Chinese firms may face barriers to winning Europe’s public contracts as leaders call for new law

This story is published in a content partnership with POLITICO. It was originally reported by Jakob Hanke and Jacopo Barigazzi on politico.eu on March 19, 2019.

European heads of government are set to call for new rules that would make it harder for Chinese companies to win public contracts in Europe, according to new draft conclusions seen by POLITICO.

The draft text calls on the European Union to kick-start internal negotiations on a new law that would enforce “reciprocity” in public procurement.

“The European Council [comprising leaders of the EU member states] calls for resuming discussions on the EU’s international procurement instrument,” say the draft conclusions, which will be discussed by EU leaders on Thursday.

The EU “must … [ensure] effective reciprocity for public procurement with third countries”, the draft adds.

Paris and Berlin have taken the lead in calling for new rules to penalise companies from countries that do not allow EU competitors to bid in their public tenders.

Many industrial EU countries are increasingly frustrated that their leading businesses were excluded from Chinese projects such as the country’s 10,000km high-speed rail network and the Olympic facilities in 2008, while the EU opened domestic markets to Chinese bidders in tenders.

The new law could make it harder for Chinese companies to win public contracts concerning everything from power plants to trains and bridges.

EU leaders will discuss the proposals at a dinner on Thursday.

The Commission first proposed such rules – known as the international procurement instrument – in 2012, but German officials said that draft law should be amended in discussions.

While China is the EU’s primary target, the reciprocity strategy would also apply to other difficult markets such as Russia, Turkey, India and Indonesia.