EU urges China to open public-contract market
European Voice | 20.10.2011
EU-CHINA Summit
EU urges China to open public-contract market
By Toby Vogel
EU firms prevented from competing for contracts.
The European Union is hoping to use next week’s summit with China (25 October) to press the Chinese authorities on obstacles facing European investors and to discuss access for European bidders to China’s public-procurement market.
Karel De Gucht, the European commissioner for trade, announced on Friday (14 October) that the European Commission will later this year present legislation to take action against countries that prevent foreign firms bidding for government contracts. An official said that the legislation – being prepared by De Gucht and Michel Barnier, the European commissioner for the internal market – is “general, but of course primarily about China”. An impact assessment is currently being finalised.
The EU has taken a more assertive stance on trade and investment matters with a new trade strategy adopted last year. A core element is ‘reciprocity’ – the notion that firms from countries that restrict access to public-procurement markets should be excluded from bidding for public contracts in the EU in the same sector. “The EU cannot afford to open its public-procurement market while others don’t,” De Gucht said.
De Gucht added that the EU wants to launch talks on an ambitious investment treaty that will protect foreign companies doing business in China. European officials suggest that China is reluctant to accept legally binding obligations on foreign direct investment, preferring to maintain the current web of bilateral investment treaties with individual member states.
The EU’s Treaty of Lisbon, which took effect late in 2009, made investment policy an EU competence, as is trade. China has been a member of the World Trade Organization for a decade but still benefits from a 15-year transitional status, which allows it to avoid fully implementing WTO rules on investment protection.
Investment challenges
De Gucht’s comments on Friday followed the presentation of a report by BusinessEurope, a federation of European business associations, which identified numerous challenges faced by European firms investing in China. These include restrictions on foreign ownership, subsidies reserved for Chinese firms, lack of access to the public-procurement market, and selective enforcement of intellectual property rules.
“I am worried when I read that European companies fear retaliation in China,” De Gucht said. “That is disconcerting and must be addressed by us in our dialogue with China and, of course, by China itself.” The EU is China’s largest trading partner.
But Fu Ying, China’s deputy foreign minister, criticised Europeans who “politicise economic matters” and damaged the “atmosphere for bilateral co-operation”, for example by pointing fingers at China over alleged unfair trade practices and human-rights violations.
‘Psychological hurdles’
She called on European countries to “get over their psychological hurdles and adapt to the new reality” of emerging economies, especially on investment. “European countries should be more welcoming to investment from developing countries and actively help them, including investors from China in Europe,” she said. China’s foreign direct investment outflows (excluding Hong Kong) grew more than five-fold between 2005 and last year.
Fu was in Brussels last week (11-12 October) to prepare for the annual summit between the EU and China, which this year will be held in Tianjin, a city in north-east China. Apart from the De Gucht, the EU will be represented by Herman Van Rompuy, the president of the European Council, José Manuel Barroso, the president of the Commission, and Catherine Ashton, the EU’s foreign policy chief.
