EU procurement fight-back

The EU Commission was preparing legislation aimed at obtaining greater powers to block foreign companies from bidding for government contracts in the 27-nation bloc, the European Union's executive body announced Wednesday.

Under the proposal, EU authorities could exclude foreign firms from competing for contracts worth more than 5 million euros ($6.6 million), if there is evidence that European companies are routinely ignored by authorities abroad.

The move was intended to create "leverage" to open third-country public procurement markets, the Commission said in a statement, thus helping EU companies get a "fair crack of the whip" at business opportunities overseas.

The move is primarily targeted at China, which refused to sign a global public procurement agreement in January, but also at the United States which recently adopted legislation favoring homegrown firms.

"The EU should no longer be naïve and should aim for fairness and reciprocity in world trade," EU Internal Market Commissioner Michel Barnier said in Brussels.

EU disadvantaged

According to figures released by the EU Commission, most countries spend between 15 and 20 percent of their gross domestic product (GDP) on public contracts.

Every year, the EU opens to foreign bidders public tenders worth 352 billion euros ($457 billion).

By comparison, the US offers only 178 billion euros worth of tenders to overseas companies, while in Japan only 27 billion euros worth of government contracts are open to foreign firms.

The Commission was unable to provide exact figures on how much of China's 83-billion-euro public procurement market was open to foreign companies.

Rising tensions

The Chinese ambassador in Brussels, Wu Hailong, rejected accusations that European companies were unfairly treated in public tenders.

"Provided that they receive equal access to our market … there is still the possibility that Chinese consumers choose domestically produced products," he told Reuters news agency.

However, industry lobby group Business Software Alliance (BSA) told the same news agency that China as the "fastest growing market" for technological products was "effectively walled off" to the group's members, including Microsoft.

The EU Commission said it would use a ban as a last resort and hoped that countries would instead decide to open their public procurement markets.

"I honestly do not believe that this will result in retaliation," said EU Trade Commissioner Karel de Gucht, adding that he believed it would "result in negotiations."

uhe/ai (dapd, AP, Reuters)