EU Cracks Down on Chinese Medical Product Suppliers in EU Tenders Over Reciprocity Concerns
European Union bars Chinese firms from public contracts
In a significant move, the European Union (EU) has announced that it will bar Chinese companies from certain public tenders, particularly those for the procurement of medical products valued at more than five million euros. This decision marks the first time the EU has invoked a tool established in 2022 to impose sanctions on states that discriminate against European companies in public procurement procedures.
The initiative stems from concerns over market access reciprocity and fairness. The EU hopes that by implementing this policy, it will persuade other countries to open their markets to European companies.
This action is largely due to the steep rise in Chinese exports of medical products to the EU, which more than doubled between 2015 and 2023, according to EU data. Simultaneously, China has erected formidable barriers to its own market, with 87% of public tenders for medical products in China featuring discriminatory measures against EU-manufactured products and suppliers.
Medical items of all kinds, ranging from ventilators, X-ray machines, sterilization equipment, wheelchairs, to bandages like plasters, are covered by these tenders.
The European Commission has maintained contact with Chinese authorities throughout the past year, but negotiations have seemingly yielded unsatisfactory results for the EU. Exceptions are made under specific circumstances, such as when only one Chinese company is bidding on a tender.
This policy reflects a broader strategy by the EU to ensure the uninterrupted availability and security of essential medical equipment in its healthcare systems. The intention is to reduce the EU's reliance on Chinese inputs and suppliers. Furthermore, the new rules not only exclude Chinese firms above the €5 million threshold but also cap the share of Chinese-origin materials in successful bids at 50%.
The EU contends that these measures adhere to its international trade commitments and are proportionate responses. Since the EU has no binding procurement commitments with China, the restrictions are deemed consistent with World Trade Organization (WTO) rules, as they aim to foster a level playing field and promote reciprocal access to public procurement markets.
The EU also invokes the utilization of the International Procurement Instrument (IPI), an instrument that became effective in 2022, to rationalize this move. The IPI empowers the EU to impose restrictions on access to its public procurement markets when third countries do not offer reciprocal access to EU companies, fostering a fairer trade environment.
This decision is part of a broader effort by the EU to address trade tensions with China, including tariffs on Chinese electric vehicles and Chinese export restrictions on rare earth elements. The EU seeks to protect its own market and suppliers.
In essence, the EU's policy amounts to a strategic attempt to rectify unequal market access conditions in China, secure stable supply chains for critical medical products, comply with international trade norms, and promote reciprocal trade relationships with China.
[1] ntv.de[2] dpa[3] European Commission, EU medical devices regulation, https://ec.europa.eu/info/business-economy-euro/industry-sector/pharmaceuticals/medical-devices_en[4] European Commission, International Procurement Instrument, https://ec.europa.eu/info/strategy/priorities-partnerships-policy/strategic-partnerships/international-partnerships/china/international-procurement-instrument_en[5] World Trade Organization, Trade Policy Review: China, https://www.wto.org/english/tratop_e/tpr_e/tp393_e.htm
- The European Union's decision to bar Chinese companies from certain public tenders, particularly in the procurement of medical products, is rooted in concerns about market access reciprocity and fairness, as China has imposed discriminatory measures against EU-manufactured products and suppliers in 87% of its public tenders for medical items.
- The European Commission's new policy aims to ensure uninterrupted availability and security of essential medical equipment in EU healthcare systems, and includes not only barring Chinese firms above the €5 million threshold, but also capping the share of Chinese-origin materials in successful bids at 50%.
- This policy is part of a broader effort by the EU to address trade tensions with China, as the EU seeks to rectify unequal market access conditions, secure stable supply chains for critical medical products, comply with international trade norms, and promote reciprocal trade relationships with China.
