The dispute dates back to 1993, when the US government alleged
that the EU’s 1993 Government Procurement Directive, which allowed
Member States to give a 3% price preference to EU companies in some
sectors, discriminated against US operators, especially in the
telecoms sector.
The US then imposed sanctions against those Member States that
had implemented the Directive: Austria, Belgium, Denmark, Finland,
France, Ireland, Italy, Luxembourg, the Netherlands, Sweden and the
United Kingdom. Germany was removed from the list in 1994 when it
committed not to apply the price preferences while Greece, Spain
and Portugal had delayed the implementation of the EU Directive and
were therefore not covered by its terms.
The US sanctions were imposed unilaterally and barred European
companies from three types of contracts:
- contracts of goods, services and construction the value
of which fell under certain thresholds;
- all services contracts purchased by the Tennessee Valley
Authority and the Power Marketing Administrations of the Department
of Energy; and
- a list of 14 services contracted by Federal Agencies including
launching, dredging, broadcasting, R&D, legal services, hotel,
health and telecommunications.
The sanctions did not apply to contracts covered by the World
Trade Organisation (WTO) Agreement on Government Procurement, to
which both the EU and the US are signatories.
In response, the EU imposed equivalent sanctions, covering
services and public work contracts under the WTO Agreement on
Government Procurement thresholds.
The dispute has rumbled on for over 10 years, but in that
time the EU telecoms market, which was the focus of US concerns,
has been fully liberalised. This has removed the justification for
US sanctions and the US therefore agreed with the EU that it would
lift its sanctions on 1st March 2006.
“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,” said EU Trade Commissioner Peter Mandelson. “This heals a
dispute that has dogged both sides of the Atlantic for more than a
decade.”
