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ECCO�s Symposium On Civil & Defense Offset, International Law

ECCO, the European Club for Countertrade and Offset, organised a symposium in Paris, France, where members and guests of ECCO discussed offset and aspects related to international law with a group of experts.

Prof. Viviane de Beaufort, a European Union law expert and co-director of the European Centre for Law and Economics (C.E.D.E.) in Paris, delved deeper into issues influencing Europe�s competitiveness. Her presentation entitled �Opening Up Of International Government Procurement,� offered a balanced look at the current offset arena and asked the question how reciprocity can be guaranteed.

Mr. Francois Riegiert from the World Trade Organisation (WTO) presented the basic principles of the WTO, focusing on non-military (civil) offset.

Here is a brief look at legislation related to civil offset:

� Countertrade is banned as a quantitative restriction (Article XI, The General Agreement on Tariffs and Trade, GATT 1947).

� Exceptions are included in Article XII: Restrictions to Safeguard the Balance of Payments.

� Article XVIII: Governmental Assistance to Economic Development deal mostly with imports and exports.

These agreements were signed by Canada, European Union, Hong Kong China, Iceland, Israel, Japan, Korea, Liechtenstein, the Netherlands (Aruba), Norway, Singapore, Switzerland, Chinese Taipei and the USA.

The cornerstone principles of the GPA (Government Procurement Agreements) are non-discrimination and transparency. 

The GPA explicitly prohibits the use of offset as measures to encourage local development, or improve the balance-of-payments accounts by means of domestic content, licensing of technology, investment requirements, countertrade, or similar requirements.

Notwithstanding this, Article V of the GPA states that developing countries may negotiate, at the time of their accession, conditions for the use of offsets provided these are used only for the qualification to participate in the procurement process and not as criteria for awarding contracts.

Article XVI of the GPA states that a developing country may at the time of accession negotiate conditions for the use of offsets, such as requirements for the incorporation of domestic content. Such requirements shall be used only for qualification to participate in the procurement process and not as criteria for awarding contracts.

Conditions shall be objective, clearly defined and non-discriminatory and may include precise limitations on the imposition of offsets in any contract subject to the GPA. The existence of such conditions shall be notified to the Committee and included in the notice of intended procurement and other documentation.

Mr. Marc Poulain, policy officer at the European Commission: Director General Trade, Government, Procurement and IPR Unit, talked about the treatment of offset under the international commitments undertaken by the EU on government procurement, including the GPA and bilateral free trade agreements.

His presentation �Treatment Of Foreign Bidders / Goods In Government Procurement Legislation: A Comparison Between The EU And The US Regime� resulted in interesting discussions.

Dr. Katharina Vierlich-Juercke, legal officer at the European Commission: Director General Internal Market, focused on defense government procurement in Europe and the new Directive 2009/81/EC.

The Directive has been adopted in view of developing a true European Defense Equipment Market (EDEM) and the European Defense Technological and Industrial Base (EDTIB). The plan is to implement the Directive on 21 August 2011.

On 6 and 7 September, ECCO will be hosting a symposium focusing on offset in the UAE (United Arab Emirates), and taking the EU debate further. The event will be in Paris.

The following symposium will be 14 to 15 December 2011 in either Paris or Brussels.

For more information or to become a member of ECCO click here.

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