EU to Stop Non EU Countries from Govt Contracts Bids

EU officials outlined a plan last week that would allow Brussels to block companies from non-EU countries from bidding for government contracts, should European firms continue to face difficulty in winning public contracts abroad. The move is expected to escalate tensions with EU trading partners, particularly China.

The initiative, announced Wednesday 21 March, would allow European contracting authorities to reject tenders or contracts worth over €5 million, should these contracts also consist of more than 50 percent of goods and services that are not subject to the EU’s international procurement commitments, such as the WTO’s Government Procurement Agreement (GPA) or bilateral deals.

The rejection of these bids by contracting authorities would be subject to approval from the European Commission.

The European Commission would also be able to conduct investigations into whether a non-EU country is engaging in discriminatory procurement practices against European suppliers.

The Commission would then start consultations with that country; should those consultations not be successful, Brussels would have the option of taking measures to restrict access to the EU’s market.

Last week’s announcement comes three months after the 27-country EU bloc, together with 15 other WTO members, concluded negotiations for a revised GPA to liberalise US$100 billion in public contracts, in addition to the US$500 billion already covered in the original pact.

Public purchases of goods and services makes up 19 percent of EU GDP, or €2 trillion a year, according to European Commission figures.

According to European Commission data, under the original GPA €352 billion of the €420 billion in the EU’s public procurement market - or 85 percent - is open to bidders from other countries that are a party to the plurilateral pact.

In comparison, only 32 percent of the US procurement market is open to foreign bidders, with Japan at 28 percent, according to European Commission figures. Both the US and Japan are also parties to the GPA.

EU officials have stressed that Brussels will respect all international agreements to which it is a signatory, including the GPA, noting that there is no conflict between the potential mechanism and the plurilateral pact.

Meanwhile, the Commission noted that only a fraction of the Chinese procurement market is available to EU companies, given that Beijing is not a party to any international procurement agreement.