Public procurement is quietly becoming one of EU’s industrial policy tools of choice. We are not the first to try this, and the evidence is sobering, warns Judith Arnal.
Judith Arnal
Public procurement is quietly becoming one of EU’s industrial policy tools of choice.
In a geopolitical environment that has turned harsher by the quarter, and with strategic autonomy now the organising ambition of European policy, the temptation is obvious: public purchasing represents roughly 14 percent of EU GDP, and conditioning access to contracts, and to the EU funding attached to them, on European origin, control or production looks like a lever Brussels actually holds.
Since 2022, the EU has pulled it again and again.
We are not the first to try this, and the evidence is sobering. The United States has run ‘Buy American rules’ for decades. The Peterson Institute puts the cost premium of local-content requirements at between 15 and 50 percent, with a central estimate of 20 to 30 percent.
US trains example
American metro carriages procured under Buy America rules come in around 34 percent more expensive than comparable foreign ones. The mechanism is simple: fewer eligible suppliers, higher prices.
A study of 600,000 Spanish awards found that each additional bidder lowers the final price by 2.1 percent. And Europe can ill-afford to lose bidders: the European Court of Auditors reports that single-bidder tenders rose from 23.5 percent of the EU total in 2011 to 41.8 percent in 2021.
The administrative implications are just as real. The EU has more than 250,000 contracting authorities, most of them small. Each origin-preference instrument asks them to run a different test on different evidence: market shares by origin, rules of origin, beneficial-ownership disclosure, corporate control structures.
The SMEs that win 71 percent of EU contracts by number cannot absorb that documentation burden. Larger authorities will cope; smaller ones will under-enforce or tick boxes.
None of this makes origin preference illegitimate.
Accepting higher costs in exchange for security of supply is a political choice democracies are entitled to make.
But if the EU goes down this route, the one non-negotiable requirement is to do it in a structured way: knowing what is restricted, through which instrument, at what cost, under whose review.
And that, precisely, is what is not happening.
