On September 9, the European Commission proposed a new regulation that introduces European preferences as part of its overhaul of the EU’s public procurement framework. The proposed Public Procurement Act is also aimed at simplifying EU procurement rules, boosting digitalization, and helping public buyers better integrate environmental, social, innovation, security, and resilience considerations into their procurement processes. It will replace three 2014 public procurement directives, as well as sector-specific legislation. The proposed EU-wide framework for European procurement preferences will allow public buyers to favor EU suppliers and those from the United States and other trading partners with procurement commitments under international agreements and to exclude bids from countries without reciprocal market-access commitments. This post examines the European procurement preference.
Scope: The European preference requirements in the new regulation can be applied to either economic operators or to the goods, services, or works that they offer in an EU procurement, provided they are clearly stated in the public summary of the procurement.
Covered operators, goods, services, and works: Of particular interest to foreign suppliers is the application of the European preferences to non-EU suppliers. The proposed regulation requires non-EU economic operators, goods, services, and works to be treated in the same manner as those of the EU when they originate in a third country that is a party to the WTO Government Procurement Agreement (GPA) or a bilateral or multilateral trade agreement with procurement commitments, provided the procurement in question falls within the scope of the EU’s commitments under that agreement.
It is important to recognize that under the GPA, the EU does not open all its covered procurement to all parties to the plurilateral agreement. Rather, it accords access to its procurement on a reciprocal basis. For example, the EU does not give the US rights to participate in the procurement of many EU utilities because the US does not cover comparable utilities under the GPA.
European preference equirements: Under the pending regulation, public buyers may limit participation in a procurement to economic operators and subcontractors originating in the EU or in covered third countries, or it may reject tenders that are not submitted by such operators or subcontractors.
With respect to goods, services, and works, the proposed regulation allows public buyers to discriminate in one of three ways:
- Require that the goods, services, and works offered originate in the EU or in a covered third country, either fully or for specific components;
- Apply a price discount or award extra points in the evaluation and ranking of tenders where tenders are submitted by EU or covered economic operators and subcontractors; or the tender contains a higher proportion of EU or covered third-country content, in comparison with the other tenders; or
- Reject a tender where the value of EU or covered third-country content is below 50% of the total estimated value of the tender.
Exceptions: The regulation makes European preferences mandatory by requiring the exclusion of non-EU or non-covered third-country economic operators, unless an exception applies. The exceptions include: extreme urgency; the unavailability of the required products or services from an EU or covered economic operator and no reasonable alternative or substitute exists; or application of the European preference requirements would result in disproportionate costs.
Restrictions on covered third countries: Even when an EU procurement is covered under an international agreement, the Commission may restrict a trading partner’s access to that procurement where it determines the third country has failed to provide national treatment to the EU contrary to its international commitments, or restrictions are needed to avoid security of supply dependencies or to protect the EU’s economic security interests.
CJEU case law implications: The Commission considers the proposal to be in line with the case law of the Court of Justice of the European Union that the rights and principles derived from EU public procurement law do not extend to economic operators, goods, services, or works originating in third countries that are not covered by international commitments in accordance with this principle, the regulation will enable public buyers to apply European preferences, in line with the EU’s international obligations.
Model for future preferences: The new regulation is intended to serve as a model for future European procurement preference rules under sector-specific EU legislation with respect to compatibility with international agreements and determining the origin of economic operators, goods, services, and works. The model could be applied to the sector-specific ‘Made in EU’ requirements for public procurement that are being considered under the European Commission’s proposed Industrial Accelerator Act. That legislation has not yet been adopted.
Next steps: The proposed Regulation is subject to negotiations by the Commission, the European Parliament, and the Council of the EU (representing the 27 member states). After they reach agreement, it will be formally adopted and enter into force.
Jean Heilman Grier
September 16, 2026
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