EU and China dispute over medical devices procurement flares

The move was initiated under EU legislation known as the International Procurement Instrument, which is intended to promote reciprocity in terms of the openness of the EU and others countries’ public procurement markets around the world.

The probe into China's procurement market for medical devices is the first time the Commission has initiated an IPI investigation since the IPI came into force in August 2022. The Commission said there is evidence that the market “has gradually become more closed for European and foreign firms, as well as for products made in the EU”, with EU commissioner for trade, Valdis Dombrovskis, describing the Commission’s attempts to resolve its concerns via talks with China as having been “fruitless” so far.

In response to the investigation, however, China has accused the EU of protectionism.

According to a report by news agency AFP, published by Macau Business, China’s foreign ministry spokesman Wang Wenbin said: “The European Union has frequently made use of its trade toolkit and trade relief measures, but they only give off protectionist signals, target Chinese enterprises, and damage the EU’s image.”

Wang added: “The EU always flaunts itself as the world’s most open market, but all the outside world sees is it gradually moving towards protectionism… We urge the European side to stick to its promise of market openness and fair competition, respect [World Trade Organization (WTO)] rules, and stop using any excuse to groundlessly suppress and restrict Chinese businesses.”

Dr. Totis Kotsonis of Pinsent Masons, an expert in procurement and trade remedies, said: “The International Procurement Instrument has been in force for nearly two years, which makes this first investigation all the more significant. It is the latest move by authorities within the EU to address what they perceive as unfair competition from Chinese companies in the internal market as well as the hurdles that European companies face in bidding for and winning public contracts in China.  Both the EU Foreign Subsidies Regulation and the IPI have been devised with a view to enhancing the trade-remedies toolkit of the EU in light of the much more limited, and arguably less effective, remedies that are available under current WTO arrangements."

In its statement announcing its IPI investigation, the European Commission said it would invite the Chinese authorities to “submit their views, provide relevant information, and open a consultation with an aim to eliminate the discriminatory measures”. It said that if China does not offer a “a satisfactory solution”, it could impose penalties on Chinese companies seeking to supply medical devices in the EU. Those penalties could range from downgrading bid scores in the procurement process to excluding the businesses entirely from tendering for EU contracts. The whole investigation is expected to run for nine months, though the Commission has powers to extend the process by a further five months in some circumstances.