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Public Procurement - How open is the European Union to US firms and beyond?

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  • Cernat, Lucian
  • Kutlina-Dimitrova, Zornitsa

Abstract

A recent report on public procurement published by the United States Government Accounting Office (GAO) attempted to provide a range of estimates for the EU and the US, among others, and argued that the EU awarded a low share of public procurement contracts to US firms ($300 million) compared to a much higher value of US public procurement ($3 billion) awarded to EU firms (GAO 2019). However, the methodological approach used by GAO was partial and misrepresented the level of EU openness, as it only looked only at the ‘tip of the procurement iceberg’ and missed out other main avenues for international government procurement. Once these other two main procurement modes are taken into account, EU openness in procurement is much higher, vis-a-vis both for US and third countries. Overall, the EU has awarded over €50 billion worth of public contracts to foreign firms, out of which €11 billion to US firms. Comparable data across all modalities do not yet exist for the US, but we do have clear evidence that, since 2009, the US has introduced the largest number of protectionist procurement measures severely affecting international procurement. Against this background, this Policy Brief makes four basic points: i. Public procurement is a key area of trade negotiations, and the EU remains committed to promoting further non-discriminatory access to procurement markets both at home and abroad. ii. The existing levels of openness in procurement markets need to be assessed across all three procurement modalities and not only on direct cross-border procurement, which is not the main procurement avenue. According to a comprehensive approach, such as the one used in this brief, the EU market already has a high foreign penetration rate, including by US companies. iii. Unfortunately, similar procurement data (at both federal and sub-federal level) does not exist for the US market. But there is growing evidence of discriminatory measures introduced in recent years, which impede the ability of EU and other foreign firms to compete on a level-playing field in US procurement markets. iv. The importance of procurement as a key negotiating area requires better data and a greater analytical engagement internationally.

Suggested Citation

  • Cernat, Lucian & Kutlina-Dimitrova, Zornitsa, 2020. "Public Procurement - How open is the European Union to US firms and beyond?," CEPS Papers 26698, Centre for European Policy Studies.
    • Handle: RePEc:eps:cepswp:26698
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    References listed on IDEAS

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    1. Anderson, Robert D. & Müller, Anna Caroline, 2017. "The revised WTO Agreement on Government Procurement (GPA): Key design features and significance for global trade and development," WTO Staff Working Papers ERSD-2017-04, World Trade Organization (WTO), Economic Research and Statistics Division.
    2. Kutlina-Dimitrova, Zornitsa & Lakatos, Csilla, 2014. "Determinants of direct cross-border public procurement in EU Member States," Conference papers 332500, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    3. Kutlina-Dimitrova, Zornitsa, 2017. "Can we put a price on extending the scope of the GPA? First quantitative assessment," DG TRADE Chief Economist Notes 2017-1, Directorate General for Trade, European Commission.
    4. Cernat, Lucian & Kutlina-Dimitrova, Zornitsa, 2015. "International public procurement: From scant facts to hard data," DG TRADE Chief Economist Notes 2015-1, Directorate General for Trade, European Commission.
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