British businesses face being locked out of the £350 billion market for public contracts in the EU under a proposal from France’s incoming president.
Companies such as BT and Serco which carry out work for EU institutions and member states would be hard hit by a proposal by Emmanuel Macron to introduce a “buy European act” reserving access to public procurement deals to companies that produce most of their goods or services in the bloc.
The proposal, contained in Mr Macron’s manifesto, is one of a series of measures aimed at protecting European industry and shoring up the EU. The pledge extends far beyond current rules and will put the young president at loggerheads with the European Commission, which recently pledged that it would “never advocate a buy European only policy”.
Mr Macron has taken a consistently tough stance on Brexit, describing it as a “crime” and stating that Britain must choose between paying into EU budgets or a “total exit”. He has also called for the renegotiation of the Le Touquet agreement, under which France is responsible for stopping migrants crossing the Channel to Britain and British immigration checks are carried out in France.
Theresa May used the landslide election of Mr Macron to ask for an “equally strong mandate and an equally strong negotiating position” at home, while conceding that the Le Touquet deal would have to be renegotiated.
Jean Pisani-Ferry, Mr Macron’s chief economic adviser, said yesterday that the president-elect would be a “tough and demanding partner” in the talks. “He is not the kind of man [who would] agree with the dismantling of the EU,” he said in an interview with the BBC.
The proposal to bar foreign companies from bidding for public contracts led yesterday to calls for retaliatory measures. John Longworth, chairman of Leave Means Leave, and a former director-general of the British Chambers of Commerce, said: “The continental Europeans have been playing this game on procurement for a very long time. It’s about time we caught up.”
He said that social and environmental clauses in public tenders in Europe were often designed to give domestic businesses an advantage. Allie Renison, head of Europe and trade policy at the Institute of Directors (IoD), said that the devil would be in the detail. “At first glance it seems to be trying to mimic the ‘buy America’ policy prevalent at all levels of government in the US,” she said. The IoD said it hoped that any Brexit deal would agree on “robust principles” to prevent the EU favouring local competitors.
On the campaign trail Mr Macron espoused free trade and liberalised markets, in contrast to the protectionism of Marine Le Pen, but he also complained of a “naive approach to globalisation”, arguing that the EU’s openness to foreign competition was not always reciprocated. “We will make the protection of European industry one of the major pillars of reinventing the EU.”
The EU has in the past shied away from proposals to introduce greater “reciprocity” by barring bidders from countries that did not open their own public procurement markets, but a watered-down draft proposal last year provided for “price penalties” on bidders from those countries. Economically liberal countries such as Germany and the UK have scuppered previous attempts to restrict foreign companies.
Mr Macron’s proposals would put the EU on a collision course with other countries at the World Trade Organisation, Alistair Maughan, a partner at Morrison Foerster, said yesterday. “A Buy Europe [act] would be difficult to square with the EU’s commitments under the WTO Government Procurement Agreement so I don’t see how it could ever be implemented,” he said. “It’s a nice soundbite but not really practical.”
The European Commission has already recommended in an internal memo that EU institutions begin freezing out British businesses from multi-million-pound contracts to prevent “unnecessary additional complications” as the UK leaves the EU.
Emmanuel Macron on Brexit
“Nigel Farage and Boris Johnson are responsible for this crime: they sailed the ship into battle and jumped overboard at the moment of crisis. What is going to happen is not ‘taking back control’ — it’s servitude.”
“Boris Johnson enjoys giving flamboyant speeches but has no strategic vision; the turmoil he created the day after Brexit proves it.”
“Leaving the EU would mean the ‘Guernseyfication’ of the UK, which would then be a little country on the world scale. It would isolate itself and become a trading post and arbitration place at Europe’s border.”
“If the UK wants a commercial access treaty to the European market, the British must contribute to the European budget like the Norwegians and the Swiss do. If London doesn’t want that, then it must be a total exit.”
“When you don’t protect your people . . . you lose your own legitimacy. And I think Brexit will have such a consequence. Tomorrow you will have to deal on your own with the Chinese. And good luck to you. Because the UK is definitely not relevant to China.”
May 9th, 2017: The Times