Some thoughts on the European Commission's revised proposal for regulation on third-country access to public procurement

The European Commission has recently published a revised version of the proposed regulation on the access of third-country goods and services to the Union’s internal market in public procurement and procedures supporting negotiations on access of Union goods and services to the public procurement markets of third countries [for discussion of the initial proposal and its implications, see K Dawar, 'The Proposed "Buy European" Procurement Regulation: An Analysis'].

As the Commission stresses, nothing in the revision of the instrument has altered the fact that
The new Instrument would allow the Commission to initiate public investigations in cases of alleged discrimination of EU companies in procurement markets. In case such an investigation would find discriminatory restrictions vis-à-vis EU goods, services and/or suppliers, the Commission will invite the country concerned to consult on the opening of its procurement market. Such consultations can also take place in the form of negotiations on an international agreement. As a last resort, the Commission could, after consultation with EU Member States, apply the new tool. This means that bids consisting of goods and services from the country concerned would, while compared to other bids, be considered as offering a higher price than the one they have put forward, thus providing European and non-targeted countries' goods and services a competitive advantage. To avoid the application of this tool, third countries have only to stop such discriminatory practices (see press release).
This is clearly an instrument of trade policy and, in my view, it is not much more than the stick the Commission is trying to get itself to be able to reinforce its push for international procurement agreements (notably, the GPA) in case some trading partners are not persuaded by the carrot of having enhanced access to the EU market. I am sceptical about the likely effectiveness of the instrument, or whether it actually adds anything in terms of the EU's external foreign (trade) policy, other than the possibility of imposing compliance with retaliatory trade measures internally, on Member States that may have different views, or simply want to benefit from cheaper or more competitive offers coming from blacklisted countries with which their 'own domestic' suppliers do not trade intensely. Oddly, the proposed regulation may have more teeth from this internal perspective than outwardly. 

What troubles me is the possibility that this trade instrument, if approved and implemented, triggers litigation from foreign non-GPA covered litigants in three fronts. First, regarding investment protection claims against the EU and its Member States by tenderers from countries that find themselves unable to continue tendering for contracts in the internal market due to the Commission's imposition of retaliatory measures under the proposed regulation. Second, regarding challenges in front of the Court of Justice of the European Union on the basis of Art 263(4)III TFEU and the negative impact that the European Commission's decision to blacklist countries create [in a similar fashion as recent cases such as Council v Manufacturing Support & Procurement Kala Naft, C-348/12 P, EU:C:2013:776], which will trigger disputes as to the locus standi of these companies. And third, regarding litigation in front of the national courts, both if the foreign companies are subjected to the price discrimination mechanisms or, counter-intuitively, even if they are not.

Overall, I am not sure that it is a good idea for the European Commission to be pushing for an instrument that is very likely to judicialize trade disputes. At the same time, if the instrument is as ineffective as I am inclined to think, maybe those risks are simply theoretical and not worth worrying after all. Which strengthens the doubts about the utility of the instrument even further...