Public procurement law as an instrument of trade policy

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For some years now, Brussels has been discussing how to use public procurement law more actively as an instrument of trade policy. The EU has made efforts to end unequal market access for European companies in third countries and to reduce distortions of competition through various measures, such as the rapid signing of bilateral investment agreements. This is due to the fact, that while the EU has largely opened its public procurement markets to companies from third countries, many of these countries do not grant comparable access to EU companies. Moreover, unregulated state subsidies can contribute significantly to unfair competition and play a decisive role in future relations with third countries.

These discussions have been reignited by the current pandemic. The public procurement system suddenly seemed unable to supply public institutions with the required supplies. Recognising this issue has made it clear that certain core needs have to be met self-sufficiently.

International Procurement Instrument, Higher Regional Court of Brandenburg, White Paper

International Procurement Instrument (IPI)

The search for concrete options for action to strengthen the position of European companies on the global trade market has been occupying the European legislative bodies for some time. To improve conditions under which EU companies can compete for government contracts in third countries and to strengthen the EU’s position in negotiations on access of EU goods, services and suppliers to foreign public procurement markets, the European Commission (Commission) proposed the so-called IPI in 2012. However, this proposal was heavily criticized by some member states. Taking these criticisms into account, the Commission presented a new proposal in 2016. It was still unsuccessful, as the member states were still unable to agree on a common solution. However, since the parallel negotiations between China and the EU on the conclusion of a far-reaching trade agreement came to a standstill, some member states abandoned their opposing views in 2019. In March 2020, the Commission presented its new industrial strategy for Europe and called for the rapid adoption of the IPI.

The current proposal provides for the Commission to launch an investigation in case of alleged discrimination against EU companies in the procurement market of third countries not covered by the GPA or a free trade agreement. If the Commission finds discrimination against EU goods, services or

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Source: Blomstein

Date: 22.09.2020