On Wednesday, the European Commission introduced a legislative proposal that would empower public authorities within the EU to prioritize European companies when awarding contracts for essential public services, including energy, water, railways, ports, airports, and postal services.
This initiative comes as EU policymakers aim to protect the bloc’s market from Chinese competition during intense trade negotiations, addressing a trade deficit with Beijing that amounts to approximately one billion euros daily.
Europe’s public procurement market, valued at €2 trillion annually, constitutes 15% of the bloc’s gross domestic product.
Commission Vice-President Stéphane Séjourné stated on Wednesday that “public money must serve our collective interests.” Under the proposal, public buyers can establish a European preference and exclude operators from countries that do not reciprocate access to their public procurement markets, whether based on company nationality or product origin.
The proposal explicitly enables EU public authorities to exclude non-European companies from public contracts if their home countries do not offer reciprocal market access to European firms.
Séjourné added that municipalities would be clearly empowered to exclude Chinese companies, or European companies offering Chinese products. Furthermore, authorities can award more points and visibility to European bids over competing foreign offers.
Swift reaction from China
The Commission also proposes that at least 30% of the evaluation criteria for public procurement supplies focus on quality rather than just price, a move expected to impact low-cost Chinese products.
“The new standard is the best quality-to-price ratio, not merely the lowest price,” Séjourné noted, emphasizing that choices must also meet social, environmental, and sovereignty requirements.
Pending adoption by the European Parliament and the EU Council, the proposed legislation has drawn a swift response from China. The China Chamber of Commerce to the EU stated that this European preference could “distort the level playing field” for Chinese companies operating in the European public procurement market.
“Public procurement should not discriminate against suppliers or goods based on the supplier’s nationality or the country of origin of the goods,” the Chamber asserted.
In March, a similar proposal advocating for European preference in strategic sectors like green technology, automotive, and energy-intensive industries also provoked strong opposition from Beijing, which threatened retaliatory measures.
EU Trade Commissioner Maroš Šefčovič is scheduled to travel to China in early October to negotiate a political deal aimed at rebalancing the trade relationship between the EU and Beijing.
