Brussels, 16/03/2012 (Agence Europe) - EU Internal Market Commissioner Michel Barnier and Trade Commissioner Karel De Gucht are preparing to unveil legislation to get non-EU countries to open up their public procurement markets to European companies (see EUROPE 10572). If other countries fail to do so, the adjudicating powers in the EU would be given the power to reject bids for the supply of goods and services in which non-EU country companies predominate. The aim is to take a proactive approach to reassure traditionally free-trade member states, like the United Kingdom and Scandinavia, which might be concerned about the EU trade policy turning protectionist. The legislation will transpose to the EU the Agreement on Public Procurement signed by the EU at the World Trade Organisation, which was partially updated in 2011 (see (EUROPE 10517) and is intended to give the Community public procurement policy a more European dimension.
The facts are stark. At present, there is huge imbalance in access to public contracts within Europe and elsewhere in the world. In an impact assessment on the draft regulation seen by this newsletter, the European Commission says that the United States, Japan and Canada have only opened up 32%, 28% and 16% of their markets respectively, yet the value of their public markets is higher than Europe's. In Europe, however, 75% of public procurement is open to competition from non-EU companies, explained Barnier recently (see EUROPE 10268).
Two-stage approach. Barnier said recently that the new regulation would take a two-stage approach. European adjudicating authorities would be given the power to reject bids comprising more than 50% of goods and services from a country that is not party to the WTO's public procurement agreement or that has not signed a trade deal with the EU comprising a public procurement section (the BRICs, for example - Brazil, Russia, India and China). The adjudicating authority would have to notify the Commission of its plans and then the Commission would have two months to decide whether to endorse the decision if it decides that there is a serious and persistent lack of reciprocal action from the country concerned in terms of opening up its public contracts market to Europe. If the country in question is in the process of negotiating greater reciprocity with the EU, then the Commission might force the European adjudicating authorities to accept bids from the country in question for a period of two years.
On its own initiative or on request from stakeholders, the Commission would be able to launch investigations lasting no more than nine months into how non-EU public procurement services act in practice. If necessary in the light of its findings, the Commission would then be able to decide to enter negotiations with the authorities of the country in question to get it to change its practices by means of a bilateral public procurement agreement with the EU. By restrictive public procurement measures are meant any law, regulation or practice in a non-EU country whose aim is to provide less favourable treatment to European countries than domestic economic operators. If the country refuses to budge even after 15 months of talks, then the Commission would be able to decide to ban the country's firms from accessing EU public markets if they make up more than half of the value of the goods and/or services covered by the contract, and/or it would be able to force companies from the country in question to increase their bid prices. These measures could be targeted at state bodies or specific industries and would apply to contracts over a certain value.
Many European companies have informed the Commission of unfair competition from big non-EU companies that use state aid to undermine European companies' prices, while aid for such purposes is illegal in Europe. In addition to the two-pronged approach, other measures are planned to deal with abnormally cheap bids from economic operators in countries that have not signed the WTO agreement or a trade deal with the EU that includes a public procurement section. Under certain circumstances, contracting authorities would have to inform in writing all companies placing bids that they are planning to sign contracts with the abnormally cheap bidders, explaining their reasoning.
No “Buy European Act”. Describing the EU as a “doormat”, the French president Nicolas Sarkozy, who is standing for re-election, called recently for a proportion of public contracts in the EU to be reserved for European small businesses by a “Buy European Act”. The idea has been brushed off by the Commission, which says that the idea of closing off all or some of European markets to non-EU companies raises serious concerns about how it would impact in terms of retaliatory measures (by non-EU countries), the cost for adjudicating authorities and the EU's competitiveness. (MB/transl.fl)