Challenges of EU Foreign Subsidies Regulation in Public Procurement
The New EU Foreign
Subsidies Regulation
Christopher Yukins
George Washington University Law School
Challenges for Public Procurement in Europe and Beyond: Concept Programme
Conference Brussels, DG Trade, June 7, 2023, 14:00 CET
Institutions for Open Societies: The Transactional State
Digital digestion - Webinar
1
•
Christopher Yukins -- Lynn David
Research Professor in Government
Procurement Law
•
George Washington University Law
School offers JD, LLM and Masters in
Law degrees in procurement law, live
and online
•
Program founded 1960
•
Work nationally and internationally
2
Materials and recordings from April 18, 2023 webinar at:
www.publicprocurementinternational.com
Recording also at:
YouTube: GW Law Government Procurement Law Program
3
Pascal Friton, Max Klasse & Christopher Yukins
E
U
F
o
r
e
i
g
n
S
u
b
s
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d
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e
s
R
e
g
u
l
a
t
i
o
n
(
F
S
R
)
•
To “level the playing field” the FSR
imposes EU “State aid” doctrine on
foreign vendors competing in EU
Member States
•
Bidders must disclose foreign
government subsidies
•
Commission will review
•
Applicable to civil agency procurements
above 250 million Euros
•
European Commission may undertake
ex
officio
investigations of defense
procurements
•
Enormous administrative burden,
including for EU-based vendors buying
from abroad; may be used strategically
by competitors
4
Discrimination?
5
Non-EU “Main”
Supplier – Heavy
Disclosure
Obligations and
Risk
EU Prime Contractor/
Procurement
EU “Main” Supplier –
No Disclosure
Obligations and No
Risk
P
o
t
e
n
t
i
a
l
S
o
l
u
t
i
o
n
–
E
x
e
m
p
t
W
T
O
G
o
v
e
r
n
m
e
n
t
P
r
o
c
u
r
e
m
e
n
t
A
g
r
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m
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t
(
G
P
A
)
N
a
t
i
o
n
s
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U.S. Chamber of Commerce proposed that GPA nations be
exempted from Foreign Subsidies Regulation – see generally
Rebecca Hallbach & Emmanuelle Rogiest (Wolters Kluwer)
•
EU International Procurement Instrument (IPI)
exempts
GPA
nations
•
Under Foreign Subsidies Regulation, EU-based vendor would suffer
discrimination if offering goods from non-EU supplier
•
Article IV.2 of GPA provides that, with respect to “any
measure regarding covered procurement, a Party, including
its procuring entities, shall not . . . (b) discriminate against a
locally established supplier on the basis that the goods or
services offered by that supplier for a particular procurement
are goods or services of any other Party”
•
Regulatory burden – if made reciprocal – could undo the GPA
6
Conclusion
cyukins@law.gwu.edu
7
The EU Foreign Subsidies Regulation (FSR) imposes EU State aid rules on foreign vendors in EU Member States, creating disclosure requirements and review processes. This regulation poses administrative burdens and strategic challenges for vendors, particularly impacting EU-based vendors purchasing from abroad. The proposal to exempt WTO Government Procurement Agreement nations from the FSR has been put forth as a potential solution.
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Presentation Transcript
The New EU Foreign Subsidies Regulation Christopher Yukins George Washington University Law School Challenges for Public Procurement in Europe and Beyond: Concept Programme Conference Brussels, DG Trade, June 7, 2023, 14:00 CET Institutions for Open Societies: The Transactional State Digital digestion - Webinar 1
Christopher Yukins -- Lynn David Research Professor in Government Procurement Law George Washington University Law School offers JD, LLM and Masters in Law degrees in procurement law, live and online Program founded 1960 Work nationally and internationally 2
Materials and recordings from April 18, 2023 webinar at: www.publicprocurementinternational.com Recording also at: YouTube: GW Law Government Procurement Law Program 3 Pascal Friton, Max Klasse & Christopher Yukins
EU Foreign EU Foreign Subsidies Subsidies Regulation (FSR) Regulation (FSR) To level the playing field the FSR imposes EU State aid doctrine on foreign vendors competing in EU Member States Bidders must disclose foreign government subsidies Commission will review Applicable to civil agency procurements above 250 million Euros European Commission may undertake ex officio investigations of defense procurements Enormous administrative burden, including for EU-based vendors buying from abroad; may be used strategically by competitors 4
EU Prime Contractor/ Procurement Non-EU Main Supplier Heavy Disclosure Obligations and Risk Discrimination? EU Main Supplier No Disclosure Obligations and No Risk 5
Potential Solution Potential Solution Exempt WTO Government WTO Government Procurement Agreement Procurement Agreement (GPA) Nations (GPA) Nations Exempt U.S. Chamber of Commerce proposed that GPA nations be exempted from Foreign Subsidies Regulation see generally Rebecca Hallbach & Emmanuelle Rogiest (Wolters Kluwer) EU International Procurement Instrument (IPI) exempts GPA nations Under Foreign Subsidies Regulation, EU-based vendor would suffer discrimination if offering goods from non-EU supplier Article IV.2 of GPA provides that, with respect to any measure regarding covered procurement, a Party, including its procuring entities, shall not . . . (b) discriminate against a locally established supplier on the basis that the goods or services offered by that supplier for a particular procurement are goods or services of any other Party Regulatory burden if made reciprocal could undo the GPA 6
Conclusion cyukins@law.gwu.edu 7
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