EU Urges China to Join WTO Procurement Deal

Seeking to correct China's policy of favoring domestic companies in government's lucrative procurement market

The EU on Jan. 17 called on China to adhere to a new agreement reached by members of the World Trade Organization to further open up government procurement -- a market worth hundreds of billions of euros.

Foreign governments and firms have long complained China favors domestic companies and squeezes them out of the government's lucrative procurement market, although Beijing has abolished some measures seen as encouraging this.

EU internal market commissioner Michel Barnier said that following on from the agreement reached in December, "the next priority is for China to adhere to it." Barnier is in China to meet senior officials including central bank governor Zhou Xiaochuan and Finance Minister Xie Xuren. "We (now) have a much better framework (for the agreement). China must say whether it wants to adhere to the agreement as it is," he said.

The agreement -- signed in Geneva by 42 countries including EU nations, the United States, Japan and South Korea -- forces them to open up new industries such as telecommunications to outside competition for public tenders.

Under the deal -- which Brazil, Russia, India, China and South Africa have not signed -- the overall public tender market open to international competition is now worth 600 billion euros (US$767 billion), up from 500 billion euros.

Government procurement represents 16% of demand in China and 19% in Europe, according to EU officials travelling with Barnier. The EU Chamber of Commerce in China has said the public procurement market in the world's second largest economy is worth $1 trillion a year -- a lucrative area that foreign firms are still largely excluded from.

Negotiations for China's adhesion to the WTO government procurement agreement have stalled on Beijing's refusal to allow EU firms the same access to public markets as that enjoyed by Chinese companies in Europe. But the EU has welcome Beijing's decision to abolish three measures linked to China's indigenous innovation campaign, which aims to encourage the development of domestic technology.

The campaign has widely been seen as blocking foreign firms from accessing some areas of the nation's procurement market. But Barnier said this was not enough. "We're still not there," he said.

Copyright Agence France-Presse, 2012

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