EU proposes contracts block on protectionist nations

21 March 2012

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21 March 2011 | Paul Snell

Buyers may soon be able to exclude bids from foreign suppliers in contracts worth more than €5 million (£4.1 million) if public contracts in their own country are not equally open.

Measures announced today by the European Commission (EC) are aimed at pushing the EU’s trading partners to open their own procurement markets up so European suppliers receive open access to contract opportunities.

Under the EC proposals, contracting authorities will now be able to notify the commission of an intention to reject bids where the contract is above the €5 million threshold, contains more than 50 per cent goods and services from the country in question and is not subject to international agreements. The EC then has up to four months to assess the level of reciprocity and then approve or deny the request, which results in action against a particular sector or even imposing a penalty in terms of price on non-EU bids. All deals below the threshold will remain open.

According to Michael Barnier, EU commissioner for internal market and services, European firms are losing €12 billion in exports annually because of restrictions that means they cannot access foreign deals, particularly in emerging markets.

“The EU should no longer be naïve and should aim for fairness and reciprocity in world trade,” he said. “We are open for business and we are ready to open up more, but only if companies can compete on an equal footing with their competitors. The Commission will remain vigilant in the defence of European interests and European companies and jobs."

It is estimated the measures will cover 7 per cent of public procurement contracts in Europe, which are worth around 61 per cent of the total value of EU deals.

“It is about encouraging our partners to open public procurement markets because some are not doing that,” EU trade commissioner Karel De Gucht told a press conference. “But let me be very clear. Europe is open for business. The point is to encourage (and that is a diplomatic term) partners to open markets.”

EU member states have been irritated by the failure of countries, particularly emerging markets such as China, to offer the same access to contracts that their companies receive in Europe. It is estimated that 80 per cent of the European public procurement market is open access, which the EU claims is the highest proportion in the world.

But in what will be a significant blow to the EC’s encouragement plans, it was reported today that China is unlikely to join the World Trade Organisation’s Government Procurement Agreement – the main reciprocal deal to open access – before it has addressed domestic procurement reforms.

 

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