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[ Presenting plain-text part of multi-format email ] Financial Times http://tinyurl.com/yoap International lawyers pore over details of Iraq contracts By Tobias Buck in Brussels and Edward Alden in Washington Published: December 10 2003 20:20 Can the US defense department award Iraqi reconstruction contracts worth $18.6bn to businesses from Mongolia, Britain and the Marshall Islands but leave companies from Germany and France out in the cold? In order to find an answer to that question, European trade officials were on Wednesday reaching for their copies of the Government Procurement Agreement, an international treaty signed in the Moroccan city of Marrakesh nine years ago. All parties to the agreement, including the US and the EU, promise not to favour their domestic companies over competitors from abroad when bidding for a government contract. The GPA also bans governments from discriminating between foreign companies based on their nation- ality. While the wording of the agreement is unambiguous, there are numerous exceptions and loopholes which could allow the US to claim that the GPA does not apply to the 26 contracts that it is looking to hand out. Most importantly, the GPA does not apply to "procurement indispensable for national security or for national defence purposes". Trade lawyers and academics argue, however, that this provision would only cover some of the Iraqi contracts. Christian Pitschas, a Brussels-based trade lawyer for Freshfields, said: "When it comes to rebuilding the general infrastructure, I really cannot see how the US would be able to argue that its national security was at stake. I just do not see that the exceptions can be applied to things such as building schools or restoring the electricity grid." Sue Arrowsmith, a law professor at Nottingham University who specialises in government procurement, said it was "very unlikely" that the US would succeed with this argument, but argued that Washington might be saved by another loophole. She pointed to an endnote attached to the GPA, which states that certain kinds of development assistance, so-called tied aid, is not covered by the agreement. However, like most trade specialists she said that international government procurement was a "grey area" - a problem exacerbated by the fact that there had been only very few World Trade Organisation rulings in this field. Richard Mills, a spokesman for the office of the US trade representative, said in a statement on Wednesday "there is no need to invoke the essential security exception to our trade obligations". Instead, he said, the US would argue that the Coalition Provisional Authority was not covered by the WTO rules, and therefore the CPA was free to discriminate in contracts as it saw fit. This line of argument came as a surprise in the light of the wording of the Pentagon decision, which makes references to "national security" and "essential security interests". Both terms appear in the GPA, suggesting that the Pentagon was initially preparing to base its defence on the national security argument. This in turn suggests that the Pentagon's decision was assembled without a full vetting by the US trade representative's office, which is the lead agency in dealing with Washington's international trade obligations. However, Commission officials rejected the US claim that contracts would be awarded by the CPA. They pointed out that the announcement on the bidding procedures had been made by Paul Wolfowitz, deputy defence secretary, indicating that the Department of Defense was closely involved in the awarding of the contracts. Brussels officials also argued that the CPA had close links to the Pentagon, and that Tuesday's statement itself made clear that contracts would be awarded by the CPA "and the Department of Defense, on behalf of the CPA". According to an annex to the GPA, most contracts awarded by the Pentagon explicitly fall under the GPA. _______________________________________________ Sent via the discussion list of the Campaign Against Sanctions on Iraq. To unsubscribe, visit http://lists.casi.org.uk/mailman/listinfo/casi-discuss To contact the list manager, email firstname.lastname@example.org All postings are archived on CASI's website: http://www.casi.org.uk