00:00The European Commission has unveiled a legislative proposal allowing EU public authorities to favor
00:05European companies in public procurement for key public services, such as energy, water, railways,
00:14ports, airports and postal services. A move that clearly targets Chinese companies in a market
00:20valued at 2 billion euros annually. This comes as European policymakers seek to shield the blox
00:27market from China amid heated trade negotiations as the EU grapples with a trade deficit with Beijing
00:34of roughly 1 billion euros a day. For more on this, let's head over to Paris, where I'm joined by
00:41Alicia Garcia-Herrero, a Spanish economist with the think tank Bruegel and an expert on Asian economies.
00:48Good morning. Good morning. So is this a long overdue act of European economic self-defense or
00:56simply protectionism with a European flag on it? Well, self-defense can be protectionist. So,
01:05you know, in a way it's everything. But I have to say that no matter how, you know,
01:11China may be reading the Industrial Selector Act, which is this legislation you referred to,
01:16it's actually not only for European companies. In fact, you only need to sign the International
01:25Procurement Agreement at the WTO to be part of the game, i.e. Korean companies can compete with
01:32European companies. Japanese companies can compete with European companies. So China could just sign
01:36this agreement, which basically means that you reciprocate in your procurement. In other words,
01:43that European companies can also go to China under the same conditions for China's procurement.
01:49So in that regard, I actually think this legislation has been heavily criticized as
01:55very protectionist, but in my view, it's very reciprocal. And I think that has to be taken into
02:01account. Right. Alicia, here's an uncomfortable question. Won't excluding cheaper Chinese companies
02:08simply make public projects more expensive?
02:13Because the idea of public procurement, as I mentioned, within this global agreement,
02:21WTO agreement, basically limits the amount of subsidies or other types of support that the
02:32companies can offer when going to procurement. I think that's fair, if you ask me. Because if
02:40Chinese government wants to compete with our companies through subsidies or other means,
02:45our companies won't have a chance. So in that regard, I think it's not only about being cheap,
02:49but about being fair. So this is why this international legislation supposedly protects us
02:56from this reality. And the Industrial Select Act, our legislation now takes that on board,
03:03which we have not done in the past.
03:06All right. Alicia Garcia Herrero from the Think Tank Bruegel. Thank you for breaking it all down for us.
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