Public procurement | Brussels, 15 March 2022

The European Commission, the European Parliament and the Council have reached a political agreement to give the EU greater leverage to get access to public procurement markets outside the EU, boosting opportunities for EU companies. The agreement on the International Procurement Instrument (IPI) follows the final trilogue in Brussels on Monday, 14 March.

The EU public procurement market is one of the largest and most accessible in the world. However, many of the EU's major trading partners apply restrictive practices in their markets that discriminate against EU businesses. These restrictions affect competitive EU sectors such as construction, public transport, medical devices, power generation and pharmaceuticals. The IPI will help address this problem by empowering the EU to initiate investigations in cases of alleged restrictions for EU companies in third country procurement markets, engage in consultations with the country concerned on the opening of its procurement market and, in the end, restrict access to the EU procurement market for foreign companies if they come from a country which continues to apply restrictions to EU companies.

Executive Vice-President and Commissioner for Trade Valdis Dombrovskis said: “A level playing field is vital for the competitiveness of our companies. While the EU has kept its public procurement market open, the same cannot be said for many third countries, where our companies still face unfair barriers. We continue to favour dialogue to resolve such issues. But in the final instance, this new instrument will give us extra leverage to remove these barriers and promote fair competition for the benefit of all.”

With the IPI, the Commission would, ultimately, be able to apply restrictions to the EU's own procurement markets in the form of adjustments in the way tenders from the country concerned are assessed, or by excluding certain tenders from the country concerned. In practice, these adjustments mean that bids from that country would, compared to other bids, be considered to offer a higher price than the actual price put forward. This would give EU and non-targeted countries' bidders a competitive advantage on EU public procurement markets.

This would be a measure of last resort. Before that step is taken, the Commission would initiate investigations in cases of alleged restrictions for EU companies in third country procurement markets. In parallel to the investigation into restrictions vis-à-vis EU goods, services and/or suppliers, the Commission would invite the country concerned for consultations on the opening of its procurement market. Such consultations could also take place in the form of negotiations of an international agreement.

In any case, to avoid the application of such measures, third countries would only need to stop their restrictive practices. The existing EU commitments – including in the WTO Government Procurement Agreement (GPA) and bilateral trade agreements – remain unaffected by this instrument.

Background

Public procurement is about how public authorities spend public money to buy goods and services. This can range from buying computers, to building a road or managing a transport network. Public procurement represents a significant part of national economies. Public procurement spending accounts for on average between 10% and 20% of each country's GDP and represents over EUR 8 trillion in business opportunities worldwide.

The EU advocates for open international public procurement markets and has opened its own public procurement market for many goods and services from third countries. Closed procurement markets undermine competition and transparency, increase the costs of public goods and services for taxpayers and also increase the risk of corruption.

The IPI was first proposed by the Commission in 2012 and amended in 2016. The Council adopted its position on the proposal on the International Procurement Instrument in June 2021.

Next steps

Further to this political agreement, the European Parliament and the Council will formally adopt the amended regulation with a view to its entry into force as soon as possible.