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procurement of products and services from (1) signatories "not in good standing" to the Agreement, (2) signatories that discriminate against U.S. firms in their government procurement of products or services not covered by the Agreement, and (3) nonsignatories to the Agreement whose governments discriminate against U.S. products or services in their procurement.

In the case of countries that discriminate on procurement not covered by the Agreement, prohibitions are to be imposed when a foreign government maintains a significant and persistent pattern or practice of discrimination against procurement of U.S. products or services that results in identifiable harm to U.S. business. In cases of signatories to the Agreement, Federal agencies would be prohibited from procuring only non-Agreement covered products from these countries unless that country has also been designated as a country "not in good standing.

Least developed countries are exempt from the procurement prohibition, as are products and services procured and used by the Federal government outside the United States and its territories. A prohibition may also be waived, on a contract-by-contract or class of contracts basis, when in the public interest or to avoid the creation of a monopoly situation. The President or head of a Federal agency may also authorize the award of a contract or class of contracts, notwithstanding a prohibition, if insufficient competition exists to assure the procurement of products or services of requisite quality at competitive prices. Normally the Congress must be notified at least 30 days before the prohibition is waived on a contract or class of contract.

The President must submit to appropriate Congressional committees by April 30, 1990 and annually thereafter a report on the extent to which countries discriminate against U.S. products or services in making government procurements. The report must identify (1) signatories to the Agreement that are not in compliance with its requirements; (2) signatories to the Agreement whose products and services are acquired in significant amounts by the U.S. Government, who are in compliance with the Agreement, but maintain a significant and persistent pattern or practice of discrimination in the government procurement of products and services not covered by the Agreement which results in identifiable harm to U.S. businesses; and (3) nonsignatories to the Agreement whose products or services are acquired in significant amounts by the U.S. Government and who maintain in their government procurement a significant and persistent pattern or practice of discrimination which results in identifiable harm to U.S. businesses. The law requires the President to take into account a number of specific factors in identifying countries and to describe the practices and their impact in the annual report.

By the date the annual report is submitted, the U.S. Trade Representative (USTR) must request consultations with any identified country, unless that country was also identified in the preceding annual report. If the country is a signatory identified as not in compliance with the Agreement and does not comply within 60 days after the annual report is issued, the USTR must request formal dispute settlement proceedings under the Agreement, unless they are already underway pursuant to a previous identifi

cation. If dispute settlement is not concluded within one year or has concluded and the country has not taken action_required as a result of the procedures to the satisfaction of the President, the country is considered "not in good standing" and the President is required to revoke the waiver of Buy American restrictions granted under the Trade Agreements Act of 1979. The President will not limit procurement from the foreign country if, before the end of the year following initiation of dispute settlement, the country has complied with the Agreement, has taken action recommended as a result of the procedures to the satisfaction of the President, or the procedures result in a determination requiring no action by the country. The President may also terminate the sanctions and reinstate a waiver at any time under such circumstances.

Within 60 days after the annual report is issued, the President must impose the procurement prohibition on any country identified as discriminating on procurements not covered by the Agreement and which has not eliminated its discriminatory procurement practices. The President may terminate the sanctions at such time as he determines the country has eliminated the discrimination.

With respect to either category of countries, if the President determines that imposing or continuing the sanctions would harm the U.S. public interest, the President may modify or restrict the application of the sanctions to the extent necessary to impose appropriate limitations that are equivalent in their effect to the discrimination against U.S. products or services in government procurement by that country. The President also cannot impose sanctions if it would (1) limit U.S. Government procurement to, or create a preference for, products or services of a single supplier; or (2) create a situation where there could be or are an insufficient number of actual or potential bidders to assure U.S. Government procurement of goods or services of requisite quality at competitive prices.

By April 30, 1994, the President must submit to the Congress a general report on actions taken under Title VII, including an evaluation of the adequacy and effectiveness of such actions as a means toward eliminating foreign discriminatory government procurement practices against U.S. businesses and, if appropriate, legislative recommendations for enhancing the usefulness of Title VII or any other measures to eliminate or respond to foreign discriminatory foreign procurement practices. Title VII shall cease to be effective on April 30, 1996 unless extended by the Congress.

In its first report on April 27, 1990, the U.S. Trade Representative determined that no country currently met the statutory criteria under Title VII. Seven procurement markets of particular significance to U.S. suppliers were identified for close review over the following year before the 1991 report: the European Community (EC), the Federal Republic of Germany, France, Italy, Greece, Japan, and Australia.

In its second annual report on April 26, 1991, the USTR identified Norway as meeting the statutory requirements for identification as a country in violation of its obligations under the GATT Government Procurement Agreement when it awarded a sole source contract for an electronic toll booth collection system for the city of Trondheim. The report also announced that while some

progress was made with the EC on non-Code-covered government procurement in the telecommunications equipment and heavy electrical equipment sectors, an early review would be conducted of the practices of the EC, Germany, France, and Italy in these areas in January 1992. Procurement practices of Greece, Australia, and Japan were also identified for further monitoring.

In its February 21, 1991 report on the "early review," the USTR found that the EC met the requirements for identification under Title VII with respect to discriminatory procurement practices of government-owned telecommunications and electrical utilities in certain of its member states. The report stated the President's intention to implement appropriate sanctions by January 1993 if consultations with the EC were not successful in resolving U.S. concerns within 60 days, subject to EC implementation of the discriminatory provisions of its September 1990 Utilities Directive that establishes procurement rules for all EC telecommunications and heavy electrical utilities.

The third annual report on April 29, 1992 continued the identification of Norway for the same practice. The report also reaffirmed the President's intention with respect to the EC and cited certain procurement markets in Australia, Japan, and China for further monitorings.

Chapter 4: LAWS REGULATING EXPORT ACTIVITIES

Background

Export Controls

Through statute, Congress has authorized the President to control the export of various commodities. The three most significant programs for controlling different types of exports deal with nuclear materials and technology, defense articles and services, and nonmilitary dual-use goods and technology. Under each program, licenses of various types are required before an export can be undertaken. The Nuclear Regulatory Commission is responsible for the licensing of nuclear materials and technology under the Atomic Energy Act. The Department of State is responsible for the licensing of exports of defense articles and services and maintains the Munitions Control List under the Arms Export Control Act.

Export licensing requirements for most commercial goods and technical data are authorized by the Export Administration Act under the jurisdiction of the Bureau of Export Administration in the Department of Commerce. The three basic purposes of export controls are to protect the national security, to further U.S. foreign policy interests, and to protect commodities in short supply. The Secretary of Defense is authorized to review certain applications for national security purposes while the Secretary of State reviews specified license applications for foreign policy purposes.

The export of goods or technical data subject to the Commodity Control List (CCL) must be authorized by licenses (either individual validated licenses or bulk licenses authorizing multiple shipments) which are granted on the basis of such factors as intended end-use and the probability and likely effect of diversion to military use. Exports and reexports from a foreign country of U.S.-origin commodities and technical data or of foreign products containing U.S.origin components or technology are also regulated. The CCL contains over 200 categories of goods and technologies applied to seven country groups, with the most stringent controls (near total embargoes) on exports to Cuba and North Korea.

The foreign policy export control authority was used by President Carter to embargo the export of grain to the Soviet Union after the 1979 Soviet invasion of Afghanistan. President Reagan used it again in 1981 until late 1983, following the imposition of martial law in Poland, to embargo sales by U.S. firms and their foreign subsidiaries of oil and gas transmission and refining commodities and technology for use by the Soviet Union on its natural gas pipeline to Western Europe. Crime control and detection instruments and equipment are subject to control for foreign policy. reasons to countries which may engage in persistent gross violations of human rights. Certain other goods and technology are con

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