BRUSSELS, June 3 (Xinhua) – The European Union has backed a proposal to restrict Chinese medical device suppliers from participating in EU public procurement tenders, citing "lack of fair access" for EU companies in China's public bidding market, EU diplomats announced on Monday. The move, the first under the EU's International Procurement Instrument (IPI), aims to enforce reciprocity in cross-border public contracting after a year-long investigation launched by the European Commission in April 2024.

IPI's Legal Framework and Implementation Logic

As the EU's first unilateral regulatory tool targeting public procurement, the IPI derives its legal basis from Article 207 of the Treaty on the Functioning of the EU (common commercial policy) and the "principle of reciprocity" in the 2012 Public Procurement Directive. Its core mechanisms include:

• Price Adjustment Mechanism

EU member states can impose a penalty surcharge of up to 20% on bids from countries deemed "non-reciprocal," effectively inflating costs for Chinese suppliers to favor EU firms.

• Bid Exclusion Clause

Chinese companies may be barred from large-scale public tenders (over €5 million) for up to five years if found guilty of "systemic discrimination."

While the EU claims these measures aim to "promote fair competition," their unilateral nature contradicts the multilateral principles of the WTO Government Procurement Agreement (GPA), potentially triggering legal disputes. Under EU law, all IPI measures must adhere to the "principle of proportionality" – requiring the EU to prove measures are strictly necessary, targeted at specific Chinese practices, and do not unduly harm public interests like healthcare affordability.

Sino-EU Tensions and Industry Implications

The Commission alleges it has "clear evidence" that China favors domestic medical devices in hospital tenders, with bidding conditions leading to "abnormally low prices" that profit-driven EU firms cannot match. This follows the EU's tariffs on Chinese EVs and China's countermeasures on EU brandy, raising fears of escalating trade friction.

The China Chamber of Commerce to the EU expressed "profound disappointment," noting the decision ignores significant market access already granted to European medical firms in China. "At a time of global trade uncertainty, unilateral tariff measures only disrupt market order. China and the EU should jointly uphold free trade," the chamber stated.

Industrial Competition and Strategic Motivations

China's rapid rise in medical device manufacturing lies at the heart of the EU's concerns. In 2024, domestic firms achieved a 63% localization rate in high-end medical equipment (e.g., MRI, CT scanners), up from 35% in 2019, with companies like United Imaging and Mindray controlling over 40% of China's top-tier hospital markets. Chinese-made cardiac stents, priced at just $800 each – one-fifteenth the cost of EU equivalents – have also penetrated over 30 international markets via WHO prequalification, squeezing EU firms like Medtronic and Carl Zeiss.

The EU's choice of medical devices as IPI's first test case reflects strategic calculus: healthcare equipment, linked to public health security, is easier to justify as a "strategic sector," while Chinese firms still depend on EU technology for components like 3.0T MRI magnets. If successful, the EU plans to expand IPI to AI pharmaceuticals and surgical robots by 2026, aligning with its Chips Act and Net Zero Industry Act to contain China's technological ascent.

As EU Trade Commissioner Maroš Šefčovič prepares to meet Chinese Commerce Minister Wang Wentao in Paris on Tuesday, all eyes are on whether diplomatic negotiations can avert a full implementation of the restrictions – or further entrench Sino-EU tech and trade divides.

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