10. Treatment granted to domestic and foreign goods, services and public works and their suppliers

10.1 Definition of domestic in relation to domestic goods, services, public works and suppliers

Please specify the working definition of "domestic" in relation to domestic goods, services, public works and suppliers.

ARGENTINA

Decree 1,224/89, which regulates Law 23,697 that repealed the "buy national" regime, defines a good as of national origin when it was produced or extracted in the Republic of Argentina, provided that the cost of the raw materials, inputs or imported materials used in the elaboration of the product is not more than 50% of its total cost. For works and services the aforementioned Decree defines "local enterprise" as the one whose domicile and principal site of business is in Argentina.

BAHAMAS

The term "domestic" means a Bahamian producer or agent.

BELIZE

Domestic in regards to goods, services and public works and supplier would refer to goods produced or manufactured in Belize. Services and public works would be rendered from resident Belizeans or resident companies with Belizean majority ownership.

BOLIVIA

The definition of national is all goods and services produced in the national territory, or which containing imported inputs, the national value added is not less than 40% of the total value. The nationality of producers of goods and/or services is not taken into account for this purpose.

BRAZIL

The Brazilian law does not make any difference between national or foreign suppliers.

CANADA

Consistent with Canada's international trade obligations, Canada applies the same rules of origin to foreign goods as those applied in the normal course of trade.

CHILE

The Chilean Civil Code in its Article 57, provides that the law does not make differences between Chileans and foreigners in relation tot he acquisition and enjoyment of rights.

COLOMBIA

Goods are considered to be of national origin if the CIF value of the inputs, raw materials or imported goods used in the elaboration of the product is equal or inferior to 60% of the value.

COSTA RICA

To define if a product is national or foreign the Dirección Nacional de Industrias del Ministerio de Economía, Industria y Comercio [National Directorate of Industries of the Ministry of Finance, Industry and Trade] establishes that the product is of national origin if is produced by a company established in the country. At the request of the interested producer the Dirección Nacional de Industrias form the Ministry of Economy, Industry and Commerce analyses the production process of the good in question, taking into account different aspects such as the added value etc. to determine the good as a national product. If the good meets the requirements the mentioned entity issues a certification acknowledging that the product is considered of national origin.

ECUADOR

Goods are considered of national origin when their national aggregate value exceeds 30%. National services are those provided by national persons or companies or domiciled in Ecuador. Public works are considered national when they are carried out in Ecuadorian territory with economic resources of national origin or originating from foreign sources but imply a compromise or a donation to the Ecuadorian government.

EL SALVADOR

There is not a definition of "national" that exists in reference to goods, services or suppliers, however, the laws, regulations, or related guidelines are able to determine each of these elements.

GUATEMALA

The law does not contain provisions defining the term "national".

JAMAICA

"Domestic" as it relates to goods, specifies that goods must be manufactured, produced or substantially transformed in Jamaica. In the case where the origin of the good is different from the origin of its materials, then there will have been a substantial transformation of those materials. In relation to services, public works and suppliers, any company carrying out public works or offering services of any kind must be a registered company in Jamaica with the majority ownership by a Jamaican national.

MEXICO

National goods are those which contain, at least, 50% of national components or parts. This category does not comprise foreign goods, which are subject to packaging, labeling or any other process which does not alter the characteristics of those goods and those which are assembled or completed in the country.

National suppliers are all those individuals and companies and/or persons which carry out economic or productive activities inside the national territory and which are administered and legally constituted in conformity with Mexican laws.

NICARAGUA

A good is considered national when its national content is at least 40%. Services, public works and suppliers are conceded national treatment when they comply with the requirement of the national laws and regulations.

PANAMA

Panama does not have a definition for national goods or services, it does not differentiate when putting out a bidding process for public sector procurement. National and international suppliers may participate provided they comply with law requirements.

PARAGUAY

The civil and tax legislation considers all goods and/or services from suppliers domiciled in the country as national.

PERU

No specific legal provision exists in this respect.

TRINIDAD AND TOBAGO

When a good is manufactured in Trinidad and Tobago.

UNITED STATES

A product is domestic when more than 50% of the content is manufactured in the Unites States and the product itself is manufactured in the United States (Buy American Act). With respect to construction services the definition includes an examination of ownership, nationality of directors and place of incorporation

URUGUAY

Does not provide a definition.

VENEZUELA

No specific definition exists.

 

10.2 National treatment

Are there laws, regulations, procedures or practices that accord domestic goods, services, public works and/or suppliers treatment more favorable than that accorded to foreign goods, services, public works and/or suppliers? Please specify the law and how, if at all, the different treatment is accorded.

ARGENTINA

Act 23,697 of economic emergency suspended the "purchase domestically" regime for the procurement of goods and services in force until that moment (Section 23). Its regulatory Decree Number 1,224/89-modified by Decree 2,284/91 of economic deregulation (confirmed by Section 29 of Act Number 24,307)-stipulates the preference in the procurement or lease of goods of national origin in the case of similar offers with identical quality and characteristics, when the price is equal or less than the foreign goods (Section 3 of Decree Number 1,224/89 and section 21 of Decree Number 2,284/91). For the purpose of price comparison, the price of the foreign good will contain import duties in force and other taxes and expenses required by a specific not privileged importer.

In addition, Section 61, subsection 73 of Decree Number 5,720/72 refers to "elements of national origin" as criteria should there be a tie in prices.

In matters of procurement of works and services, local companies will be preferred if the offers presented by the local and the foreign company are equal (Section 11 of Decree 1,224/89 and Section 21 of Decree Number 2,284/91).

BAHAMAS

There are no national preference laws. All suppliers whether local or foreign are subject to the government imposed tariffs. Government imposed tariffs are presently being reviewed and revised.

BELIZE

Even though there is no specific regulation on the subject, usual practice prefers the contracting of national goods and services when financed by public funds.

BOLIVIA

Yes, legal provision provides an incentive for those proposals with national goods and services in order to promote national services and industry as compared to foreigners. For this purpose, a 10% incentive is granted to the sum of technical and economic qualification, only if the minimum or maximum percentage required for the opening of envelope "B" has been obtained.

BRAZIL

There are no laws favoring national suppliers in government procurement processes.

CANADA

National treatment: There are no local content requirements for procurements covered by the international trade agreements.

Preference for domestic suppliers: An industrial and regional benefits policy may apply for larger value procurements by all government departments, when the procurement is not covered by the international trade agreements. Under this policy, all procurements over a value of C$2 million (US$1.44 million) are reviewed to assess the opportunities for achieving socioeconomic benefits in Canada. However, this policy is rarely applied to contracts under C$100 million (US$72.03 million).

For procurement handled by Public Works and Government Services Canada and not covered by international trade agreements, PWGSC applies a Canadian Content Policy, which restricts a procurement opportunity to suppliers of Canadian goods and services, provided there is adequate competition, usually three or more suppliers. The rules of origin applied are the rules used in the normal course of trade.

Preference for small or medium-size enterprises: Canada does maintain an exception under the WTO-AGP and NAFTA for small business. However, it does not currently have in place a program providing small business with preferences.

Consistent with Canada's international trade obligations, Canada may apply a set-aside for government procurement to qualified Canadian aboriginal businesses.

CHILE

The Chilean Civil Code, in Section 57, indicates that regarding the purchase and enjoyment of a civil right, the law does not recognize a difference between Chilean and foreign entities.

COLOMBIA

As established in Art. 29 of Act 80, "The selection process is objective, awarding to the offer most favorable to the entity, according to its needs, without letting personal interests interfere", which grants equal treatment to foreign and national offers.

Act 80, following the concepts of efficiency and compatibility, it brings out two essential factors: the principle of reciprocity and preference to national offers under competitive quality, price and opportunity conditions.

The same conditions as set forth in Art. 20 of Act.80, for offers that contains goods and services of domestic origin will be preferred. Therefore, equal treatment to foreign and national offers, if the corresponding country provides the same treatment as domestic offer to Colombian offers.

Art. 21 of same Act. sets forth that in the case of foreign bidders under equal conditions , the bidder that includes the most incorporation of national human resources, national components and better technology transfer conditions, will be preferred.

As a rule, the foreign and national offers are subject to equal considerations. In this manner, a comparison framework is set for the market, only applicable on the basis that the goods and services of national origin are in equal conditions as those of international origin: in quality, opportunity and price, that is to say, when national products are really competitive and not just taken into account for being national.

COSTA RICA

In Costa Rica, the principle of national treatment regarding government procurement legislation applies to all countries with the following exceptions:

The principle of national treatment is subject to the principle of reciprocity.

As a general rule, Article 5 of the Administrative Contract Law requires that all potential bidders be given equal consideration in the administrative contracting proceedings. It also indicates that the regulations of this law or the provisions that rule the specific proceedings of each contract shall not include regulations that will impede fair competition among potential bidders.

According to this same provision, the participation of foreign bidders is ruled by the principle of reciprocity; the same treatment is given as that which is received in the participant?s country. Article 5 of the law establishes that foreigners will be denied participation if nationals of Costa Rica are denied participation in their country. In order to facilitate this reciprocity, the Administration can request, as a qualifying condition, any evidence it deems pertinent.

The principle of National Treatment as a matter of selection of offers is contemplated for Central American countries and Panama for goods; and for Mexico for goods and services without prejudice of the application of the principle of national treatment to other countries in the case that reciprocity is demonstrated with such countries.

The Incentive for Industrial Production Law, Law Number 7,017 of December 16, 1985, (Annex 3) published in issue number 23 of La Gaceta of December 27, 1985, Article 12 establishes that "Upon any procurement by the Government of the Republic, its independent institutions, semi-independent institutions, the municipalities or any other official entity mandatory preference will be given to the products manufactured by the national industry when the quality is comparable, supply is adequate and the price is equal or lower to imported products.

This same condition applies to Central American countries as a result of Article III (which establishes the principle of national treatment) of the General Economic Integration Treaty of Central America. To Mexico, by virtue of Article 1.24 (National Nondiscrimination Treaty) of the Free Trade Agreement between Costa Rica and Mexico (Law Number 7,474 of December 20, 1994), and to Panama by virtue of Article 12 (national treatment) of the Free Trade and Preferential Exchange Treaty (Law Number 5,252 of July 31, 1973).

The national treatment principle does not apply in the case of subcontracting national construction companies, when the bidder in a public works competitive bid is a general contractor.

In this case, a national constructor is preferred. Article 14 of the Public Works Concession Law indicates that in the concessionaire selection process, each time that an eventual concessionaire is not going to directly construct the public works, preference will be given to those bids that indicate that a certain subcontractor work will be done by national firms.

Please note that the following should be added according to Law Number 7,017, previously mentioned, for price comparison purposes custom duties and all inter-nation expenses will be added to the price of foreign made merchandise, even when the purchasing firm is tax-exempt.

Decree Number 26,076 MP-MEIC ("Gaceta" Number 113 of Friday, June 13, 1997) regulated Article 12 of Annex 3 of Law Number 7,017. In this regulation it establishes, according to said law, the percentages that should be added to the CIF value of the imports of foreign bidders.

 

ECUADOR

National treatment, both in the Executive Decree Number 976 of June 22 of 1982 and in the Executive Decree Number 2,548 of February 24, 1995, described in paragraph (c) of Section 8, establishes compensatory procedures in favor of domestic production.

EL SALVADOR

APPLICABLE LAW

ARTICLE

CONTENT

Ley de Suministros [Procurement Law]

19

As a general rule, when given two equal offers, a national offer is preferred to a foreign one.
Reglamento del Instituto Nacional de Pensiones de los Empleados Públicos para la Adquisición de Bienes Muebles y Coordinación de Servicios no Personales []

2 literal "d"

32 literal "b"

Give preference to products manufactured domestically or those made in Central America, in accordance with the needs of the institution.

Quality and origin of the products.

Reglamento de Proveduría [Procurement Regulation], University of El Salvador

22 paragraph 2

As a general rule, when given two equal offers, a national offer is preferred to a foreign one.
Ley de Suministros for Public Works

8 literal "c"

For one of kind products because of their authors, manufacturers or having being chosen in its place of origin.
Ley de Suministros for Public Health and Social Assistance and its amendments

7 literal "b"

Ibid.
Regulations for the acquisition of movables, execution of works and contracting of non personal services of the Social Security Institution.

2 literal "d"

32 literal "b"

Give preference to products manufactured domestically or those made in Central America, in accordance with the needs of the institution.

Quality and origin of the product.

GUATEMALA

The law does not contain provisions which accord different treatment to national goods, services, public works and/or suppliers as opposed to foreign ones.

JAMAICA

There are no laws and regulations that stipulate this, but there is more or less the practice that preference be granted to domestic goods, services, public works and/or suppliers, in order to develop the local market.

MEXICO

The legal framework currently in force in Mexico regarding government procurement does not establish any quantitative preferences that benefit domestic goods and suppliers over foreign goods and suppliers.

Nevertheless, as explained before, international bids can only take place when the entities justify such need, after a prior market research has been conducted, when the contract is financed with resources from foreign credits or when the contract is covered by international treaties subscribed.

Furthermore, Article 31 of the Law provides that the participation of foreign suppliers and contractors in international bidding procedures when their native country has not subscribed a treaty on government procurement with Mexico or when that country does not grant a reciprocal treatment to Mexican suppliers or contractors or goods or services.

NICARAGUA

There is no differentiation between treatment of domestic and foreign companies. An agreement on Central American Commercialization of Services is currently under negotiation.

PANAMA

No.

PARAGUAY

All public work shall be compulsorily executed by Paraguayan companies or professionals, with the modalities anticipated in this Law. In the case of works that require foreign companies contracting, these will act in association with national companies, whose participation be up to the limits of the contracting or production capacity, that shall not be inferior to the 40%.

In the public works that are executed by virtue of agreements among the State and international financial organizations and of financing agreements of external source, it will have to be assured to the Paraguayan companies the participation adapted to their capacity, that in no case will be inferior to the 40%.

PERU

There are no laws, regulations, procedures or practices that grant a preferential treatment to domestic goods, services, public works and/or suppliers over foreigners.

TRINIDAD AND TOBAGO

By policy decision of the cabinet, a 10% preference on the cost is applied. It is a policy decision of the Government to accord domestic goods only, treatment more favorable than that of comparable foreign goods.

UNITED STATES

Local content requirements: In general, the Buy American Act of 1933 requires that domestic end products be acquired for public use. Executive Order 10,582, December 17, 1954 (as amended) implements the statutory preference by stating that an offered price of a domestic product is unreasonable and that an award can be made for a foreign product if the price exceeds the price of a foreign product by 6%. Moreover, the Executive Order authorizes a federal agency to use any factor to determine that the offered price of a domestic product is excessive. For example, a factor of 12% is used by many civilian agencies to determine whether a price offered by a small business firm is unreasonable. Generally, federal agencies other than DOD use the six or 12% evaluation factor to determine if the offered price of a domestic product is unreasonable. DOD uses a 50% factor.

Procurement subject to U.S. international obligations is exempt from Buy American Act preferences by Presidential action authorized under the Trade Agreements Act (TAA) of 1979. Authority under the TAA has been used to implement obligations under the WTO GPA, NAFTA, the U.S.-Israel Free Trade Agreement and the WTO Agreement on Civil Aircraft. Additionally, the Buy American Act does not apply to procurement of services or procurement by state and local governments, although many of these sub-federal jurisdictions apply their own preferential procurement policies.

In addition to the Buy American Act, appropriations and authorization legislation, particularly for DOD, may require procurement from domestic sources, as discussed under question 3(b) above.

Preferences for small and medium size enterprises: There is no preference for medium size companies. The Small Business Act requires that awards of any size shall be set aside for small business participation when there is a reasonable expectation that offers will be obtained from at least two small businesses and awards will be made at fair market prices. This is the so-called "Rule of Two" for application of set-asides.

Purchasing prohibition: The TAA requires that procurement of products from countries that are not signatories to the WTO GPA and have not taken on equivalent reciprocal obligations (e.g., under NAFTA Chapter 10) be prohibited for federal goods contracts that are covered by the GPA. This provision is intended to provide incentive to WTO members to join the GPA. The prohibition affects approximately $20-$30 billion in procurement opportunities annually. Amendments to the TAA contained in the Uruguay Round Agreements Act (URAA) of 1994 permit the President to waive the purchasing prohibition and apply Buy American preferences in its place for countries that are not signatories to the GPA but agree to apply equivalent competitive procurement procedures and effective anti-corruption measures. This authority has yet to be exercised.

URUGUAY

Section 52 establishes that all procurements of the entities mentioned in Section 2 and of quasi-governmental entities must provide a preference to domestic products with equal quality and capability as foreign ones. Such preferences for domestic production shall be governed by the provisions of existing promotion laws or laws that will exist, with the obligation of stating its nature and limits in the general bidding terms and conditions.

In the award of contracts of public works, if there is a similarity in the various elements that form the offer, those that imply a greater utilization of domestic labor and materials will be granted preference.

For the purpose of appraising such preference the corresponding general bidding terms condition will require that the bidder estimates and expresses the percentages of domestic labor and materials that make up the price of the offer.

When the foreign offers quote FOB, CIF, and CYF prices, all integrating factors of the cost must be added to it, for its comparison with the goods or products of domestic origin.

VENEZUELA

Our legislation, as far as the procurement of goods, services and works is concerned, does not contain other elements different from those previously mentioned, giving a better treatment to national suppliers.

 

10.3 Most favored nation

Are there laws, regulations, procedures or practices that accord goods, services, public works and/or suppliers of one country more favorable treatment than those of another country (e.g. through regional agreements)? Please specify the law and how, if at all, more favorable treatment is accorded.

ARGENTINA

There are no legal provisions that provide a more favorable treatment in the qualification and award of contracts. However, where goods are concerned, Argentina as a member of Mercosur and by virtue of agreements signed under LAIA (Latin American Integration Association), accords tariff preferences to those countries.

BAHAMAS

Does not concede more favorable treatment to any specific country.

BELIZE

Does not concede more favorable treatment to any specific country.

BOLIVIA

There are no legal provisions that provide more favorable treatment in the qualification and award of contracts. Nevertheless, Mexican goods and services are granted preferential treatment as a consequence of the application of the liberalization program agreed upon in the Free Trade Agreement between Mexico and Bolivia. Likewise, goods from Colombia, Ecuador and Venezuela are granted preferential treatment by virtue of the Cartagena Agreement, and goods from Argentina, Brazil, Paraguay and Uruguay under the Free Trade Agreement Mercosur and goods from Chile and Peru under the corresponding bilateral agreements.

BRAZIL

There are no provisions of this type in the national legislation.

CANADA

MFN Treatment: Canada has clear WTO-AGP and NAFTA obligations that provide MFN access to parties to those agreements. Canada also has the option to provide MFN treatment to non-Parties, although such access is not guaranteed under international agreements.

CHILE

There is no preferential treatment for any country.

COLOMBIA

There are no provisions in matters of procurement that offer a preferential treatment to offers from a foreign country, discriminating it from the offer from another foreign country.

COSTA RICA

The principle of most favored nation in Costa Rica applies to all laws concerning public sector procurement, with the following exceptions:

The Principle of National Treatment is subject to the principles of reciprocity.

As a general principle, Article 5 of the Administrative Contract Law indicates that in the administrative contracting procedures the fair participation of all potential bidders should be respected. It is also indicated that the regulations of this law or the provisions that rule the specific proceedings of each contract should not include any regulation that impedes free competition among the potential bidders.

According to this same provision, the participation of foreign bidders is ruled by the principle of reciprocity, they will receive the same treatment accorded to Costa Rican nationals in the native country of the foreign bidder. Article 5 of the regulations of the law establishes that foreigners will be impeded from receiving preferential treatment if Costa Rican nationals do not receive the same preferential treatment in the native country of the foreign bidder. In order to facilitate this reciprocity, the Administration can request, as a qualifying condition, any evidence it deems pertinent.

In the proposal selection factor, the most favored nation treatment has exceptions due to the treaties agreed to with Central America, Panama and Mexico.

Proposals from Central America, Panama and Mexico are given preferential treatment in comparison to proposals from other countries. This preferential treatment will be given by the Government of the Republic, its autonomous institutions, semi-independent institutions, municipalities or any other official entity to those products manufactured by the industries of Central America, Panama and Mexico, when the quality is comparable, the supply is adequate and the price is equal or lower than imported products.

Please note that the according to Law Number 7,017, previously mentioned, the following should be added: ?for price comparison purposes custom duties and any other inter-nation expense will be added to the price of foreign produced merchandise, even when the purchasing entity is tax-exempt.

Decree Number 26,076 MP-MEIC (Gaceta Number 113 of Friday, June 13, 1997) regulated Article 12 of Annex 3 of Law Number 7,017. This regulation it established, according to said law, the percentages that should be added to the CIF value of the imports of foreign bidders. This decree establishes the corresponding percentages for the proposals from Central America; Mexico; and the third markets with which Costa Rica has no commercial treaty be they bilateral or multilateral. The differences in percentage are due precisely to the specific tariff regimes with some countries due to the commercial treaties agreed upon by Costa Rica.

ECUADOR

In government procurement matters, there is no most favored nation treatment for any country.

EL SALVADOR

No.

GUATEMALA

The law does not contain provisions which accord preferential treatment to goods, services, public works and/or suppliers of one country as opposed to others.

JAMAICA

Does not concede more favorable treatment to goods, services, works and/or suppliers of any particular country over others.

MEXICO

In matters of government procurement, the legal framework in force in Mexico, does not establish quantitative preferences in favor of domestic suppliers and goods over foreign suppliers and goods.

Nevertheless, Section 31 of the Law provides that foreign suppliers or contractors may be denied participation in international bids whenever there is not treaty subscribed with their country of origin or when such country does not award a reciprocal treatment to Mexican suppliers or contractors or goods and services.

NICARAGUA

There is no preferential agreement with Central America applicable to import tariffs of goods that are commercialized within the area. There is no preferential regulation in other trade aspects.

PANAMA

There is no law or regulation in Panama that grants preferential treatment to goods, services, works and suppliers of another country through a regional agreement.

PARAGUAY

There are no agreements in this regard.

PERU

There are no laws, regulations, procedures or practices that grant a preferential treatment to goods, services, public works and/or suppliers of one country over another.

TRINIDAD AND TOBAGO

No.

UNITED STATES

Procurement subject to U.S. international obligations is exempt from Buy American Act preferences by Presidential action authorized under the Trade Agreements Act (TAA) of 1979. Authority under the TAA has been used to implement obligations under the WTO GPA, NAFTA, the U.S.-Israel Free Trade Agreement and the WTO Agreement on Civil Aircraft. Additionally, the Buy American Act does not apply to procurement of services or procurement by state and local governments, although many of these sub-federal jurisdictions apply their own preferential procurement policies.

Purchasing Prohibition: The TAA requires that procurement of products from countries that are not signatories to the WTO GPA and have not taken on equivalent reciprocal obligations (e.g., under NAFTA Chapter 10) be prohibited for Federal goods contracts that are covered by the GPA. This provision is intended to provide incentive to WTO Members to join the GPA. The prohibition affects approximately $20-$30 billion in procurement opportunities annually. Amendments to the TAA contained in the Uruguay Round Agreements Act (URAA) of 1994 permit the President to waive the purchasing prohibition and apply Buy American preferences in its place for countries that are not signatories to the GPA but agree to apply equivalent competitive procurement procedures and effective anti-corruption measures. This authority has yet to be exercised.

URUGUAY

If the purchase must be carried out abroad, the agreements with the countries incorporated to trade organizations, communities or customs or integration or production agreements of which the country is a party, will be complied with, and, in particular, the Asociación Latinoamericana de Integración (ALADI).

VENEZUELA

The definition is found in the Free Trade Agreement of the Group of Three (TLG-G3), subscribed by Venezuela. Each party will grant the other party?s goods, suppliers of such goods and providers of services, a treatment not less favorable that the most favorable treatment received by their own goods and suppliers of another party. It is worth mentioning that, besides this definition, there is no preferential treatment for national products in Venezuela?s legislation.