The European Commission (the Commission) is considering new legislation which will impose restrictions on non-EU companies and will set terms for their access to the EU public procurement markets.
The Commission has launched an online questionnaire and is seeking the views of stakeholders across the EU as part of its consultation.
Government procurement in the EU amounts to EUR 2,100 billion and the purchase of goods, works and services represents 19% of GDP. Through the World Trade Organisation (WTO) Government Procurement Agreement (the GPA) and bilateral and regional Free Trade Agreements (FTAs), the EU has granted access to its public procurement market in relation to certain goods, services and companies in non-EU countries. Currently 13 countries outside of the EU are covered by the GPA and approximately 15 by FTAs.
However, according to the Commission, the EU has only partially exercised its power to regulate such access and a gap has appeared between what has been agreed and the actual access conditions, meaning that the EU public procurement market is de facto more open to non-EU goods, services and companies in comparison to non-EU markets.
The Commission has calculated that companies originating in GPA countries have access to 85% of the EU public procurement market, whereas EU companies benefit only from limited reciprocal access, for example 50% in Korea, 23% in Japan, 12% in the USA, and only 3.2% in Canada.
According to the Commission, companies within the EU are therefore being put at a disadvantage, risking a reduction in competitiveness and innovation within the EU and job losses as well as having a negative impact on the ability of EU SMEs to perform on an international platform.
What is being proposed?
The Commission is considering a range of proposals during its impact assessment, including: (i) maintaining the status quo and continuing with the current policy without any intervention; (ii) a non-legislative approach involving the publishing of guidance on the scope and enforcement of existing instruments and making more active use of mechanisms such as the dispute settlement mechanism under the WTO; and (iii) the drafting of new legislation to reflect the current EU commitments under the WTO and FTAs and defining those goods, services and companies originating in non-EU countries which may or may not benefit from such commitments.
It is likely that the Commission will favour the third option, being the introduction of new legislation. The scope of this legislation would mirror that of the public procurement directives with regard to thresholds, and would create legal certainty for both EU entities requiring goods and services and prospective international suppliers.
It is envisaged that one of two alternative methods of drafting such legislation will be used:
- EU procuring entities would exclude non-EU goods, services and companies which fall outside of the current EU commitments, with the possibility of exceptions and waivers for goods and services unavailable in the EU, cases of emergency, and/or an overriding reason of general interest; or
- EU procuring entities would have the option to exclude non-EU goods, services and companies which fall outside of the current EU commitments, subject to notification to the Commission.
The aim is to address the imbalance and set proportionate, coherent and effective terms of access whilst creating increased leverage for negotiating access to other international procurement markets. This may be coupled with the publishing of guidance by the Commission.
What are the next steps?
The Commission is seeking views on the approaches and policy options as outlined in the consultation document, and is particularly keen to receive responses from businesses which sell to public authorities and utilities, trade associations, contracting authorities or associations representing contracting authorities, government institutions and regulatory authorities, trade unions and NGOs.
Further information can be accessed using the link below.
Responses to the online questionnaire must be submitted to the Commission by 2 August 2011, after which they will be published on the Commission’s website and considered when determining the final design of the future legislation in this area.