European Commission proposes EU preference in public procurement, excluding Chinese firms

On Wednesday, the European Commission unveiled a legislative proposal that would enable EU public authorities to prioritize European companies in public procurement for essential services, such as energy, water, railways, ports, airports, and postal services. This move is aimed at safeguarding the EU market from China during ongoing trade negotiations, as the bloc faces a trade deficit with Beijing of approximately €1 billion daily.

Public procurement markets in Europe are valued at €2 trillion annually - a figure representing 15% of the EU's GDP. Commission Vice-President Stéphane Séjourné emphasized that public money should serve the collective interests of EU citizens. Under the proposed legislation, European public authorities would have the power to exclude non-European companies from public contracts if those companies originate from countries that restrict European access to their own public procurement markets, based on company nationality or product origin.

Moreover, the proposal suggests that EU public authorities could grant more points or visibility to European offers compared to competing bids. To counter potential low-cost pricing from Chinese companies, the Commission proposes that at least 30% of the evaluation of supplies for public procurement should prioritize quality criteria rather than solely focusing on price.

Séjourné explained that the new standard will prioritize the best quality-price ratio, while also considering social, environmental, and sovereignty concerns.

The proposed legislation, yet to be adopted by the EU co-legislators - the European Parliament and the EU Council, elicited an immediate response from China. The country's Chamber of Commerce in the EU stated that such a European preference could distort a level playing field for Chinese companies participating in the European public procurement market. China's Chamber of Commerce emphasized that public procurement should not discriminate against suppliers based on their nationality or the origin of the goods.

In March, another proposal advocating for a European preference in strategic sectors such as green technology, automobiles, and energy-intensive industries also drew criticism from Beijing. The Chinese government threatened retaliatory measures in response. EU Trade Commissioner Maroš Šefčovič plans to travel to China in early October, aiming to reach a political agreement with Beijing to rebalance the trade relationship between the EU and China.