28 April 1992

1.1 In document GPR/W/106 of 11 June 1991 the United States informed the Committee on Government Procurement ("the Committee") that bilateral consultations had been held with Norway under Article VII:4 of the Agreement on Government Procurement ("the Agreement") on the procurement by Norway of an electronic toll collection system for the city of Trondheim. Since these consultations had not produced a mutually satisfactory solution, the United States requested a meeting of the Committee pursuant to Article VII:6 of the Agreement. This meeting was held on 20 June 1991 (GPR/M/40, paragraphs 2-24). In document GPR/W/108 of 11 September 1991, the United States informed the Committee that no progress had been made towards a mutually satisfactory solution and requested a meeting of the Committee. In document GPR/W/110 of 20 September 1991, the United States requested the establishment of a panel pursuant to Article VII:7 of the Agreement and set out the complaint that it would like the Panel to address. The Panel was established by the Committee at a meeting held on 23 September 1991 (GPR/M/42, paragraphs 2-3).

1.2 On 25 October 1991, the Chairman of the Committee informed the Committee that the Panel would have the following composition and terms of reference (GPR/62):

Composition

Terms of Reference

1.3 The matter referred to the Committee by the United States was described in document GPR/W/110 as follows:

1.4 The Panel met with the parties to the dispute on 9 December 1991, 22 January 1992 and 21 February 1992. The third meeting was held primarily to ensure that a full opportunity had been provided for views to be put forward on the issue of the Agreement's provisions on technical specifications, which was only raised after the initial submission of the United States. The Panel's report was submitted to the parties on 6 April 1992.

2.1 In March 1991, the Norwegian Public Roads Administration announced that the toll ring planned for the city in Trondheim would be based on an electronic and mainly unmanned toll collection system, forming part of an integrated payment system for the city, and that a contract had been concluded with a Norwegian company, Micro Design A.S. (Micro Design), relating to parts of this system (referred to hereinafter as "the contract"). This contract was characterised as a "research and development" contract. The Public Roads Administration also announced that Trondheim had been designated as a national test area for Advanced Transport Telematics (ATT).

2.2 The contract with Micro Design, which is the subject of the present dispute, was in three parts:

The contract foresaw a total budget of 28.5 million Norwegian Kronor (NOK). Of this NOK 14.3 million was allocated for (i) above, NOK 8.7 million for (ii) above, and NOK 5.5 million for (iii) above. An unofficial translation provided by Norway of the paragraphs of the contract which describe its contents, including its provisions concerning the disposition of proprietary rights, can be found at the Annex to this report.

2.3 The toll collection system was required to be ready for preliminary toll collection operations on 14 October 1991, with the whole project including testing to be completed by 14 April 1994. Estimated revenue collection after entry into operation was nearly NOK 2 million per week or NOK 96 million per annum.

2.4 The contract forms part of the Trondheim toll ring project, which had an estimated value of NOK 47.5 million. Responsibilities for the implementation of the parts of the project not covered by the contract with Micro Design were divided as follows:

2.5 No tender notice was issued for the contract that was awarded to Micro Design and no tenders or offers were invited from companies other than Micro Design.

2.6 The issue concerning a previous procurement of toll collection equipment, for the city of Oslo, raised in the document containing the complaint of the United States and referred to in the terms of reference of the Panel, was discussed in the Committee on Government Procurement in 1990 (GPR/M/35, paras 2-12; GPR/M/36, paras 25-41; GPR/W/103 and addenda). This matter was mutually satisfactorily resolved between the United States and Norway on the basis of an exchange of letters.

3.1 The United States argued that the whole procurement fell under the Agreement since it was for a product: a toll collection system. In the United States view, Norway had failed in conducting the procurement to meet its obligations under the Agreement in the following respects:

3.2 On the above grounds, the United States requested the Panel to find that Norway had violated its obligations under the Agreement in the conduct of the procurement of toll collection equipment for the city of Trondheim and to recommend that Norway take the necessary measures to bring its practices into compliance with the Agreement with regard to this procurement. The United States further requested the Panel to recommend that Norway negotiate a mutually satisfactory solution with the United States that took into account the lost opportunities in the procurement of United States companies, including Amtech, a company which had been willing and eager to bid for the contract.

3.3 In the Norwegian view, the only part of the procurement that was covered by the Agreement was the part concerning the procurement of prototypes. The remainder was for research and development, a service, which was not covered by the Agreement. In regard to the procurement of the prototypes, Norway argued that:

3.4 Norway requested the Panel to reject the United States' complaints as unfounded and find that Norway had not violated its obligations under the Agreement in its conduct of the procurement of prototypes for the Trondheim toll ring project. Norway also requested the Panel to reject the United States' suggestion that the Panel recommend that Norway negotiate a mutually satisfactory solution with the United States that took into account the lost opportunities of United States' companies, including Amtech, in the Trondheim procurement, both because Norway has acted consistently with its obligations under the Agreement and because such a recommendation would not fall within the mandate of the Panel.

3.5 The following outlines the main points made on each of the arguments referred to above.

(i) Extent to which the Agreement Covers the Procurement

3.6 The United States argued that, since in its view the procurement was for products and not for research and development, and the contract value exceeded the threshold, the totality of the procurement fell within the scope of the Agreement pursuant to the provisions of Article I. Whether or not the supplier awarded the contract had to create new equipment incorporating and integrating new technologies was not relevant to a determination of coverage by the Agreement.

3.7 Norway argued that, since research and development was not a product and the contract was for research and development, only the part of the procurement concerning prototypes was covered by the Agreement, given the provisions of Article V:16(e). Norway also stated that the budget provided for in the contract allocated slightly more than 50 per cent of the amount to the research and development component of the contract.

(ii) Article V:16(e), including its Headnote

3.8 The United States argued that, since paragraph 16 of Article V constituted an exceptions provision, the burden of proof lay with Norway to demonstrate that it had acted consistently with its requirements. The United States also maintained that, as an exceptions provision, Article V:16(e) had to be construed narrowly.

3.9 The United States argued that the contract was not to procure research and development. In the procurement under consideration, the Norwegian Public Roads Administration had not had as its principal purpose the procurement of research and development, i.e. the purchase of the results of such research and development; rather, it had had as its principal purpose the procurement of a functioning toll collection system or at least the largest part of such a system, i.e. products. Norway had not identified what research and development, as opposed to products, the Norwegian Public Roads Administration had been procuring from Micro Design. For this reason, Norway would not have met the requirements of sub-paragraph (e) of Article V:16, even if the products in question had been prototypes and research and development had been required in order to produce them. In the United States view, the fact that the enterprise, Micro Design, had retained possession of the proprietary rights over the knowledge generated by the research and development seemed to contradict the contention that it was research and development as such that was being procured. If Article V:16(e) were interpreted so that the mere fact that a product being procured required some preliminary development by the producer meant that it could be single tendered, Parties to the Agreement would be able effectively to exclude from the coverage of the Agreement any procurement of an innovative product incorporating new technologies.

3.10 In response, Norway said Article V:16(e) did not require that the principal purpose of the contract be acquisition of research and development results. The provision did not refer to the results of research and development or to intellectual property. It was sufficient that the basic task assigned under the contract be the conduct of research and/or development. This interpretation was supported by the wording of the footnote to Article V:16(e). On the issue of the proprietary rights, Norway maintained that a procuring entity would be under no obligation in terms of Article V:16(e) to retain ownership of the proprietary rights in the results of the research and development. This was a matter on which the Agreement was silent and which was therefore left to be decided in accordance with each country's internal regulations. The disposition of the proprietary rights in the Trondheim contract was drafted along standard lines for Norwegian research and development contracts. Moreover, there had been no particular reason for the Public Roads Administration to secure full proprietary rights: what it had needed from the contract was not the research and development results concerning payment electronics, video surveillance and ISDN as such, but, with regard to the matter before the Panel, prototypes as part of an entire integrated payment system, an operational toll ring and a European test area for such technology. Since it was sufficient for the Public Roads Administration to retain the right to use free of charge the systems and software developed under the research and development project in question as well as in the event of future contracts for corresponding systems, there was no reason to deviate from general Norwegian regulations on this point.

3.11 The United States also contended that the products procured were not prototypes but a final product. It maintained that the procurement had not been for the purchase of prototypes but rather for that of a complex and sophisticated final product. The contract entailed the quantity production of 12 toll stations and some 60,000 identification tags sufficient for the needs of the final toll system. It did not call for a small-scale test model, but a full-scale operational toll system for one of Norway's major urban areas. Sub-paragraph (e) of Article V:16 did not apply to the procurement of final products, and, as the footnote to it made clear, did not "extend to quantity production to establish commercial viability or to recover research and development costs".

3.12 In response, Norway said that the contract was for prototypes and did not extend to quantity production to establish commercial viability or to recover research and development costs. Norway drew attention to the fact that Article V:16(e) referred to prototypes in the plural and further indicated in the footnote that it covered "limited production in order to incorporate the results of field testing and to demonstrate that the product is suitable for production in quantity to acceptable quality standards". In the contract, what had been procured was the development of an integrated and comprehensive toll ring system; some aspects of it could not have been implemented or tested except as part of a fully operational system. Not only could the testing not have been undertaken by a test model but also such a test-model phase would have unacceptably delayed implementation of the project and thus the collection of revenue. A fully operational system was also necessary for the Trondheim system to meet its goals of constituting a national test area for advanced transport telematics as well as a European test area for integrated payment and automatic debiting as part of the European standardisation and DRIVE II programmes.

3.13 In regard to the tags for electronic vehicle identification, Norway said that these were not included in the procurement of prototypes. However, the tags were technologically inseparable from the readers, whose miniaturisation and integration in roadside cabinets was part of the research and development contract. Micro Design had provided the main component for these tags from the supplier which had made the most competitive bid (SAW-TEK, based in Florida, USA).

3.14 The United States further contended that research and development was not required in order to meet the terms of the procurement. It maintained that Norway had shown no evidence that true research and development was involved at all in the Trondheim procurement. In the United States view, equipment already existing at the time of the conclusion of the contract would have been fully capable of meeting the project's requirements. These apparently consisted of normal systems integration work of various known and available technologies and products of several manufacturers, such as video cameras, automatic vehicle identification equipment, software, data communications etc. All the functions to be performed by the toll stations were accomplished routinely in many settings using commercially available technology, including registration and validation of electronic payments, payment in self-service automats, digital video recording, compression and reduction of video images, video surveillance, voice transfers and self-check and remote enforcement of operations. While there was always some software or hardware customisation work in procurements of this type, such routine work could not be characterised as research and development. Any toll collection system, as indeed any product involving high technology, would require some customisation work to adapt it to the particular environment in which it would operate and the specific functions that it was intended to fulfil; this did not mean that all such procurements could be single tendered. State-of-the-art automatic vehicle identification and electronic toll collection systems were commercially and competitively available and were being routinely procured by governments. A recent example had been the purchase of a turnpike toll collection system by the State of Oklahoma from the United States company, Amtech.

3.15 The United States also argued that the fact that the period between conclusion of the contract in March 1991 and making the system operational in October 1991 was no more than seven months indicated that genuine research and development had not been called for.

3.16 Norway argued that considerable development and some applied research had been, and was still being, required under the contract, and provided the Panel with considerable information with a view to substantiating this argument. Because of the small traffic base in the Trondheim area and high Norwegian salaries, a largely unmanned toll system (10 out of 12 toll stations) was called for. N° such largely unmanned toll ring had been implemented before and the technology to do so was not available on the market. Other specific requirements of the Trondheim project, such as a highly differentiated fee structure (including time-differentiated fees, payment once per hour, maximum payments per month and free parking in city carparks after passage through the toll ring), and the need to reduce operational and investment costs compared to previous toll systems as well as to minimise the environmental impact also required new technological solutions.

3.17 Norway maintained that the United States had presented no evidence substantiating the United States' allegation that the Trondheim procurement was a matter of customisation and putting together commercially available technologies. The planning of the Trondheim toll ring had been initially based on the assumption that existing technical solutions would be sufficient to cover the project requirements in Trondheim. As part of the project preparations, a study had also been undertaken of solutions based on commercially available technologies in other fields. None of the commercially available solutions or technologies had, however, been found to be applicable to Trondheim. Norway furthermore maintained that the United States had provided no information demonstrating that the technical solutions for the turnpike toll collection system procured by the State of Oklahoma were applicable also to Trondheim, as the United States had implied. The Public Roads Administration had regarded in particular the enforcement system and communications solutions for the Oklahoma project as being inapplicable to Trondheim.

3.18 What had made a largely unmanned system feasible was the decision to employ a novel application of ISDN (Integrated Services Digital Network) telecommunications technology, which permits simultaneous transmission of data, speech and images using a single telephone line between the toll stations and the toll collection company offices. This had made the following features of the Trondheim unmanned stations possible at an acceptable cost: remote assistance to motorists having problems in using the service; automats for manual payments; automatic processing and transmission of video images for enforcement purposes; and real-time video surveillance and advanced monitoring of stations. Toll collection systems using ISDN had not been developed when the Trondheim project had been in the planning stage. Accordingly, Micro Design had had to develop, in co-operation with Trondheim Telecom, new products to meet the needs of the Trondheim toll system. For example, extensive development work, which was still on-going, had been necessary in the area of advanced image processing, notably the compression of video images to one-tenth of normal size before transfer to the central computer for processing. The Trondheim project was one of the main pilot projects of Norwegian Telecom in preparation for the commercial introduction of ISDN in Norway in 1993 and was one of the national test areas for the commercial applications of ISDN technology. The use of ISDN technology in the Trondheim system was the most advanced application of ISDN in Norway and, in the Norwegian view, was at the forefront of the application of ISDN technology internationally. In addition to the development of these above functions and of their interface with the ISDN network, the contract required their integration into one miniaturised computer system at each toll station. The contract also required the miniaturisation of the otherwise standard units for the automatic reading of vehicle tags so that they, together with the computer, could fit into a specially developed climate-controlled cabinet at each unmanned station. All this had not been available on the market nor could it have been obtained by customising known products.

3.19 In response to United States contentions concerning the short delay between conclusion of the contract and initial operation of the system, Norway said that it should be kept in mind that this period of seven months was not the time required to complete the research and development for the toll ring system. Research and development work under the contract was still going on, for example on the ISDN solutions and providing for inter-operability between toll payment and city car parks. Moreover, a great deal of testing and systems development remained to be carried out. The research and development contract was not due to be completed until 14 April 1994.

3.20 The United States then turned to the headnote to Article V:16(e). The United States argued that, even if Norway had met the requirements of sub-paragraph (e) of Article V:16, it would not be covered by the exception in Article V:16 because it had failed to comply with the requirements of the headnote to that provision which required that single tendering must not be used with a view to avoiding maximum possible competition or in a manner which would constitute a means of protection to domestic producers. In conducting the procurement, the Norwegian Public Roads Administration had made no effort to consider other possible suppliers than Micro Design. In particular, it had not contacted a United States company, Amtech, which was a known and eager supplier. Amtech had been known to the Norwegian authorities as a world leader in providing equipment of the type required by the Trondheim toll ring. In the exchange of letters between the United States and Norway following the previous procurement of a toll collection system by Norway for the city of Oslo, Norway had recognised that Amtech's technology had been found to be "proven, reliable, competitive, type approved by the PTT and commercially available" as well as able to "satisfy the requirements set up for the Oslo Toll Ring Project". Amtech's interest in bidding for the Trondheim project had been emphasised repeatedly by United States Government officials in numerous communications between November 1990, when Amtech had learned that Norway intended to sole source the procurement from Micro Design, and 13 March 1991, the date the award of the contract had been officially announced. Despite these indications of interest, Norway had neither provided information on the procurement to United States officials nor provided Amtech an opportunity to present what it had to offer. Because it had ignored known and eager competitors and had done everything possible to avoid maximum possible competition, Norway had no legitimate basis for its conclusion that Micro Design had been best qualified to supply the requested product.

3.21 The United States contended that the Norwegian procurement of a toll ring system for Oslo confirmed that Norway's behaviour in the Trondheim case was part of a consistent Norwegian policy to use its government procurement system to support a national supplier of electronic toll systems so as to increase its ability to compete on the European and world markets. In the Oslo case, the procurement had been first awarded to Amtech, but the decision had been subsequently reversed by the Norwegian governmental authorities at the political level, reportedly for industrial policy reasons. In this connection, the United States referred to a letter from the Norwegian Ministry of Transport and Communications to the procuring entity in the Oslo case which stated:

The United States stated that it had not raised the Oslo procurement in order to debate the specifics of that situation, although it did not accept the Norwegian Government's characterisation of the Oslo procurement process. Rather, the United States maintained that the Oslo case was important in demonstrating Norway's intent with respect to the Trondheim procurement.

3.22 Norway maintained that, since the Norwegian Public Roads Administration had acted in accordance with objective criteria in according the contract to Micro Design, Norway had not granted protection to a domestic supplier or domestic products and had not used single tendering so as to avoid maximising competition. Micro Design had been, in the opinion of the Public Roads Administration, the company best qualified to perform the contract. The award of a research and development contract to Micro Design had been considered the most speedy and cost-effective way of implementing the project. Furthermore, Micro Design, together with Trondheim Telecom, had put forward broad ideas for the technological concepts on which the final toll ring solutions had been based. The Agreement contained no requirement for some sort of pre-market solicitation before single tendering, as the United States appeared to be suggesting, nor did the Agreement forbid the use of single tendering in a way that excluded a known and eager competitor. If the United States interpretation were to be accepted, the regime under Article V:16 would be closer to that of ordinary tendering procedures than to that of single tendering.

3.23 Norway rejected the United States' depiction of the Norwegian authorities as having used the government procurement system to support a national supplier of electronic toll systems to give it a competitive edge. The Norwegian Public Roads Administration had been in a position to judge the respective suitability of Micro Design and Amtech for the research and development contract because of its experience with the Oslo procurement and because it had kept itself abreast of developments in electronic toll collection systems and of the projects under way. One of the challenges in Trondheim had been to integrate a highly advanced digital video control system with the payment system, and to develop alarms, automatic check routines, monitoring and possibilities for remote servicing of motorists. The Norwegian Public Roads Administration had not regarded Amtech as possessing any advantages in this field as compared to Micro Design. In the Oslo procurement, EB Lehmkuhl/Amtech had only bid for one of the four computer systems required to operate each toll plaza. EB/Amtech had submitted no bid for the digital video enforcement system. In the Trondheim system, video images constituted 95 per cent of the total data handled. Norway's recognition of Amtech's technological and other capabilities in the exchange of letters quoted by the United States had only extended to the field of electronic identification equipment for the Oslo procurement. The procuring entity had not regarded Amtech as being particularly qualified as a supplier of video enforcement systems.

3.24 Norway took issue with the United States' characterisation of the Oslo toll system procurement and of its relevance to the present case. In the Oslo procurement a local entity, based on its recommendation to the central authority, had issued a letter of intent to EB Lehmkuhl (with Amtech as a sub-contractor) for the electronic identification parts of the contract. However, the central authority, which by statute approves or rejects the local entity's proposal in such cases, had at that time not yet made a final decision in the matter and had not been consulted by the local entity. The central authority had had a different opinion than the local entity regarding the technical and economic assessment of the bids made by EB Lehmkuhl/Amtech and Siemens/Micro Design. Accordingly, the Public Roads Administration had found itself obliged to withdraw the letter of intent. New bids had then been invited from the two leading contenders and a fresh evaluation made. It had been at the time, and it still was, the opinion of the Norwegian authorities that the procurement of equipment for the Oslo toll ring had been handled in a manner consistent with Norway's obligations under the Agreement. It had been, however, recognised by Norway as unfortunate that the local entity had acted outside its competence, by making unauthorised decisions and informing one of the companies involved in the Oslo toll ring procurement process of such decisions. Norway had recognised in the exchange of letters that this could be considered an irregularity in the procurement process incurring costs for the company concerned in developing an offer for the Oslo toll ring project. The company had been, accordingly, compensated financially for this unfortunate event, as referred to in the exchange of letters. Nothing in the evaluation of the offers for the Oslo project had indicated that Amtech's system was in any way superior to that of Micro Design or better suited to meet the project's requirements. In addition, Micro Design's bid had been 7 per cent lower in price. In any event, in the Norwegian view the Oslo procurement fell outside the scope of the Panel's terms of reference and was of no relevance to the case in hand, which was quite separate and different.

(iii) Article II:1

3.25 The United States contended that, for the same reasons that Norway had failed to meet the provisions of the headnote to Article V:16, it had also not met the general obligation in Article II:1 not to accord less favourable treatment to the products and suppliers of other Parties than to national products and suppliers.

3.26 Norway agreed with the United States that Article II was applicable to the Trondheim procurement, in as far as the prototypes were concerned. Norway maintained, however, that for the same reasons that it had met the requirements of the headnote to Article V:16(e), it had also complied with Article II:1 of the Agreement.

(iv) Article IV:2 and Article IV.4

3.27 United States contended that Norway had not complied with the requirement of Article IV:4 that "procurement entities shall not seek or accept, in a manner which would have the effect of precluding competition, advice which may be used in the preparation of specifications for a specific procurement from a firm that may have a commercial interest in the procurement". Norway had admitted that Micro Design had worked to improve an earlier rejected proposal for the Trondheim project and had proposed a concept which had been subsequently adopted as the basis for the toll collection system. Norway had described how Micro Design, "as one of the 'architects' of the proposed concept", had been awarded the contract. The United States concern was not that the procuring entity had received unsolicited ideas as such, but that this had been done in the process of preparing "specifications for a specific procurement". Moreover, this had been done before it had been determined that a research and development contract had been called for and the specifications drawn up had served to help justify a decision to single tender the procurement as a "research and development" contract. The effect of allowing Micro Design to do this had been to ensure that its proprietary technology for the automatic vehicle identification products would be specified for the project. In fact, the proprietary system of any potential supplier could have communicated just as well with the rest of the equipment constituting the overall toll collection system. The United States did not accept the distinction that Norway made between general functional requirements and technical specifications; in the United States view, referring to broad functional requirements was just another way of referring to performance based technical specifications.

3.28 The United States further maintained that, by allowing Micro Design to specify that its proprietary equipment be chosen, the Norwegian authorities had violated Article IV:2(a) of the Agreement by prescribing specifications in terms of design rather than performance.

3.29 In response, Norway rejected that any violation of Article IV:4 had taken place and said that any questions regarding Article IV could only relate to the procurement of the prototypes under the contract since research and development procurement fell outside the scope of the Agreement. In the Norwegian view, Article IV:4 only prohibited a procuring entity from seeking or receiving advice from potential suppliers, if this was done in a manner that would have the effect of precluding competition and the advice might be used in the preparation of technical specifications for a specific procurement from the firm proffering the advice. Neither of those conditions had been met in the Trondheim procurement.

3.30 Micro Design, together with Trondheim Telecom, had put forward broad ideas, notably concerning the use of ISDN technology, for how to solve the problems with establishing a viable toll system for Trondheim, but these ideas were conceptual and not technically specific. These proposed solutions had not been related to the prototypes as such but to the whole toll ring system. Moreover, the contract concluded with Micro Design had not been based on technical specifications but on general functional requirements. One of the reasons why a research and development contract had been chosen was that it had not been found possible to prescribe technical specifications; one of the tasks under the contract was the development of such specifications. The use of research and development contracts in such situations was, to Norway's knowledge, common practice, including in the United States.

3.31 In regard to the arguments of the United States concerning the automatic vehicle identification (AVI) products, Norway said that the contract did not contain any requirements as to which system or what technology should be adopted. In fact, the electronic tag and reader system was not part of the research and development contract, except for the requirement to miniaturise the readers and integrate them into roadside cabinets. This part played no role in the procuring entity's decision to use a research and development contract to implement the project. Apart from miniaturisation, the only functional requirement with regard to the AVI system was that it should be able to identify toll tags. Moreover, it was Norwegian and European policy in the DRIVE programmes to establish common open standards for AVI systems and not to prescribe the use of proprietary technology.

3.32 Norway argued that, given that the contract with Micro Design did not contain technical specifications but general functional requirements, no violation of Article IV:2 could have taken place.

(v) United States Request for a Panel Recommendation that Norway Negotiate a Mutually Satisfactory Solution with the United States

3.33 The United States requested the Panel to recommend that Norway negotiate a mutually satisfactory solution with the United States that took into account the lost opportunities of United States companies, including Amtech, in the procurement. The United States said that it was not asking the Panel to recommend "retroactive compensation". It had, however, to be remembered that the Agreement on Government Procurement, unlike the GATT and other Tokyo Round Codes, did not deal primarily with trade flows, but rather with events, the opportunity to bid. A Party's rules and procedures could be perfectly consistent with the Agreement's obligations, but if a country decided to ignore these rules in a particular case, the purpose of the Agreement would be negated. In such cases, a standard panel recommendation that the offending Party bring into its rules and practices into conformity with its obligations would not, by itself, be a sufficient remedy, and would not provide a sufficient deterrent effect, especially if it were felt that it would not be appropriate to order that procurements be annulled and recommenced. It was particularly important that there be remedies under the Agreement with a strong deterrent effect.

3.34 Moreover, in the specific case of the Trondheim procurement, Norway had, in the United States view, violated the Agreement a second time, with regard to exactly the same type of product that had been involved in the previous Oslo procurement. The Norwegian Government had taken this action despite an explicit promise not to do so. In the United States view, the Norwegian Government had known that its action at Trondheim would violate the Agreement and had made a calculated decision that this was an acceptable cost of supporting a domestic industry. The Agreement should not allow signatories to so profit from blatant disregard of its provisions.

TO CONTINUE WITH PROCUREMENT OF TOLL COLLECTION EQUIPMENT FOR THE CITY OF TRONDHEIM