Verbatim report of proceedings

Thursday, 1 February 2007 - Brussels

4. Government Procurement Agreement (GPA) (debate)

  President. The next item is oral question to the Commission on the renegotiation of the Government Procurement Agreement (GPA) by Daniel Varela Suanzes-Carpegna, on behalf of the Committee on International Trade (O-0128/2006 – B6-0450/2006).

  Daniel Varela Suanzes-Carpegna (PPE-DE), author. – (ES) Madam President, Commissioner, ladies and gentlemen, we are putting this oral question on the renegotiation of the Government Procurement Agreement, which will end in March, because we are at a crucial moment. Furthermore, in view of the importance of that agreement and its period in force, which will once again be ten or twelve years, it became necessary to raise the issue with the Commission here in Parliament.

The government procurement markets are becoming increasingly important in the world, in view of their volume, which may be up to 25% of world GDP and, furthermore, because they represent a comparative advantage for the European Union, since at the moment we can be competitive in this sector compared to the competition that we are facing from other countries in other sectors, such as agriculture and industry. If we want to adapt to globalisation, therefore, it is important that the European Union develop the sectors in which it can be competitive internationally and thereby create fair and favourable conditions for European companies.

In most countries, these markets are reserved for national companies, which is one of the main non-tariff barriers to international trade. There are two aspects in this renegotiation that I would stress in particular. Firstly, the geographical extension of this agreement, with the entry of significant players, such as China and the developing countries, and, secondly, the need to ensure fair, balanced and reciprocal conditions for the companies of the different countries.

With regard to the first point, the greater the geographical area covered by this agreement on government procurement the more valid it is. Parliament therefore wishes to know whether any new countries are interested in signing up to the agreement in the short term, and particularly whether we can expect substantial commitments from China in relation to the opening up of its public markets. Let us not forget that China committed itself to opening up its government procurement market – which largely remains closed, or has requirements that are unacceptable to European companies – and to beginning negotiations in 2008 on accession to the Government Procurement Agreement, following its accession to the World Trade Organisation.

Secondly, with regard to fair and reciprocal conditions, we must remember that the European Union's public markets are already very much opened up to international competition. This has considerable advantages for the public bodies awarding contracts, since this openness gives them greater choice and therefore makes it possible for them to find better quality goods and services at lower cost. Let us not forget, however, that this may harm European companies in cases where foreign competitors are preferred.

The Union’s trade policy is geared towards greater opening up of all aspects of the international markets. The solution is not therefore to close the public markets to foreign companies. For this reason, we have the legitimate right to demand that our companies enjoy similar conditions of access to the public markets of our main trading partners, whose companies currently enjoy access to our public markets. That is not currently the case, however, since the commitments made by our trading partners are very limited compared to those made by the European Union.

Commissioner Mandelson also referred to this imbalance in his communication on a competitive Europe in a globalised economy. In it, he suggests the possibility of introducing concrete restrictions to access to certain sections of the Union’s public markets, with the aim of persuading our trading partners to open up their markets in a reciprocal manner.

Having said all of that, I consider this oral question on behalf of the Committee on International Trade to the European Commission, calling upon it to explain its strategy in this renegotiation of the agreement, to be timely – and hence more than appropriate. I would repeat that we are at a crucial time, since we need to reach an agreement over the coming weeks.

How is the Commission going to defend the interests of European companies in the markets of sectors in which we are highly competitive, such as transport, energy and public works, within the context of the objective of continuing along the path towards greater commercial openness, and not the reverse? Within this context, how are we going to deal with the situation of European SMEs, which are already at a disadvantage compared to large companies, compared to the situation of other SMEs in other countries whose governments reserve a proportion of their public contracts for them, as in the case of the United States?

In view of the lack of reciprocal arrangements, the disadvantages faced by European SMEs and their importance in terms of the main objectives of the Lisbon Strategy, we would call upon the Commission to demand that the other parties in the negotiation remove their exceptions or, if that is not possible, to accept our application of an exception of this same kind in favour of European SMEs. In any event, we need that kind of reciprocal arrangement since European companies are currently at a disadvantage.

I would therefore ask the Commission to tell us how the negotiations are progressing, particularly with regard to the issues that I have raised and those referred to in the text of our question. I would also ask the Commission to take note of the concerns expressed by the European Parliament and to take them into account in its negotiations in Geneva.

  Charlie McCreevy, Member of the Commission. Madam President, the issue of the renegotiation of the WTO Government Procurement Agreement, known as the GPA, is important for Europe as it should provide our companies with future opportunities outside the Community. Last December, after many years of long and difficult negotiations, the GPA parties reached a provisional understanding on a new revised text. I consider this to be a major achievement in the current context of the Doha Round. It demonstrates that the political will to reach an understanding on sensitive issues remains alive.

The new text provides for more clarity and transparency, as well as better guarantees for equal treatment in the procurement procedures. It includes, for the first time, provisions for conducting electronic procurement.

The European Community played an important role during the negotiations. The existing agreement is unbalanced, both in terms of procedural guarantees and coverage. Our main objectives were to fill the gaps and to eliminate ambiguities.

We wanted to obtain better legal guarantees for our suppliers, similar to those offered by our internal regime. At the same time we sought to make the new agreement more attractive for developing countries via new specific measures. The final agreement on the new text is subject to a satisfactory outcome of the market access negotiations which are ongoing. Here as well, we need to rebalance the situation in favour of the Community. Hence the coverage our partners currently offer should be extended to the level the Community has offered and it should be more uniform.

We all want to see improved access for our companies to foreign countries’ procurement markets. The Council emphasised in its recent conclusions on the Commission’s communication ‘Global Europe – Competing in the World’ that we need to achieve additional improvements in market access with our future major trading partners, namely in public procurement.

The Community has submitted a comprehensive request and offer which will give the other GPA parties all the necessary incentives to offer significant additional procurement opportunities. Should we fail to get a substantial improvement from other GPA parties, we will consider taking the necessary measures to adapt the Community commitments in the new GPA accordingly.

In the absence of improved access for the EU to third-country procurement markets, Commissioner Mandelson and I are reflecting on a market-opening instrument to enhance EU access.

The case of our SMEs certainly deserves particular attention. It will specifically benefit from the new text, with the introduction of rules on electronic procurement and, if negotiations are completed successfully, the lowering of thresholds of some parties. However, let me remind you that the agreement deals with rather large procurement contracts which are mainly undertaken by big companies. SMEs certainly have an important role to play, but mostly as subcontractors. This is why we have asked our GPA partners who currently maintain specific derogations for their domestic SMEs to abandon them.

On the prospects of extending the geographical scope of the agreement, eight WTO members are in the process of acceding to it. Among those, Jordan is the most advanced. China has indicated that it will start accession negotiations by December this year and, following my visit there last year, we are already preparing this important accession. As already mentioned, the Community has pushed for better provisions on the special and differential treatment for developing countries. I believe we have achieved a good result with tailor-made new rules that fully take their specific needs into account.

I am confident that if we succeed, this new agreement will constitute a milestone for international trade and create new opportunities for our companies.

  Jean-Pierre Audy, on behalf of the PPE-DE Group. – (FR) Madam President, Commissioner, ladies and gentlemen, I shall start by congratulating my esteemed colleague, Mr Varela Suanzes-Carpegna, and by thanking him for having asked, on behalf of the Committee on International Trade, this oral question on the negotiations under way at the World Trade Organisation regarding the rules on access to public contracts. We need derogations for small and medium-sized enterprises, Commissioner.

The subject bringing us together today is a crucial issue as far as growth and employment in Europe are concerned. The WTO rules on trade in goods and services do not apply to purchases made by a State for its own use, that is to say to public procurement. That is why some countries, operating just outside the Marrakech agreements of April 1994, have voluntarily signed a special annex containing an agreement on public procurement. With the exception of the European Union, all the major countries participating in this agreement – Canada, Korea, the United States and Japan – have excluded from their offer contracts that they reserve for their SMEs. This imbalance is unacceptable, and the public contracts that have thus been excluded are precisely those that concern our small and medium-sized enterprises, while the SMEs from those countries have unrestricted access to all our public contracts.

Our SMEs are thus under-represented where public procurement is concerned, and we need to launch a broad debate on the reasons for this. We need to put right this imbalance by obtaining a derogation on public procurement that favours European SMEs. We cannot accept distortions of this kind.

Commissioner, ladies and gentlemen, over and above this negotiation, the issue at stake is the will of the European Union to provide small and medium-sized enterprises with the favourable environment that they need and to use access to public procurement as an extraordinary lever for growth and employment; also at stake is the need to provide legal certainty, within the European Union, between the international legal system, European law and national laws. We are not talking here about protectionism; quite the contrary, we are talking about increasing the supply by having more businesses to meet the demand.

Commissioner, there are three areas on the planet today: Asia, excluding Japan, which has poor countries but strong growth; the United States, which is a rich country with strong growth; and Europe, which has rich countries but weak growth. We need to reflect. When we regulated the internal market by voting for the Services Directive, we built this market on the laws of competition, and the European Union took a great interest in consumers. We now need to take an interest in our manufacturers. The renegotiation of the multilateral agreement on public procurement that is currently under way at the WTO is, in our view, an extraordinary opportunity to act and to reflect on the place occupied by SMEs in terms of accessing public contracts.

We need, Commissioner, to give the internal market the gift of a European Small Business Act that includes social market economy considerations. The debate is open, and I welcome that.

  Erika Mann, on behalf of the PSE Group. – Madam President, it is a pleasure to see you in the Chair.

What is interesting and fascinating about this debate is that we are talking about a plurilateral agreement that is very specific in character. It is, of course, part of the multilateral framework but, as it is plurilateral in character, it allows much more flexibility for those Member States that are part of this agreement.

With regard to this, and as it is its tenth anniversary, could the Commissioner tell us a little bit about it: how it worked in the past, whether he is satisfied with it and thinks it is a worthwhile undertaking that is worth renegotiating. It is not part of his portfolio, but does he consider that it is also worthwhile renegotiating the telecoms agreement, which is also ten years old this year?

With regard to the agreement on government procurement – which Mr Audy mentioned – we are very concerned about SMEs, because we know by experience that they are definitely having much more difficulty in accessing international markets. What is the Commission going to do about it beyond what has been done in the past?

China is of great concern. We are happy to have China as part of the global environment, but it puts a lot of pressure on some companies. So once China becomes a member of the plurilateral agreement, what safeguards will the Commissioner put in place to safeguard the interests of European companies and workers? How much is this exercise part of global Europe? How much is it related to the new approach from the Commission agreeing on different bilateral agreements and what will be part of this connection?

With regard to services of general interest, how, again, will the Commissioner ensure that European interests will be safeguarded? Can the Commissioner tell us more about that? He has not touched on that.

Finally, can the Commissioner ensure that Parliament will be kept informed? Can he promise that the Committee on International Trade, which has just elected its new chairman this morning, will also be kept informed?

  Ryszard Czarnecki, on behalf of the UEN Group. – (PL) Madam President, it is entirely appropriate for the House to be dealing with the question of the greater liberalisation of public procurement markets today, and I believe it is regrettable that the same determination was lacking when we debated the liberalisation of services across our continent. Essentially, the issues are the same. It is right to consider extending the geographical scope of the GPA, and it is unfortunate that we did not seize the opportunity of significantly deepening our services market a few months ago.

Both cases involve more than just measures to help the operation of the larger European companies. There is a particular emphasis on promoting the interests of small and medium-sized enterprises. I support contract negotiations that will allow us to participate in the Chinese public procurement market, but it is also important to bear in mind the actual opportunities for participation in the European market for the other side, as Mrs Mann just mentioned. As far as our Chinese partners are concerned, there are two sides to this coin, and it seems to me that we should also take into account the specific challenges that exist for the European market in this area.

  Caroline Lucas, on behalf of the Verts/ALE Group. – Madam President, congratulations! It is very good to see you in the Chair.

Commissioner McCreevy, I too should like to start off by talking about how best we support small and medium-sized enterprises. I am very pleased that there seems to be a concern right across the different political groups of this House. I think we all share that.

I would like to ask first of all for some clarification of remarks made by the French Trade Minister, Christine Lagarde, when she came to Parliament’s Committee on International Trade just last week. She spoke very passionately and rightly, I believe, about the importance of defending small and medium-sized enterprises in Europe. And yet you, Commissioner, seem to have a very different view of the role of SMEs and how best to support them.

Guaranteeing better access to public procurement contracts for innovative small and medium-sized enterprises is essential. They represent 75 million jobs in the Union and 50% of Community GNI, and they are a vital component of thriving local and regional economies all around the EU.

But it seems that the Commission is voluntarily giving up the right to support its SMEs. There are already five countries– Canada, the US, Israel, Japan and South Korea – that will introduce provisions into their legislation which give privileged access to SMEs for public procurement, and yet the EU, bizarrely, has decided it has no interest in standing up for its own SMEs.

So Commissioner, can you really justify this position? For the EU to forego the right to a level playing field which would allow SMEs to have an equal opportunity to compete like the large multinationals seems both extraordinary and indeed unacceptable. Surely we too should be using the renegotiation of the GPA in Geneva to break down the WTO barriers which prevent Member States from implementing a privileged access measure for SMEs should they so wish. We too should be arguing for derogations as part of the revised GPA to allow us to bring in preferential measures, and by doing this we are simply restoring equality of treatment in order to prevent the large multinational corporations from having all of the advantages.

I very much regret as well that we have not had the opportunity for a prior debate really in Europe about whether it is appropriate to try to extend international trade rules to cover government procurement at all. Many would argue that government procurement has little or nothing to do with traditional matters of trade, tariffs and quotas, and that it is an unacceptable area for negotiations at the WTO, because subjecting government procurement at the national, local or regional level to one-size-fits-all rules at a global level on how taxpayers’ funds are spent I think destroys citizens’ reasonable expectations that they should have a level of democratic accountability over how their money is spent. Essentially, taxpayers’ money is different from private, corporate money, and citizens rightly expect that they should have the right, for example, to lobby to cut off expenditure on companies that were doing business in South Africa when there was apartheid, or to disqualify companies with bad labour or environmental records.

I believe we have a really important role to play in defending local sourcing and procurement as a vital instrument of local employment and industrial policy.

  Helmuth Markov, on behalf of the GUE/NGL Group. – (DE) Madam President – with my warm congratulations on your election, Commissioner, the Government Procurement Agreement has hitherto applied only to the OECD states, and their expenditure on public contracts in respect of supplies, services and building works make up something between 10% and 25% of their GDP.

China has now been giving consideration to the possibility of joining them. The renewed negotiations currently in progress are, in general, aimed at extending the scope of the Agreement, and that would, of course, give it a vast amount of added significance in terms of the international exchange of goods and services.

While the Commission must certainly, in the revision process, seek to improve transparency and combat corruption in international public procurement, the urgent environmental challenges mean that ecological sustainability in the public sector must be given high priority, and that, as I understand it, means that regulation is needed to deal with it. It must, for example, be lawful and legitimate, when awarding state contracts, for preference to be given to environmentally friendly goods and services, even if they are minimally more expensive.

One crucial question is how one deals with developing countries. It needs to be ensured that public procurement, in the same way as the other Singapore issues, is dealt with absolutely independently of the current Doha development round negotiations, the need for which was expressed very clearly by the developing countries at Cancún.

The document that we are talking about – the one that is due to be renegotiated – can in fact only apply to partners of comparable strength, and so I see something problematic in the idea of non-discrimination or reciprocity, which seem to me once more to tend towards treating highly industrialised countries and developing countries in exactly the same way, which does not work.

The proposed provisions for developing countries, involving a transitional period of three years – or five for the least developed – are quite utterly inadequate when it comes to persuading them to sign up to the Agreement. I think one regrettable consequence of this is that many of these countries will give this Agreement a wide berth, which I, in principle, regard as a disgrace when this is meant to be being handled plurilaterally.

  Graham Booth, on behalf of the IND/DEM Group. – Madam President, the debate we are having about this oral question epitomises so much of what is wrong with the European Union. Firstly, we have to deal with the WTO through one man who represents no less than 27 nations. He has no popular mandate and in the light of his record in British politics would not have been chosen to run a village fête. I do not want an EU representative to speak for my country at the WTO. I want a representative of Her Majesty’s Government who not only knows my country but cares for it too.

Then there is the whole issue of competitive tendering. China was mentioned as a potential provider in the oral question and it may well be highly competitive. Whilst I condemn the suppression of individual freedoms and rights in China, the Chinese know a few things about running a successful economy. Government spending is only some 20% of GDP, whereas in the eurozone it was 47.5% in 2005. In China, business runs with a light regulatory touch. In the European Union, we are regulating ourselves to death.

In 2005 Mr Blair promised that the British Presidency would cut red tape. It did nothing of the sort. How many thousands of pages did it add to the mountain of legislation? My country was hoodwinked into joining the European Union in 1973 on the basis of it being just a free trade area. This is all it should be: no Parliament, no Commission, no directives. Instead it has become a bureaucratic monster which is wrecking our economy.

IN THE CHAIR: MR MARTÍNEZ MARTÍNEZ
Vice-President

  Georgios Papastamkos (PPE-DE). – (EL) Mr President, provisional agreement has already been reached on the revised text of the Public Procurement Agreement and is expected to be reached on the final agreement.

I respect the need for negotiations to be carried out in secret, but do you not think, Commissioner, that you have been late informing the European Parliament about the priorities, demands and offers of the Union during the renegotiation of this important agreement?

I think that the Union's basic negotiating principle should be reciprocity and the achievement of a balanced result between the trading partners. The balanced result should not be at the level of theoretical commitments between the trading partners on behalf of the other partners. It must be evaluated at the level of the real facility to make full use of the volume of invitations to tender subject to cross-border competition. Has the Commission prepared studies on the real access of European undertakings to the market of the other states from the application of the agreement so far? The USA, Canada, South Korea and Japan – the parties to the agreement – have already safeguarded preferential access for small- and medium-sized enterprises to the public procurement market. Paradoxically, however, the Union has not.

I believe the European Union should demand an exemption within the framework of the application of the Public Procurement Agreement for small and medium-sized enterprises. This demand is reasonable, especially as our partners have already acted.

Small- and medium-sized enterprises are the backbone of the European economy and an important source of development and employment, as both Mr Varela, the author, and Mr Audy have emphasised. They contribute to economic and social cohesion. We have an obligation to take initiatives that will safeguard their dynamic role.

  David Martin (PSE). – Mr President, I should like to congratulate you on your appointment.

I am not going to speak about SMEs because many of my colleagues have already done so, but I want to emphasise and agree with them that this is an extremely important issue.

Government procurement accounts for 20% of GDP in developing countries and around 15% of GDP in developed countries. I feel a little bit Janus-faced on this issue, because intuitively I am in favour of opening up public procurement to competition. It should in theory reduce government costs and increase transparency in government procurement and therefore cut out corruption. That should bring benefits both to the developed and the developing world and, in the developing world, would free up resources for health and education. However, if you look at the list of those who have signed up for GPA, there is not a single African country among the 36. It is clear that the African countries and other LDCs feel that the costs potentially outweigh the benefits of signing up to this agreement.

I would ask the Commission what support could it plan to give, firstly, African and other LDC countries to enable them to compete in the European market and the other developed markets on a fair footing and what assistance can they be given to develop their own industry so that they can sustain competition inside their own country if they sign up for opening of the government procurement contracts.

I also worry, as Mrs Lucas has indicated in a slightly different way, how non-trade issues will be taken into account in GPA and the application of GPA, how issues like the environment, human rights and labour rights will be taken into account. I agree with Mrs Lucas that this is public money and that there is a danger, if we simply have GPA without any conditions, that labour and environmental standards could be driven down. On the one hand I can see the advantage of opening up public procurement, but it is fraught with dangers and I hope the Commission will examine these issues.

  Syed Kamall (PPE-DE). – Mr President, I should like to congratulate you once again, and to thank the Commissioner.

In Britain, SMEs are unfairly shut out of public procurement due to well-meaning requirements such as corporate social responsibility and environmental standards; quite often a requirement for three years of audited accounts, which many small businesses cannot meet; a lack of competitive tendering; the bundling of contracts that become too big for SMEs and favour the large companies; and secrecy and a lack of transparency.

We know that the EU directive requires transparency and competitive tendering, but most contracts that SMEs bid for are quite often below the threshold. So when you speak to SMEs and ask them what they want to see, they say they want to see a cut in bureaucracy and paperwork. They want to see authorities avoiding the one-size-fits-all requirement for certification. They want to see contracts advertised on websites such as ‘supply2.gov’, and they also want to see unbundled contracts. But we have to recognise that government departments are not commercial organisations and will often want to seek to avoid the extra work involved in multiple tenders, so we therefore need to provide incentives for governments and local government.

In America, targets have been provided as to whether fair competition actually does or does not exist. SMEs do not require quotas, but they need a performance metric to see whether there is fair competition. Also in America there are small SME advisers helping the government to enable SMEs to have fair access. These requirements – benchmarks and competition advocates – would probably not be allowed under the WTO agreement, and I understand the reason, but it does unintentionally forbid measures which ensure fair competition.

The WTO agreement is actually generally positive, as it is anti-protectionist, but it forbids measures which are needed to help small businesses. So while some Member States want an opt-out, others rightly fear that this would increase protectionism. Therefore, let us call on the Commission to seek a compromise whereby an opt-out is secured, but a new agreement is drafted to allow SME-friendly measures and to greatly extend anti-protectionist measures. If we allow SME-friendly measures, the agreement would remove America’s reasons for its opt-out, which has been used to retain the Buy America Act. It would also help British and European SMEs to compete globally.

  Margrietus van den Berg (PSE). – (NL) Mr President, a Government Procurement Agreement could mean more transparency and thus less corruption. It could also mean fair prices – which is not unimportant given that public service contracts involve taxpayers’ money – with the right, though, to include social and environmental criteria at the tendering stage. Developing countries could also benefit enormously from all these advantages. Needless to say, their participation in the international Government Procurement Agreement in future cannot be ruled out, but the Commission should ensure that they can implement this method – and the same applies to fair competition rules – nationally or regionally at first, just as we did in Europe, and do not need, therefore, to allow in the entire world and the large monopolies straight away. It would then have to be up to the developing countries to determine when they would feel sufficiently developed. Something that, in fact, applies the world over, is that forced large-scale tenders, as a result of which the small and medium-sized enterprises are pushed out of the market, should be avoided at all costs. Unfortunately, I have first-hand experience of exactly that at a train station in Amsterdam where the train station’s security service was put out to tender. The company that was previously responsible for the station’s security was a small company and was doing an excellent job. During tender, however, this company proved too small to compete for the total tender for many of those stations and was elbowed out of the market, therefore.

My fellow Members have undoubtedly come across similar examples, and that is why we would like to ask the Commission how the SMEs can be guaranteed better access to procurement contracts.

Finally, the forced break-up of the national and semi-public provisions for the sake of large foreign suppliers is fundamentally wrong. Every country has the right to regulate publicly what the public would like to retain. We are talking about basic provisions here, like education and water, provisions that are at the heart of society and that should not be messed with.

  Andreas Schwab (PPE-DE). – (DE) Mr President, Commissioner McCreevy, ladies and gentlemen, it is because the question raised by the Committee on International Trade on the problem of procurement at WTO level directly affects the European internal market that I believe that we have to consider these more closely. Of course, on the one hand, it is the WTO agreement that is at issue here, but, on the other, it must also be clear to us that these international treaties – as is the way of things with globalisation – have direct effects on the European internal market.

Mr Kamall pointed out that, in a number of WTO member states, the United States of America being one of them, certain quotas are to be adhered to even now in the award of national contracts to small and medium-sized enterprises, which means, at the end of the day, nothing other than that the scope of the procurement regulation laid down by the WTO is being restricted. I would like to see an impact assessment indicating whether or not this is of any long-term benefit to small and medium-sized enterprises; that it is, in any case, not certain.

As long as we do not know that for certain, we do not need to worry about the limitation of scope, for it is of course the case that small and medium-sized enterprises live from markets that are as transparent as possible and that they find easiest to access, and if the WTO member states reduce the scope by a quarter, I do not know whether small and medium-sized businesses actually derive any benefit from that.

It would surely be a worthwhile exercise – and it is with this in mind that I, too, support this question – if the Commission were to be able to examine this closely and show us whether this does have positive effects on small and medium-sized businesses.

In the Council, of course – none of whose representatives are, alas, present – a balance must be found between those who would favour an approach like that of the USA and those who want to see the precise opposite of that, that is to say, the reduction of quotas to create a free and open market right across the WTO, giving small and medium-sized enterprises a chance everywhere.

It is for that reason that I believe that the crucial problem for small and medium-sized enterprises in this respect is much more that we have not yet really got a handle on the problem of sub-contractors, for it is in that capacity that small and medium-sized enterprises are often used, being in that way able to create jobs and have the chance to earn money, but they are, ultimately, managed from higher up and that often puts them in a difficult position, with their feet in two different camps.

What I think we should do is give this problem, in particular, closer attention, and so I would be glad if the Commission were to give some thought to this and keep us up to speed with what is going on. In other words, it should start by addressing the problem to which this question refers and then we can make definite demands of the Commissioner.

  Stefano Zappalà (PPE-DE). – (IT) Mr President, ladies and gentlemen, I should like to congratulate Mr Varela Suanzes-Carpegna and to thank him for having submitted his question, which gives us a means of addressing the issue at stake. I was rapporteur in this House on the reform of contracts, supplies and services, in this case Directives 17 and 18.

Even though there is very little time, I think that it is worth pointing out the main aspects of the problem. As I have heard some speakers say this morning, Parliament has very much focused Directive 18, or the general directive on contracts, on environmental issues, the updated system of electronic contracts, the social sphere and the issue of thresholds, and I therefore believe that we have legislation that is without doubt exceptional, but that does not actually concern this morning’s subject matter.

The issue raised is completely different: a review is under way of an international agreement that places EU countries – and therefore EU businesses – at a disadvantage compared with others. What is the problem? In 1994 and in subsequent years, very different types of activity were planned worldwide through plurilateral agreements. The United States, China and other countries in reality enjoy privileges that are not enjoyed by EU businesses. This system is now being reviewed, but the methods of reviewing it need to be laid down, because, as my fellow Members and I myself should recall, the United States alone has an annual output of almost USD 200 billion, a sum that actually remains within the United States.

The point is that, while anyone can come and work in Europe, our small and medium-sized enterprises cannot go and set up business in the rest of the world. The GPA agreements are, among other things, agreements that deny European businesses access to the international system.

What decisions can therefore be made today? As I see it, the Commission believes that, by abolishing the privileges of others, we can compete once again on an equal footing. That is not so. I believe that we need instead to protect Europe’s small and medium-sized enterprises, by guaranteeing them the same privileges within the European Union and thus with regard to the European Union that are enjoyed by small and medium-sized enterprises from the United States and from other countries in the world.

Therefore, not only am I grateful to Mr Varela Suanzes-Carpegna, but I am also of the opinion that the argument being upheld by France at the moment within the Council should definitely be favoured and supported over the European Commission’s position.

  Charlie McCreevy, Member of the Commission. Mr President, I should like to thank all Members for their comments.

I attach the utmost importance to public procurement. Proper, fair and transparent procedures are crucial not only for businesses that want to bid for projects but also for authorities that would be able to save themselves and taxpayers huge amounts of money if they applied the procedures properly.

Getting commitments from our trading partners to open their procurement market for European bidders is essential. Our companies have something to offer. They are competitive, but too often they are simply not allowed or invited to make a bid.

SMEs benefit from public procurement. They already have a big share of the market, but I do not think that setting aside quotas or giving preferential treatment is the answer. If we were to do that, so would more of our trading partners and the result would be that European companies would lose out. I believe that all sides are best served by open markets. Our SMEs are dynamic and strong. They will benefit as well.

Mrs Mann asked to be kept informed. I shall ask my officials to keep her committee closely informed. They will attend meetings of the committee and will answer your questions about the details of the negotiations.

Various Members referred to special arrangements for SMEs and that this should be part of our negotiating stance. As I have said, I do not agree. I agree with a lot of what Mr Kamall said, and his observation that Member States themselves could do a lot to assist their SMEs in the area of public procurement without contravening any rules at all. If they unbundled some of their contracts and cut out a lot of the bureaucracy, that would benefit SMEs substantially, and would not require the setting-aside of quotas. Where I would disagree is with the conclusion drawn by some people that the way to do this better for SMEs is to set aside quotas.

Mr Kamall also raised the issue of the United States having a Small Business Act and an agency to deal with these matters. However, the figures show that, either in volume or in quantity terms, SMEs in Europe get a far higher percentage of contracts than they do in the United States. That should be of some interest to people.

Therefore, I say – and people are entitled to disagree with my views on this – that public procurement is all about competing: the best goods and services for the lowest amount. That means value for money. Reserving parts of the market underlines this. We were also discussing SMEs in an earlier debate this morning. Members said that SMEs need opportunities. I certainly agree. However, protectionism is not the answer. But, of course, we will not be naive: we expect our trading partners to open their markets as well.

  President. We shall suspend the sitting and resume at 11.00 a.m. for the formal sitting with the President of Bulgaria.

(The sitting was suspended at 10.25 a.m. and resumed at 11.00 a.m.)

IN THE CHAIR: MR POETTERING
President