The EU has activated its International Procurement Instrument (IPI) for the first time, targeting China’s medical device sector. The investigation was launched under the IPI by the European Commission, and concluded on 14 Jan,  which with the verdict that EU suppliers were being unfairly restricted from participating in China’s public procurement tenders for medical devices. The Commission’s findings indicated that Chinese policies favour domestic manufacturers, compelling hospitals to prioritize locally produced devices over foreign alternatives.

The investigation revealed that China’s “Made in China 2025” strategy includes specific targets to increase the domestic market share of Chinese medical devices. This industrial policy has led to procurement practices that effectively exclude European companies from competing on equal footing in China’s public healthcare sector. Such measures were deemed discriminatory and in violation of principles promoting fair competition in international trade.

In response, the EU is considering implementing measures under the IPI that could restrict access for Chinese medical device manufacturers to the EU’s own public procurement markets. Potential actions include imposing penalties or limitations on Chinese companies bidding for EU-funded contracts. The objective is to encourage China to dismantle its protectionist barriers and establish a more reciprocal trading environment.

This move marks a significant escalation in the EU’s trade defense strategy, reflecting a more assertive approach to ensuring fair market access for its businesses. The IPI, which came into force in 2022, was designed to address such imbalances by providing the EU with tools to counteract discriminatory procurement practices by non-EU countries. Its activation against China underscores the EU’s commitment to upholding the principles of reciprocity and fairness in global trade.

The EU’s decision to deploy the IPI has broader implications for its trade relations with China and serves as a reminder of its existence to ASEAN countries who may have been limiting their domestic procurement markets. It signals the EU’s readiness to leverage its economic influence to challenge practices it deems unfair, particularly in strategic sectors like healthcare. This action may prompt further negotiations between Brussels and Beijing, as both parties seek to balance their economic interests while maintaining a cooperative bilateral relationship.

European businesses, especially those in the medical device industry, have welcomed the Commission’s findings and the prospective measures. They have long advocated for a more level playing field, citing challenges in accessing China’s vast healthcare market due to systemic favoritism toward domestic firms. The EU’s assertive stance through the IPI offers hope for more equitable treatment and expanded opportunities in international public procurement.