EU acts to improve reciprocal access to international procurement

The European Commission, the European Parliament and the Council have reached a political agreement to give the EU greater leverage to get access to public procurement markets outside the EU, boosting opportunities for EU companies. The agreement on the International Procurement Instrument (IPI) follows the final trilogue in Brussels on Monday, 14 March.

The EU public procurement market is one of the largest and most accessible in the world. However, many of the EU’s major trading partners apply restrictive practices in their markets that discriminate against EU businesses. These restrictions affect competitive EU sectors such as construction, public transport, medical devices, power generation and pharmaceuticals. The IPI will help address this problem by empowering the EU to initiate investigations in cases of alleged restrictions for EU companies in third country procurement markets, engage in consultations with the country concerned on the opening of its procurement market and, in the end, restrict access to the EU procurement market for foreign companies if they come from a country which continues to apply restrictions to EU companies.

Executive Vice-President and Commissioner for Trade Valdis Dombrovskis said: “A level playing field is vital for the competitiveness of our companies. While the EU has kept its public procurement market open, the same cannot be said for many third countries, where our companies still face unfair barriers. We continue to favour dialogue to resolve such issues. But in the final instance, this new instrument will give us extra leverage to remove these barriers and promote fair competition for the benefit of all.”

With the IPI, the Commission would, ultimately, be able to apply restrictions to the EU’s own procurement markets in the form of adjustments in the way tenders from the country concerned are assessed, or by excluding certain tenders from the country concerned. In practice, these adjustments mean that bids from that country would, compared to other bids, be considered to offer a higher price than the actual price put forward. This would give EU and non-targeted countries’ bidders a competitive advantage on EU public procurement markets.

This would be a measure of last resort. Before that step is taken, the Commission would initiate investigations in cases of alleged restrictions for EU companies in third country procurement markets. In parallel to the investigation into restrictions vis-à-vis EU goods, services and/or suppliers, the Commission would invite the country concerned for consultations on the opening of its procurement market. Such consultations could also take place in the form of negotiations of an international agreement.

In any case, to avoid the application of such measures, third countries would only need to stop their restrictive practices. The existing EU commitments – including in the WTO Government Procurement Agreement (GPA) and bilateral trade agreements – remain unaffected by this instrument.