procurement is covered by its list of GPA commitments, discriminations favouring SEGS in public procurement can therefore be successfully challenged under the GPA. However,the GPA offers some flexibilities, providing that the procurement procedures are applied in a nondiscriminatory manner. For example, government entities are not required to award the contract based on the lowest price but can choose the “economically most advantageous” tender, which leaves room to take other policy objectives into account. Even if a procurement practice is considered discriminatory, a country can invoke the exception provision under the GPA which mirrors the exceptions under article XX of the General Agreement on Tariffs and Trade, GATT. These allow a country to take certain ‘measures necessary for the protection of 1
Herve, Alan and David Luff (2012); Trade Law Implications of Procurement Practices in Sustainable Energy Goods and Services; International Centre for Trade and Sustainable Development, Geneva, Switzerland. The full paper is accessible at: http://ictsd.org/i/publications/146446/.