Brussels to investigate US contracts in Iraq
By Tobias Buck in Brussels
Financial Times - Apr 10 2003
The European Commission is examining contracts awarded by the US for reconstruction work in Iraq to find out whether they breach World Trade Organisation rules and discriminate unfairly against European companies.
The move could throw up a new irritant at a time when relations between Washington and Brussels are already severely strained by the highly critical stance adopted by many European Union members towards the war in Iraq.
It also comes as trade negotiators on both sides of the Atlantic struggle to overcome their differences over further trade liberalisation in the current WTO round as well as a growing number of bilateral trade disputes.
The EU insists that the US abide by the WTO Agreement on Government Procurement, which states that, in principle, contracts awarded by national governments or their agencies must be open to businesses from abroad.
However, a spokeswoman for Pascal Lamy, the EU trade commissioner, conceded that this rule did not apply to vast bulk of contracts signed by the US Agency for International Development, the State Department organisation that oversees US humanitarian aid projects, and which so far has been largely responsible for reconstruction contracts in Iraq. Contracts that touch upon issues related to "national security" or "national defence" are also not covered by the agreement.
This is because WTO members were given significant leeway in deciding what sectors and government agencies they would open to foreign competition.
"We will be examining [the contracts] on a case-by-case basis. We have to examine whether each of them falls under the exceptions the WTO rules provide for," the spokeswoman said.
However, the Commission stressed that it was keen to avoid formal proceedings against the US in front of the WTO: "The last thing we need now is a row at the WTO," she added.
Officials also said that they were not aware of any complaints from European companies regarding the current tenders for reconstruction work. "We have not yet identified any particular problems. We hope that they respect the rules. But if they don't, there is the WTO," a Commission official said.