3 - Reciprocity in access to public procurement in Europe and China

Procurement is where the strategy of reciprocal engagement is put to the test of practice, yet nothing concrete has been decided in 2012 and Europe continuedto move at snail’s pace.

The EU seeks fair competition and equal access to the Chinese market for public procurement. European companies rarely win contracts partly because China has not yet joined the WTO’s Agreement on General Procurement (GPA), which regulates public procurement. (In November China made another offer, but it included only one-tenth of its real public-procurement market.) In March, the European Commission proposed an instrument on reciprocity in public procurement that would potentially exclude bidders from countries with less open markets including China. In the words of Internal Market and Services Commissioner Michel Barnier, it was about the EU no longer being “naïve”. In a resolution, the European Parliament also came out in favour of stronger reciprocity and better access to Chinese public procurement.

The proposal is currently being discussed by member states and could end up stalled in internal wrangling for years. Member states are divided and several larger member states are against. The UK issued a clear rebuttal stating that the proposal would undermine value for money in public procurement and lead to unnecessary “tit-for-tat protectionism”. And while Chancellor Angela Merkel had seemed positive about reciprocity in 2010, a leaked document from the German government similarly foresaw that the proposal heralded “serious problems for… German companies”. Eastern European countries were more interested in getting investment from Chinese companies rather than waiting for guarantees of obtaining reciprocal concessions by China, because they have few expectations for their own companies there. At the same time, there is a discussion on who would maintain the blocking power over incoming deals. France, otherwise a protagonist for the proposal, is also in the lead for demanding that blocking capacity remain at national level, which in the worst case could lead to a patchwork of 27 different practices rivalling China’s opacity.