Trade: provisional agreement to promote reciprocity in access

The Council Presidency and the European Parliament have reached a provisional agreement on a draft regulation aimed at promoting reciprocity in access to international public procurement markets.

The provisional agreement is subject to approval by the Council and the European Parliament before going through the formal adoption procedure.        

This legislative act will enable us to introduce a new trade policy tool to ensure access and a level playing field for EU companies on third countries’ public procurement markets. After all, according to the Commission, public procurement accounts for 15 to 20% of global GDP.

Currently, European procurement is broadly open to companies from third countries, but European companies do not always have reciprocal access to public procurement in those countries. This new European instrument will equip the EU with credible leverage to open up our partners’ public procurement to our companies and will enable us to right that imbalance and defend our companies against these discriminatory practices. Today's well-balanced agreement is a historic step in implementing an open, sustainable and firm trade policy.

Franck Riester, minister with responsibility for Foreign Trade and Economic Attractiveness, attached to the Minister for Europe and Foreign Affairs

A new lever for European trade policy

The instrument aims to create bargaining leverage to encourage third countries to end practices which close their public procurement markets. Thus, when the Commission carries out an investigation, it will invite the third country concerned to consult with it in order to guarantee European companies open access to all to its public procurement. Otherwise, at the end of a transparent investigation, the European Union will be able to apply reciprocal measures by restricting the access of that third country’s companies to European public procurement markets.

IPI measures  

Thus, if the Commission finds that European companies face serious and recurring restrictions on access to a third country’s public procurement and if, following consultation with the third country concerned, those barriers persist, it may impose measures limiting the access of that third country’s companies to European public procurement in response. Such limitations on access may be imposed either by applying a penalty to the scoring of tenders submitted by economic operators from that country, or by excluding such tenders entirely from award procedures.    

IPI measures only apply to economic operators, goods and services from third countries which do not have an international public procurement agreement with the EU or whose agreement does not include commitments to open up markets for these goods or services. Furthermore, they apply only to procurement procedures with an estimated value equal to or above EUR 15 000 000 excluding VAT for works and concessions, and at least equal to or above 5 000 000 excluding VAT for goods and services.

Member states will be able to request exemption from IPI measures for a limited list of local contracting authorities, under certain strict conditions.

Lastly, given the EU’s objective of encouraging sustainable growth in low-income countries, the Commission will not be able to launch any investigations into the practices of least-developed countries which benefit from the ‘everything but arms’ arrangement.  

Anti-circumvention measures            

In order to avoid circumvention of these rules, additional obligations will be imposed on successful tenderers in procurement procedures to which an IPI measure applies, such as an obligation not to subcontract more than 50% of the total value of the contract to economic operators from a third country subject to an IPI measure.      

Guidelines and review of the regulation        

The Commission will publish guidelines to help member states’ tendering authorities in applying the regulation, and in particular to facilitate its application by SMEs.

It will also regularly review the scope, functioning and effectiveness of the regulation.          

Background   

On 21 March 2012, the European Commission presented a first proposal for a regulation, which did not obtain the necessary support in the Council. On 29 January 2016, the European Commission adopted an amended proposal, and it was on this basis that the Council agreed its negotiating mandate on 2 June 2021, before starting its contacts with the European Parliament.     

Next steps      

The agreement will be submitted to the EU’s Permanent Representatives Committee for approval on behalf of the Council, after finalisation of the text at technical level. Parliament and Council will then be called on to adopt the proposed regulation at first reading.