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EU vows to fight for raw materials, public tenders

Published 10 November 2010
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The European Union said on Tuesday it aimed to punish countries that hoard raw materials and energy resources or restrict access to bidding for public works contracts as part of its new long-term trade strategy.

But the policy statement was vague on what form the restrictions might take, which drew criticism from industry and EU diplomats.

Unveiling the strategy, the EU's executive Commission promised it would be assertive about securing access to foreign markets and scarce natural resources, as part of a plan to help the EU battle the economic crisis.

The policy announcement was a shot across the bows of emerging economic powers who have so far shrugged off EU demands, but was also aimed at reassuring Europeans worried about losing production and jobs to increased globalisation.

It also addresses growing fears about global supply shortages of raw materials from alloys to timber and minerals - an issue that has emerged since the EU launched its last long-term trade strategy in 2006.

"I am proposing a greater focus on enforcement, using all appropriate means to stand up for our rights," said European Trade Commissioner Karel De Gucht.

"Europe rejects protectionism," he told reporters.

Legislation due to be proposed by mid-2011 could deny EU public works contracts to countries that do not allow European firms to bid in their public tenders.

Canada, Brazil, Argentina, the United States and China are among the EU's major trading partners that keep such lucrative contracts - from heavy construction to major infrastructure projects - reserved for local contractors.

"We have a broad understanding [...] whereby we can react to third countries when they don't effectively open their public procurement markets to us," De Gucht said.

"I don't believe that bluntly closing our procurement markets would be a good idea but it should be sectoral, specific and aimed at practices we cannot accept from third countries."

De Gucht said Europe would clamp down on countries that restrict exports of raw materials and rare earths, commodities that are critical to EU output and growth.

"We have to insist with the Chinese that they keep the markets open [...] and on the other hand we should also reopen our deposits," he said.

Whiff of colonialism

Industry experts and diplomats were unimpressed.

"How exactly are rules on public procurement supposed to work? You can't just go beyond your borders and tell other countries what to do," said Stefan Wengler, director at the Foreign Trade Association, which represents European retailers and importers.

"It's not really helpful to be wagging one's finger like that, telling other countries the right way to do things. It has a whiff of colonialism," Wengler said.

EU diplomats who declined to be named said Tuesday's legal threats could alienate major trading powers.

Members of the WTO should negotiate new rules on export restrictions to address raw materials shortages, Andre Sapir, a senior fellow at Brussels think-tank Bruegel, told Reuters.

"One needs to come to an agreement within the framework of the WTO about improving the existing rules on export restrictions in general, including for raw material."

(EurActiv with Reuters.)

Background: 

In November 2008, the European Commission presented a new 'integrated strategy' for raw materials, suggesting three pillars for the EU's policy response to global resource scarcity (EurActiv 05/11/08):

The strategy was supported by EU industry ministers who called for EU "raw materials diplomacy" and a stronger focus on resource-efficiency and recycling (EurActiv 04/06/09).

In June this year, an EU expert group identified rare earths among a group of 14 raw materials seen as "critical" for EU high-tech and eco-industries. It suggested that the European Union's global diplomacy should be geared up to ensure that companies gain easier access to them in future.

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