Opposition to Chinese companies competing for European tenders is increasing rapidly. In this article, the FD newspaper wrote about European dredging companies, including Van Oord and Boskalis, that are objecting to the participation of Chinese competitors in tenders in Europe. The article also gave rise to questions being presented in the European Parliament and to Minister Kaag in the Netherlands. In her reply, Minister Kaag acknowledged the problems caused by Chinese dredgers. In 2019, similar objections were raised in the field of public transport, for instance to the Chinese electric buses for the province of Overijssel.
Subsidies from the Chinese government, as well as lower wages and other circumstances, often allow these Chinese competitors to submit much lower tenders than their European competitors. That is making it possible for those Chinese companies to push their European competitors out of the market. On the other hand, the Chinese market remains completely closed to European companies...
This problem is not new – nor is the long-term solution. The FD article and the Minister cautiously refer to a promising European-Chinese Comprehensive Agreement on Investment (CIA) that would, in principle, give European dredgers access to the Chinese market in the future.
But how to solve the current unfair competition between European and Chinese companies in European tenders?
I believe that the finger of blame is wrongly being pointed at Europe and China. It is true that a bilateral agreement may offer a lasting solution in due time that will give all the market players equal opportunities on both markets, but that will not level today’s unfair playing field. A Dutch dredger currently cannot compete in a European tender with a heavily subsidised Chinese competitor. In my opinion the solution should be found closer to home (namely in Europe).
European contracting authorities already have a range of legal options at their disposal to exclude Chinese companies from tender procedures. A first possibility can be found in the Government Procurement Agreement (GPA) of the World Trade Organisation. Since China is not a party to the GPA, European contracting authorities may exclude tenderers from China. They may also exclude “abnormally low tenders”. Finally, a contracting authority must exclude a tenderer if it does not meet the European social, environmental and labour standards.
In other words, I believe that European tenderers should therefore not pin their hopes on a slow and uncertain bilateral process between Brussels and Beijing, but should now already raise critical questions and present objections to European contracting authorities where necessary: What about compliance with the rules of social, environmental and employment law? And what about state aid? Is the tender remarkably low? Is there a level playing field? The current regulations allow and sometimes even obligate contracting authorities to exclude certain (Chinese or other) tenderers.
This blog was also published on www.aanbestedingscafe.nl
