Amid growing trust deficit with growing Chinese economic clout, the European Union is set to roll out a new set of rules to limit access to its 2 trillion euros ($2.2 trillion) worth of public tenders to exert pressure on countries, especially China, to open up their markets.
The European Parliament and France, which holds the rotating EU presidency, cleared the new rule, paving the way for the launch of the International Procurement Instrument (IPI), which had been blocked for a decade.
Franck Riester, trade minister of France, said the agreement on the IPI was part of Europe’s step away from being naive by looking after its own businesses and insisting on reciprocity.
Under the proposal, the European Commission would determine if third countries allow fair access to their public tenders to EU companies and, if not, seek to encourage remedies. Otherwise, the EU would apply a penalty to companies from that country, such as adding as much as 20% to the price of the bid during the selection process.
This would give bids from the EU or non-targeted countries an advantage. In some cases, the EU could even exclude bids from particular countries. The IPI, first proposed in 2012, was blocked, but the Commission urged EU governments and the parliament in 2019 to revive talks on a revised text, stressing the challenge posed by China, which EU members now regard more suspiciously.