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:
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.”
