Public procurement sanctions removed

3 March 2006
More legal news

03 March 2006 | Rebecca Ellinor

The EU and US this week lifted long-standing mutual public procurement sanctions against each other.

The move ends a 13-year dispute that prevented suppliers on both sides of the Atlantic from bidding for certain types of contract.

EU trade commissioner Peter Mandelson said in a statement: "I welcome the fact that the US has finally agreed to lift its sanctions against EU member states, which enables us to do the same. This heals a dispute that has dogged both sides for more than a decade."

The US government imposed sanctions against the then 11 EU states in May 1993. It did so because it alleged that the EU's 1993 Government Procurement Directive, which allowed member states to give a 3 per cent price preference to EU companies in some sectors, discriminated against US operators, particularly in the telecoms sector.

In response to the sanctions, EU imposed equivalent measures.

However, since that time the EU telecoms market has been fully liberalised and US sanctions are no longer justified. Both sides agreed to cancel sanctions on 1 March.

The US sanctions covered Austria, Belgium, Denmark, Finland, France, Ireland, Italy, Luxembourg, the Netherlands, Sweden and the UK. Germany was removed from the list in 1994 when it agreed to drop price preferences.

The measures barred European companies from three types of contracts: goods, services and construction under a certain value; all services contracts purchased by the Tennessee Valley Authority and the power marketing administrations of the Department of Energy; a list of 14 services contracted by federal agencies including launching, dredging, broadcasting, research and development, legal services, hotel, health and telecommunications.

In response, the EU imposed equivalent sanctions, covering services and public work contracts under the World Trade Organisation agreement on government procurement thresholds.


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