Clifford Chance has commented on the Prime Minister’s promise to change public procurement rules in the UK in favour of national businesses once the country is outside the EU in a fairly detailed piece by Andrew Dean.
The article correctly explores the various alternatives for the UK going forward, depending on what type of relationship is struck between the UK and the EU, ie with a deal based on the Withdrawal Agreement or no deal at all. But the important assumption is one similar to that myself and Albert Sanchez-Graells argued two years ago already: in the context of the GPA (which the UK has decided to enter into as a standalone member) the constraints this framework imposes may limit the scope of what ‘freedom’ the UK actually has to do as it pleases.
It is no surprise then that the UK’s coverage offer for the GPA is quite similar to the current EU one, but with a couple of key differences. Dean’s piece cites them in detail, but for me the two key ones are the lack of coverage for contracts below-thresholds and the exclusion of the old Part-B services, now those subject only to the limited rules of Directive 2014/24/EU. These were already restricted in their cross-border relevance anyway so they don’t seem to be a significant change. If they should have not been covered in the first place at EU level however, that’s a different story.
And herein lies the rub of Johnson’s ‘Buy British’ pledge - within the context of GPA participation the UK will not be able to tilt the rules in the favour of its own businesses. As Dean’s argues, the only way for the UK to do so is adopting a blank canvas approach, ie not having any sort of bilateral/multilateral agreement where procurement is covered.
Andrea Leadsom’s recent interview to MLex (gated) really drives home the message that the Government does not understand how the GPA or trade deals work. It also is oblivious to the reality of numbers as most procurement spend in the UK is already done with UK companies. The bit that isn’t is not easily substitutable by national alternatives, hence being won by foreign firms.
More grievously, the Government seems not to understand the consequences of this approach. Obviously, what will happen is that British firms which are successful bidding externally will be cut off from their markets. This will affect direct cross border and possibly as well the joint-venture approach preferred in some markets.
It is also possible that procurement access will become a sticking point in future trade deals, as it has happened in the past. For what benefit? A couple of positive headlines? A less competitive national market? The loss of internationally focused businesses?