The European Union (EU) flags in front of EU headquarters in Brussels, Belgium. Photo: VCG

The European Commission on Wednesday adopted a proposal for "simpler and more strategic" public procurement rules. The number of rulebook pages may be shrinking, but the list of Brussels' protectionist trade policies seems to be getting longer.

The reform targets a public procurement market worth around 2.6 trillion euros ($3.016 trillion). The new rules will oblige public buyers to put more emphasis on "quality" factors including environmental sustainability, local supply chains and the so-called "European preference" considerations. Although the proposal does not explicitly name China, given the significant presence of Chinese companies in relevant sectors, European media outlets have largely interpreted the policy as yet another EU measure to "counter China."

Zhou Mi, a researcher at the Chinese Academy of International Trade and Economic Cooperation, told the Global Times that such an approach is unfair and risks distorting market competition. Public procurement represents a huge market where the EU can exert significant policy leverage. By rewriting procurement rules and using public funds to channel orders toward regional companies, Brussels is pursuing protectionism.

This means that public procurement, originally intended to serve the public interest and improve the efficiency of public spending across areas such as infrastructure, schools, energy and healthcare, is increasingly being used by Brussels as a policy tool to protect internal industries and restrict external competition, taking on increasingly pronounced elements of industrial and trade protectionism.

"This proposal is consistent with the EU's recent push to strengthen economic security and industrial policy," Dong Yifan, a research fellow at the Institute of European Studies of the China Institutes of Contemporary International Relations, told the Global Times. He said that amid "concerns" over economic security and the so-called "China shock," the EU is seeking to strengthen market protection. 

A series of measures, including the Industrial Accelerator Act, complement one another, forming a policy framework aimed to "protect" European industries and enhance the bloc's "competitiveness," Dong noted.

The problem, however, is policies can create orders, but they cannot create competitiveness.

The real question is whether European companies can win orders on the basis of price, technology, quality and efficiency. As one online commenter put it, "procurement preference is the easy lever. The test is whether European suppliers can actually deliver at cost and scale."

Taking Chinese buses as an example, EU industry chief Stephane Sejourne claimed that Brussels could no longer be blamed if local authorities opted for Chinese buses by proposing the new rules because it is giving them the means to favor European buses.

His remark is telling. EU governments have never lacked the right to buy European products. If European buses were genuinely competitive, they wouldn't need Brussels to create a special channel to "Buy European." Keeping competitors out is not the same as improving competitiveness; turning "Buy European" into policy pressure on member states does not amount to expanding EU's strategic choices.

Public procurement should enable taxpayers to get better products at better value for money, rather than shutting out suppliers that may offer greater price or technological advantages. Creating a "safe zone" in public procurement for European companies by restricting competition could instead weaken their incentives to improve efficiency and increase investment in research and development.

The "European preference" scheme could also end up narrowing the choices available to EU member states. Zhou said EU member states have different levels of economic development and different needs. If the pool of suppliers and level of competition are artificially reduced, some European governments may be forced to pay higher prices for products, services or projects that are not necessarily of better quality. This runs counter to the very logic of public procurement, which is supposed to leverage large-scale purchasing and robust competition to bring down costs. 

Ultimately, protecting European companies may generate short-term orders, but it cannot substitute for innovation, efficiency and productivity. If the EU increasingly relies on restricting external competition and introducing origin-based preferences to protect its own industries, it is voluntarily narrowing its policy options, step by step, to one increasingly familiar path of protectionism.

The EU may therefore have to confront a more fundamental question: When Europe increasingly relies on rules to clear the field for its domestic companies, is it really protecting Europe - or merely protecting 'an illusion of competitiveness' that is becoming harder to withstand the test of competition?

The proposal still needs to go through the European Parliament and the Council of the EU, and both the final text and its implementation could change during the legislative process. Whatever the final outcome, however, the more important issue is not how many foreign suppliers the EU can keep out, but how much policy space the EU will have left for itself if it keeps shutting competition out.