International public procurement instrument: securing fairness for EU firms

(Credit: Unsplash)

This article is brought to you in association with the European Parliament.


Parliament gave its final greenlight on Thursday to the new international procurement instrument intended to encourage the opening up of global procurement markets.

The International Procurement Instrument (IPI) introduces measures limiting non-EU companies’ access to the open EU public procurement market if their governments do not offer similar access to public tenders to EU companies seeking business. By fostering reciprocity, it tool aims to open up these protected markets and to end the discrimination against EU companies in third countries.

The trade offensive tool, adopted with 554 votes for, seven against and 14 abstentions, will empower the Commission to determine whether and to what extent companies from a third country must be subject to an IPI measure, depending on the extent of the trade barriers.

More contracts in scope

Overall, IPI measures will apply to tenders worth at least €15 million for works and concessions, for example road or bridge construction, and €5 million for goods and services, such as the purchasing of computers.

Parliament widened the scope of the tool by reducing the number of exceptions whereby an authority seeking tenderers in member states (for example, town halls, public institutions or governments) can opt out of IPI measures. MEPs ensured that big contracting authorities, for example city halls of large towns or central governments, are bound by the new rules.

Thanks to Parliament, it will be mandatory for contracting authorities to consider social, environmental, and labour requirements when judging bids.

Stricter IPI measures when barriers are found

Parliament ensured that if the Commission finds that barriers exist in the public procurement market of a third country from which a bid originates, IPI measures can take the form of a price penalty or a reduced score for the relevant bid, depending on certain criteria.

MEPs successfully argued that bidders from least developed countries should not be subject to IPI measures.

Quote

“With today’s final vote, the European Parliament has ensured that the International Procurement Instrument becomes an effective and efficient tool that improves reciprocity in procurement markets. IPI is a door opener for our European companies in third countries, as it removes unfair barriers they face and promotes fair competition. The days of an uneven playing field have finally come to an end,” said Daniel Caspary (EPP, DE), the rapporteur in charge of the IPI proposal since its first presentation in 2012.

Next steps

After its official adoption by the co-legislator Council and its signature, the regulation will enter into force on the 60th day after its publication in the Official Journal of the European Union.

Background

The EU has opened its public procurement markets to a significant degree to competitors from third countries and has been advocating for the end of protectionist measures on international public procurement markets.

Parliament has been working on the file since the Commission’s original proposal in 2012, then modified in 2016. Member states only reached an agreement on the topic in June 2021. The two institutions informally agreed on the final shape of the regulation in March 2022, and the EP’s International Trade Committee unanimously backed that agreement in April.

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