European Union pressures China to open up markets

 

The European Union is to adopt on new rules to limit access to the two trillion euros worth of European public tenders in a move designed to pressure countries such as China to open up their markets.

Paving the way for the launch of the International Procurement Instrument (IPI) later this year, European Parliament lawmakers and France, which holds the rotating EU Council presidency, settled on a text on Monday.

The rules are part of an EU push to develop a more assertive trade policy and insist on fair play after the pain of Brexit, clashes with the Trump presidency, and a new realism over China.

Brussels and European capitals face ‘reality of interacting with a more assertive China’

“The naïve Europe is in the past,” said French Trade Minister Franck Riester, explaining that, from now on, access to the European public procurement market would be conditional on reciprocity.

While European public procurement markets are generally open to international competition, third countries often restrict access to their own tenders to favour their domestic companies. This led the European Commission to propose the IPI ten years ago. However, due to resistance from some member states, the instrument was stuck in the EU decision-making process until 2019.

Then, the Commission urged EU governments and the parliament to revive talks on a revised text, stressing the challenge posed by China, which EU members now regard with more suspicion.

China Promises ‘Door Will Continue to Open’ for European Companies

The IPI now instructs the Commission to determine if third countries allow fair access to their public tenders to EU companies.

If EU companies are not granted equal access in a country, the EU can apply penalties to companies from that country. For example, this can mean that bids from that country would be considered to offer a much higher price, as much as 100% more, than the price actually put forward. Under the rules of the IPI, the EU can even exclude bids from particular countries.

The rules would apply to central governments and any local authority with 50,000 people or more and cover tenders of at least EUR 15 million for works and concessions, such as road construction, and EUR 5 million for goods and services.

 

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