MEPs back tool to help EU firms compete for public contracts in third countries  

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Plans for a tool to allow EU countries to prevent non-EU firms from bidding for public procurement contracts worth €5 million or more unless their home countries reciprocate by allowing EU firms to do likewise were approved by Parliament on Wednesday.

The proposed tool, which could be used only with European Commission approval, should strengthen the EU’s hand in trade talks with third countries. "We are not trying to shut off our market. We are trying to motivate other countries to open their procurement markets to our firms", said European Parliament rapporteur Daniel Caspary (EPP, DE).

The plans were approved by 479 votes to 184, with 17 abstentions and the approved text will now serve as a basis for Parliament to negotiate the necessary regulation with the Council.

Big contracts only

The tool could be used only for big public contracts (worth €5 million or more excluding VAT) and those in which goods or services originating outside the EU make up more than 50% of the total value of the goods or services involved. It will apply to those countries which do not currently have an international agreement covering public procurement with the EU but exclude Least-Developed Countries.

Preventing fragmentation of the EU single market

To prevent fragmentation of the EU’s single public procurement market, MEPs amended the proposal by stipulating that EU member states may restrict the market access of third country suppliers only by means of measures provided for in the regulation or relevant EU law and only after a European Commission investigation has found a ”lack of substantial reciprocity” by the third country concerned.

Promoting labour rights and development

To ensure that developing countries do not become unintended victims of the new tool, MEPs propose to exclude from its scope those developing countries which are ”considered to be vulnerable due to a lack of diversification and insufficient integration within the international trading system”.

MEPs also suggested that “lack of substantial reciprocity” restrictions could also be imposed where international labour standards, as defined by the recently-approved EU Public Procurement Directive, are breached in a third country.


Is this protectionism?

A minority of 214 MEPs voted to reject the proposed tool altogether, echoing the view of some EU member states that deploying such a a "trade weapon" could provoke retaliation by the EU’s trading partners which would in turn harm EU industry and the EU’s global image as a promoter of trade liberalization.

However, the European Commission stresses that that the aim of the new tool is to remedy market access imbalances between the EU and its trading partners.

According to the Commission, 85% of EU public procurement markets are already potentially open to international bidders, compared to only 32% of public contracts in the USA and 28% in Japan.