Brussels, 29/01/2016 (Agence Europe) - On Friday 29 January, the European Commission unveiled a revised proposal for a mechanism to encourage third countries that use discriminatory practices towards EU companies to open up their public procurement.
The revised proposal brings improvements to the Commission's initial proposal that was tabled in March 2012 (see EUROPE 10579) and on which the discussions at the Council became bogged down (see EUROPE 11202) while the European Parliament adopted a clear position (see EUROPE 10998).
The revised proposal would enable the Commission to take proportionate and more targeted measures to give it more weight in negotiations with third countries that restrict access to their public procurement, without, however, closing them to the EU or imposing an unreasonable burden on the contracting authorities.
The new instrument that is planned would enable the Commission to open public investigations in cases of alleged discrimination against EU companies in a third country's public procurement. If such an investigation confirmed the existence of discriminatory restrictions against EU products and services and/or suppliers in this country, the Commission would request consultations with this country in order to improve access to the country's public procurement.
If the country concerned did not offer sufficient improvements in its call for tenders opportunities for European suppliers within a reasonable time period, the Commission could, as a last resort (after consulting with the member states), use the new mechanism. This would work as follows: at the time of comparing offers to a call for tenders for public procurement in the EU, the prices of the offers for products and services made by a supplier of the third country concerned would be considered as above the price effectively proposed, which would give a competitive advantage to the products and services of European countries and other countries not targeted. In order to avoid using this instrument, the third country concerned would only have to put an end to its discriminatory practices
This mechanism would not challenge the existing commitments taken by the EU as part of the WTO government procurement agreement (GPA) and bilateral agreements with third countries, the Commission assures, underlining the unparalleled opening of EU public procurement to the suppliers of third countries, but also their transparency, especially thanks to the Tenders Electronic Daily database which lists the opportunities for public procurement in the EU and has a free translation tool.
Furthermore, the use of such a mechanism with regard to third countries with which the EU has talks underway for opening public procurement through a free trade agreement or at the WTO would become superfluous after the conclusion of an international agreement with these countries.
In addition, the revised proposal includes other elements enabling proportionality to be guaranteed in the achievement of the EU's objectives and enabling the avoidance of the mechanism being used abusively to protect or close the EU's public procurement: the proposed instrument could not be used with regard to the suppliers of least developed countries or vulnerable developing countries; it would not apply to offers made by SMEs established in the EU and involved in trade operations involving a direct and real link with the economy of at least one member state; its use would be limited to public procurement exceeding a certain threshold; its scope could be limited to certain suppliers of a third country concerned and its implementation to a restricted group of contracting authorities in each EU member state.
“Many third countries are reluctant to open their procurement markets to international competition or to open those markets further than what they have already done. The value of the US procurement offered to foreign bidders is currently just €178 billion and €27 billion for Japan, whereas only a fraction of the Chinese public procurement market is open to foreign business”, the Commission notes in the reasons for its revised proposal. The Commission also underlines that “many countries” have also adopted protectionist measures in the wake of the economic crisis (of 2008).
In all, over half the world's public procurement market is closed and this share is increasing. As a consequence, only €10 billion in exports from the EU (or 0.08% of its GDP) currently finds its way in global procurement markets, and €12 billion in exports remains unrealised due to restrictions, the Commission adds. There are therefore many missed opportunities for competitive EU sectors such as construction, public transport, medical devices, and electricity production.
At the same time, the EU opens up €352 million in public procurement to bidders from GPA stakeholder countries. However, some key actors, like China, India or Brazil, are not part of this, and some GPA members limit the coverage of procurement in their schedules. (Original version in French in Emmanuel Hagry)