Page:Special 301 Report 1996.pdf/26



Acting United States Trade Representative Charlene Barshefsky announced today the Administration's decisions with respect to this year's review under Title VII of the 1988 Omnibus Trade and Competitiveness Act, as amended by the 1994 Uruguay Round Agreements Act.

The Administration has identified Germany for a "significant pattern or practice of discrimination" in the heavy electrical equipment sector. In the 1995 Title VII Report, the Administration referred to this procurement market in Germany as "warranting special attention" as an area "of substantial concern." The Administration's concern arose out of a procurement of steam turbines for the Lippendorf project, which involved a number of irregularities in the procurement process. Among other problems, a U.S. firm, General Electric (GE), was inexplicably excluded from a final stage of bidding in which two German manufacturers were permitted to present best and final offers on price. When GE sought to challenge the procedure before an impartial German review body, it experienced substantial difficulties in identifying a forum, despite the fact that Germany is obligated under the 1993 U.S.-European Union (EU) Memorandum of Understanding (MOU) to provide a remedy mechanism.

Since the publication of the 1995 Report, other developments have occurred that lead the Administration to conclude that a systemic problem exists with Germany's implementation of its obligations. A second U.S. firm, Westinghouse, participated in the initial stages of a second heavy electrical equipment procurement in the city of Cottbus and also found irregularities in the process that effectively excluded it from competitive bidding. Westinghouse too has had difficulties in obtaining an impartial review of its complaints.

At the same time, the Commission of the European Communities has proceeded with an infringement action against Germany for its implementation of relevant EU procurement directives that in turn implement obligations with the United States. In light of the Lippendorf and Cottbus cases, the Administration has concluded that an institutional problem exists with Germany's implementation and enforcement of these directives.

Identification under Title VII triggers a 60-day consultation period during which the Administration will seek to resolve these problems with the German government. If no resolution is forthcoming by the end of this period, the Administration will decide on further action, including the possibility of sanctions. Any further action will take into account that the Lippendorf and Cottbus cases are covered by the 1993 MOU, as opposed to the new WTO Government Procurement Agreement (GPA).