Dear Reader,

This issue pick’s up on the nuisance that, outside the European Union, many countries are reluctant to open their public procurement market to international competition further than what they have already done. As a result, European international contractors face restrictive procurement practices in many of the EU’s trading partners. The EU Commission’s aims at creating a more level playing-field in bilateral trade negotiations with third countries on opening up public procurement markets. But does the Commission follow the right strategy?

Sincerely,
Your EIC Team

Brussels    On 13 June 2018, EIC, FIEC and EuDA informed the Members of the International Trade (INTA) Committee of the European Parliament about their joint voting recommendations for the proposed EU Regulation on the access of third-country goods and services to the Union’s internal market in public procurement (COM(2016) 34 final).

The proposal on an International Procurement Instrument (IPI) is the EU’s response to the lack of a level playing field in world procurement markets. While the EU public procurement market is generally open to foreign bidders, the procurement markets for foreign goods and services in third countries remain to a large extent closed de iure or de facto. The IPI aims at encouraging partners to engage into respective negotiations and opening participation for EU bidders and goods in third countries’ tenders.

However, contrary to the original proposal of the year 2012 (COM(2012) 124 final) the amended version proposes to delete the possibility to close the market in case of a lack of reciprocal market access and to limit possible restrictive measures to so-called “price adjustment measures”. This means that foreign bidders and products and services which are subject to a price adjustment measure for evaluation purposes could still be awarded the contract, if despite the price adjustment the offer remains competitive in terms of price and quality.
 

EIC, FIEC and EuDA have come together and jointly formulated voting recommendations in which they call upon the INTA Committee Members to reject the proposed Amended Regulation. The European federations are highly concerned that the amended proposal erases via Article 1 para. 5 the possibility for contracting authorities/entities in EU Member States to exclude from their tenders foreign bidders from third countries which have closed for their part the domestic government procurement market for European companies.
 
By contrast, past experience arising e.g. out of the “Covec case” in Poland back in 2009 and the unfolding “Pelješac case” in Croatia suggests that the planned limitation of possible restrictive measures to price penalties of up to 20% is not suitable to open third country procurement markets to EU companies nor can they prevent unfair competition by third country firms, in particular state-owned enterprises, in the EU Internal Market.
 
Hence, the proposed draft Regulation, in particular in its amended version, will not help opening third-country procurement markets for European companies but will open the EU’s internal procurement market – contrary to the spirit of the GPA – entirely for third country bidders, with particularly severe implications for the – privately operating – European construction industry.

Brussels   On 23 May 2018, the EIC and FIEC Directors with the Chairman of the International Trade (INTA) Committee of the European Parliament, MEP Bernd Lange, to learn about the results of the mission of the INTA Committee to China from 6 to 9 May 2018.

Prior to the meeting, EIC had submitted to the INTA Chair its Memo on elevating the level playing field for European international contractors which allowed Chinese companies to take advantage of the existing imbalance in the international trade law. As a consequence of the asymmetric obligations for European and Chinese international contractors, and notably the European and Chinese development and export finance institutions, the international competitive level playing is severely distorted.

During the meeting, the EIC and FIEC Directors highlighted the fact that China had still not become a member of the WTO’s Agreement of Government Procurement (GPA) and that, therefore, the EU should strictly apply the principle of reciprocity until China had opened its national construction market to foreign contractors to the same degree as the EU construction market has been opened to GPA members.
 

EIC and FIEC also drew the attention of the INTA Chair to the recent decisions of Croatian public authorities to award the EU-financed tender for the construction of the Pelješac Bridge along with access roads to the state-owned China Road and Bridge Corporation and to reject the appeals filed against the selection by privately-run European bidders.

FIEC and EIC criticised the EU’s trade policy allowing that a consortium of Chinese state-owned companies could participate in EU-financed tenders within the EU Internal Market whereas in China foreign bidders were excluded from the domestic public procurement market.

Link:
EIC Briefing Note to Bernd Lange

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Macao    On 08 June 2018, EIC President Dessoy was invited by the Chinese International Contractors Association (CHINCA) to present the EIC Corporate Responsibility Report in the context of the 9^th International Infrastructure Investment and Construction Forum (IIICF) in Macao.

The 9^th International Infrastructure Investment and Construction Forum (IIICF), organised by CHINCA under the auspices of the Ministry of Commerce of China, gathered more than 1.500 politicians, business people and academics from more than 60 countries, including more than 50 government officials at the ministerial level. During the past eight editions of the Forum, more than 50 cooperation agreements or contracts were signed, covering hydropower, roads, railways, airports, ports, housing and other infrastructure projects.

international clients and financiers as well as for civil society. He presented the corporate value proposition of European international contractors relating to social, environmental and ethical aspects and highlighted that Corporate Responsibility was a core challenge not only for European contractors but for the global construction sector.
 

During the event, the 2018 edition of the Belt and Road Infrastructure Development Index was released. The report is considered as the barometer of the infrastructure in countries along the “Belt and Road” and contains statistical information and future prospect related to the development of infrastructure and business co-operation.
 
CHINCA Chairman Fang Qiuchen said that the latest edition of the index indicated that cooperation long the Belt and Road Initiative had reached new heights with Indonesia, Singapore, Pakistan, Russia, and Vietnam being the top five countries in the country, while Portuguese-speaking countries had the greatest development potential.

Brussels   The EU is currently updating its 1995 trade defense law to counter unfair trade practices and adapt to the needs of European firms, workers and consumers. 
 

Link:
EP Press Release on Defence Tools against Unfair Imports
 

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