EU bids to open market access in emerging nations

(BRUSSELS) - The European Union unveiled proposals Wednesday aimed at forcing emerging powers such as China to offer European firms access to lucrative government contracts.

After repeatedly complaining about Chinese restrictions, the European Commission proposed measures to allow the 27-nation bloc to bar foreign firms from winning government contracts if their countries block European companies.

"We are simply asking them to open their markets for our products just as we have been doing for theirs," EU Trade Commissioner Karel De Gucht told a news conference. "It's about fundamental fairness."

The proposals, which he described as a "carrot and stick" approach, are aimed at compelling nations to enter negotiations but he dismissed fears that it could lead to counter-measures.

"I don't believe this will result in retaliation," De Gucht said.

With EU firms also facing restrictions in India, Brazil and Russia, EU Internal Market Commissioner Michel Barnier said Europe loses out on 12 billion euros ($15.8 billion) per year worth of government contracts in third nations.

"We see that our trade partners apply a number of protectionist measures and restrictions in their public markets. It's true for the United States, Japan and emerging nations," Barnier said.

While 85 percent, or 352 billion euros worth, of the EU's public procurement market is open, the United States offers foreign bidders only 178 billion euros in contracts and Japan offers 27 billion euros, according to the commission.

European companies are generally blocked from contracts related to construction, rail equipment, urban buses and energy production, he said, adding that "this creates competition problems in these sectors."

One of the measures proposed by Brussels would allow a government entity such as a municipality to ask the commission to bar a protectionist country's companies from bidding on contracts of more than five million euros.

The second measure would restrict public procurement access to a third country that repeatedly discriminates against EU companies and refuses to negotiate to address the imbalances.

Some EU nations, notably France, pressed for such measures, said an EU official.

French President Nicolas Sarkozy, facing a difficult re-election campaign, has called for a "Buy European Act" in the EU modeled after the "Buy American Act" in order to give European companies priority in public contracts.

External public procurement initiative - guide