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in the EU are alarmed by the provisions of the bill on public procurement — Ukrainian News

The European Union is seriously concerned about the texts of the draft resolution of the Cabinet of Ministers and the law of Ukraine on restrictions on imported machine-building products in the public procurement system. This is stated in a letter from the head of the European Union Delegation Matti Maasikas to the Chairman of the Verkhovna Rada of Ukraine Dmitry Razumkov and the Prime Minister Denis Shmygal, the text of which was published by Nashi Groshi.

Maasikas’ letter concerns the draft resolution of the Cabinet of Ministers «Some issues of the pilot project on procurement of machinery in the engineering industry with a confirmed degree of localization of production» of June 11 this year and the draft law amending the Law of Ukraine «On Public Procurement» to create conditions for sustainable development and modernization of domestic industry.

Maasikas warns that the draft government decree may be incompatible with Ukraine’s public procurement obligations under the Ukraine-EU Association Agreement and the WTO Public Procurement Agreement.

“The draft resolution intends to introduce as a pilot project the requirement of 15% — 30% of the share of the criterion of localization of machine-building equipment in Ukraine. In our opinion, this will be a significant violation of these principles of equal treatment and non-discrimination, «the head of the EU Delegation said in a letter.

As for the draft law, it introduces a requirement to localize production for a significant list of industrial goods and vehicles for a period of 10 years. According to the EU, this will also violate Art. IV of the WTO Agreement and Art. 151 (1) Association Agreements.

«This not only undermines the fundamental principles of equal treatment and non-discrimination, but also, given the degree of localization required by the bill (up to 60%), de facto deprives foreign products of the opportunity to participate in procurement in these areas,» said the ambassador.

In addition, Maasikas adds, the bill requires the Cabinet to ensure the introduction of the same level of localization in future procurement related to projects financed by international financial institutions such as the European Investment Bank.

«In this regard, we would like to emphasize that these requirements may have a serious negative impact on the future of such institutions in Ukraine and the corresponding support of the EU,» said the EU Ambassador.

The Ambassador notes that the «introduction of discriminatory measures», as provided for in the draft resolution and the draft law №3937, will call into question Ukraine’s achievements in recent years in reforming the public procurement system.

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In relation to the WTO Agreement on Public Procurement, this would violate its principles and, accordingly, also create a risk for Ukraine’s access to the public procurement market. In addition, the reputation of the country, built with other parties to the WTO Agreement, will be seriously damaged.

Maasikas added that the EU is ready to further discuss these issues and support the Ukrainian authorities with its experience of using public procurement as a strategic tool to address legitimate economic interests in compliance with the basic principles and international obligations of Ukraine.