Nations may face bans on their companies winning public procurement contracts in Europe under plans published today by the region’s trade and market chiefs.
The powers, part of proposals to boost the European Union’s arsenal against trade discrimination, could be used if other countries don’t grant equivalent market access to EU-based businesses, the European Commission said.
“The EU should no longer be naive and should aim for fairness and reciprocity in world trade,” Internal Market Commissioner Michel Barnier said today in an e-mailed statement.
The announcement of the measures comes as the 27-nation EU and the U.S. lean harder to China to overhaul its trade policies on concerns the Asian country manipulates its currency and uses discounts, preferential loans and tax incentives that give its exporters an unfair advantage.
President Barack Obama signed an executive order in February creating a panel to probe unfair trade practices by nations including China, while the EU joined the U.S. and Japan this month in challenging Chinese curbs on rare-earth minerals at the World Trade Organization.
The U.S.-China trade deficit widened to $295 billion last year and the imbalance is a main source of friction between the two countries. The EU’s 2011 trade gap with China narrowed to 155.9 billion euros ($207 billion) from 169.3 billion in 2010.
China is one of several countries that have introduced protectionist measures for procurement contracts, the Brussels-based commission said. Others include the U.S., Brazil, Turkey and Russia.
Under today’s proposals, the commission would be able to ban non-EU companies from winning procurement contracts in the bloc if they are based in countries that repeatedly discriminate against European firms. The draft law would also clarify what access foreign companies get to EU public procurement markets through free-trade agreements and other accords.
National governments and European Parliament lawmakers must approve the proposals before they can come into effect.
Public procurement contracts in the EU represent 19 percent of the region’s gross domestic product, according to commission figures. The annual value of such tenders advertised across the EU is about 420 billion euros.