The activities of Chinese State-Owned construction Enterprises (SOE) in and around the EU have reached new dimensions with the “Belt and Road Initiative” (BRI) and the budgets involved. Recent examples of public works contracts awarded to consortia led by Chinese SOEs (e.g. in Croatia and Sweden) for prices that seem to be abnormally low from the perspective of a private company show the need for a comprehensive EU strategy in favour of a level playing field and fair competition.
To address the China Challenge, FIEC has joined forces with the European International Contractors (EIC) and the European Dredging Association (EuDA). Dealing with internal market issues, FIEC’s main objective is to prevent unfair competition and ensuring a level playing field on the internal market while our partners are also addressing external challenges.
International Procurement Instrument (IPI)
In 2012, the European Commission adopted a proposal for a Regulation on the access of third-country goods and services to the Union’s internal market in public procurement and procedures supporting negotiations on access of Union goods and services to the public procurement markets of third countries - also known as International Procurement Instrument (IPI). The main aim consisted of increasing the EU’s leverage in negotiations in order to achieve reciprocity as regards the access of European companies to foreign procurement markets. Basically, where a third country not being member to the WTO Government Procurement Agreement (GPA) restricts market access for European companies, economic operators from the concerned country could be subject to restrictive measures taken by the European Commission. The legislative file has been at a standstill in recent years since the Council could not agree on a common approach. However, towards the end of 2019, the Council resumed its work on the file.
FIEC considers the IPI as a vehicle to prevent unfair competition on the internal market and is mostly concerned by the fact that the IPI proposal as it stands now, would completely open the EU procurement market to third country bidders while undermining provisions of existing public procurement legislation. Therefore, FIEC advocates for several modifications of the proposal. Most importantly, it must be assured that the IPI comes as a complement to existing legislation and does not overrule it.
For several years, FIEC called for a solution to the problem of subsidised companies in procurement procedures. For instance, FIEC asked for a State Aid Test to be conducted when such companies want to participate in tendering procedures.
Against this background FIEC welcomes the White Paper on Foreign Subsidies that was published by the European Commission. Amongst others things, the paper contains the idea of introducing a targeted legal instrument that ensures a level playing field within the internal market and complements the existing EU public procurement framework by introducing the possibility of an exclusion of subsidised bidders from an ongoing public procurement procedure. For this purpose, a new statutory exclusion ground would be introduced, complementing the exclusion grounds already contained in the procurement Directives.