19 October 2006 | Paul Snell

The European Union is threatening to prevent companies from outside the EU competing for public contracts.

Global Europe: competing in the world, a review of trade strategy by the European Commission, says that while the European market for public-sector contracts is open, "almost all the EU's major trading partners operate restrictive procurement practices that discriminate against EU suppliers".

The EC warned that countries that do not offer open access to public-sector contracts may be prevented from participating in the procurement process, or it could offer preferential treatment to EU suppliers.

The EU's biggest partners are the US, China, Japan and Canada. The total of imports and exports between the EU and these countries in 2005 was ¤4,559 billion (£3,082 billion).

The EC said negotiations were key to encouraging open markets and co-operation, but added that restrictions could be applied "as a last resort" if countries would not reciprocate.

Restrictions would not apply to developing countries. The EC has also reassured buyers it will not single out individual companies that fail to pass on cost savings from cheap imports to consumers. It followed newspaper reports that companies would be "named and shamed" if consumer prices did not reflect the savings they made importing cheaper goods.

The EC has however voiced concern that lower prices are not being "passed down the supply chain" and told SM it could make details public, but would not "target individual retailers".

The EU agreed this month to impose strict tariffs on shoe imports from China and Vietnam. Shoes from China will face a duty of 16.5 per cent and imports from Vietnam face a 10 per cent charge.

SMoct2006