IT IS NOT ONLY TARIFFS THAT ACT AS TRADE BARRIERS
On Foreign Actors’ access to Public Procurement
TRADE BARRIERS BEYOND TARIFFS
Trade barriers extend far beyond customs duties. They include any measure used to restrict trade between countries. Access to public procurement markets is a key component of global commerce. When countries introduce discriminatory procurement rules, they effectively limit foreign companies’ ability to compete on equal terms. This can have significant consequences for international trade relations and economic growth.
THE INTERNATIONAL PROCUREMENT INSTRUMENT (IPI) – THE EU’S TOOL TO ADDRESS PROCUREMENT‑RELATED TRADE BARRIERS
The EU’s IPI Regulation, which entered into force on 29 August 2022, aims to promote reciprocal access to international public procurement markets. The regulation authorises the European Commission to investigate whether public procurement markets in non‑EU countries are subject to restrictions targeting European companies or goods and services originating in the EU.
If the Commission decides to adopt an IPI measure, such a decision may limit access to EU procurement procedures for companies from the countries concerned. The Commission may adopt two types of IPI measures: exclusion and score adjustment. Exclusion requires EU contracting authorities to reject tenders submitted by bidders originating in countries subject to an IPI measure. Score adjustment means that tenders from such bidders must be penalised during evaluation, for example by applying a points reduction or price adjustment. In addition, contracting authorities may be required to include contract conditions designed to prevent circumvention through subcontracting to entities from countries covered by an IPI measure. The Commission shall, in its decisions on IPI measures specify the goods, services, and concessions covered, the categories of contracting authorities and bidders concerned, and the minimum estimated contract value for the measure to apply.
The regulation and any future IPI measures introduce new obligations and increased demands for EU contracting authorities. Ahead of a procurement procedure, authorities must assess whether the procedure falls within the scope of an applicable IPI measure. They must also verify the origin of tenderers, apply scoring penalties during evaluation for companies originating in countries targeted by an IPI measure, include specific contract terms required under the measure, and ensure compliance with such terms throughout the contract period.
THE EU’S IPI REGULATION AND CHINA
The Commission has not yet adopted any specific IPI measures. However, in January 2025 the Commission published the results of its first investigation under the IPI Regulation. The investigation found that China discriminates against EU‑based medical technology companies in its public procurement markets. According to the investigation, such discrimination occurs through both direct and indirect measures favouring local suppliers over foreign competitors. If no resolution is reached through constructive dialogue, the EU may, under the IPI regulation, restrict or even exclude Chinese companies from participating in public procurement procedures within the EU. In February 2025, the Commission opened a consultation to gather input from stakeholders who may be affected by a potential IPI measure.
CONCLUDING REMARKS
The purpose of the IPI regulation is to improve access for EU companies to public procurement markets in non‑EU countries. The mechanism is intended to encourage more open markets by imposing penalties on companies from countries that restrict such access. Whether the regulation will achieve its intended objective—by contributing to the removal of procurement‑related trade barriers abroad—or whether IPI measures will instead be viewed merely as an administrative burden for contracting authorities, potentially even affecting competition within EU procurement markets, remains to be seen.
Several members of Advokatbyrån Sigeman & Co have extensive experience working with public procurement matters and closely follow developments in this area. We are following with interest the ongoing matter concerning possible IPI measures targeting Chinese medical technology suppliers, and the potential implications for EU contracting authorities.
If you have questions regarding public procurement, you are welcome to contact us.
Malin Håkansson
Markus Mårline