The EU adjust their weapons against countries with closed public markets

The EU is doing a new attempt to reach internal agreement on actions that can promote openness in the global market of public procurement.
The EU adjust their weapons against countries with closed public markets

 

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The EU make efforts to reach an agreement on the best actions to open important global markets for public procurement for EU suppliers. Among others, the “retaliatory step” is removed, eliminating countries that do not have corresponding open markets, from the EU market of public procurement. A price increase is suggested for third country providers with closed public markets.

The European Parliament discussed the imbalance between the access for third country to EU’s public markets and the EU contributor access to the third-country public markets. Actions to create more balance have taken place in the EU’s formal forums since 2012, but the opinions in the member states are too big to reach any agreement. The Parliament’s internal market committee proposals for actions were attempts to create a manageable compromise.

For the EU it is about establishing guidelines and rules for public procurement in the global market, where there are yet no rules. American procurement open for foreign suppliers, is currently only 178 billion Euro, corresponding to Japan’s 27 billion Euro. In China, only a small part of public procurement is available to foreign providers.

 

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Protectionist actions

Several countries have implemented protectionist actions in the wake of the financial crisis some years back. In total, more than half of the world’s procurement market is closed due to protections actions, and the proportion is still increasing. As a result, EU exports to the global procurement markets are only 10 billion Euro (0,08 % of EU GDP), while EU exports of an estimated 12 billion euros can not be realized due to restrictions.

Through the revised agreement of public procurement, within the framework of the World Trade Organization, the worth of purchases are valued at close 352 billion Euro, for disposals to third-countries covered by this agreement. Important economic contributors such as China, Brazil and India are not yet parties to this agreement, and some of the parties have only limited procurement in the agreement.

 

Removed the negative

The compromise proposal that is currently up for discussion internally in the EU, has now removed all negative elements from original proposal. The complete closure of EU’s procurement market has as well been removed. There should be a “retaliatory step” towards countries not willing to open their corresponding markets. The compensation is increase in prices on goods and services from countries not opening their markets for EU exports. This means that foreign suppliers can still win contracts in EU countries, given that the price increase is giving them advantage.

Administrative burdens associated with the actions will be reduced, and certain exceptions are introduced for small and medium sized enterprises form third-countries, as well as developing countries with an EU-agreement. Third-country suppliers that can document less than 50 % of offered goods and services originated in a third-country, will also get certain exceptions from the implementation of increased prices.

The time that the European Commission is going to use to map the barriers in a relevant third-country for opening the public market must be shortened. The results of such surveys will be published.

 

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This article first appeared at Anbud365, Norway’s leading online newspaper for public procurement. Published by Lennart Hovland on 30th of August 2017. The full article can be found in Norwegian here.

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