The International Procurement Instrument: A Comprehensive Analysis of the EU’s Strategic Tool for Reciprocal Market Access

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Abstract

The International Procurement Instrument (IPI) stands as a seminal component of the European Union’s (EU) evolving trade policy, meticulously crafted to address persistent disparities in global public procurement markets and to foster genuinely reciprocal market access. This extensive research paper embarks on an in-depth exploration of the IPI, dissecting its intricate legal architecture as enshrined in Regulation (EU) 2022/1031. It meticulously traces the instrument’s protracted legislative genesis, illuminating the political and economic forces that shaped its eventual adoption. Furthermore, the paper rigorously examines the IPI’s multifaceted objectives, which extend beyond mere trade enforcement to encompass the promotion of fair competition, the safeguarding of EU economic interests, and the strategic pursuit of open autonomy. A significant portion of this analysis is dedicated to its practical application, including a detailed retrospective on its inaugural deployment against discriminatory practices in the Chinese medical device sector. Finally, the paper casts a forward-looking gaze, contemplating the IPI’s expansive potential for future application across diverse industrial sectors and against a broader spectrum of non-EU countries, while simultaneously weighing the complex strategic and diplomatic considerations inherent in its wield. By offering a granular examination of the IPI’s conceptual foundations, procedural intricacies, and strategic implications, this comprehensive analysis aims to provide a robust understanding of its profound role in reconfiguring international trade relations and its capacity to address systemic imbalances in global procurement landscapes.

Many thanks to our sponsor Esdebe who helped us prepare this research report.

1. Introduction: Navigating Global Procurement Imbalances

The landscape of international trade has long been characterised by asymmetries in market access, particularly within the vast and strategically significant realm of public procurement. Public contracts, encompassing goods, services, and works, constitute a substantial segment of global economic activity, estimated to account for 15-20% of GDP in developed economies. For the European Union, a major global trading bloc built upon the principles of open markets and fair competition, the lack of reciprocal access to these lucrative markets in third countries has been a growing source of concern. While the EU maintains one of the most open public procurement markets globally, valued at approximately €2 trillion annually, many of its key trading partners impose significant barriers, whether through overt discrimination, local content requirements, or opaque administrative procedures. This imbalance not only disadvantages EU businesses seeking opportunities abroad but also distorts global competition and undermines the very ethos of a level playing field.

It is against this backdrop that the International Procurement Instrument (IPI) emerges as a pivotal legislative tool within the EU’s broader trade policy arsenal. Adopted as Regulation (EU) 2022/1031, the IPI empowers the European Commission to address and counteract non-EU countries’ practices that unfairly restrict the access of EU economic operators, goods, and services to their public procurement and concession markets. Unlike traditional trade defence instruments such as anti-dumping or anti-subsidy measures, which respond to specific unfair pricing or subsidisation, the IPI directly targets discriminatory procurement practices, aiming to restore genuine reciprocity.

The strategic importance of the IPI was emphatically demonstrated in June 2025, when the EU invoked its provisions for the first time, imposing restrictions on Chinese medical device firms from participating in certain public tenders exceeding €5 million within the EU. This landmark decision not only underscored the EU’s resolve to actively enforce its trade principles but also highlighted the IPI’s potential to serve as a formidable instrument for rectifying procurement imbalances in critical sectors. This research paper is designed to furnish a comprehensive and detailed analysis of the IPI, delving into its foundational legal framework, chronicling its complex and often arduous legislative journey, articulating its overarching objectives, and meticulously exploring its potential future applications across diverse sectors and against various global trading partners. Through this rigorous examination, the paper aims to contribute to a deeper understanding of the IPI’s strategic significance in shaping the future trajectory of international trade relations and advancing the EU’s commitment to open strategic autonomy.

Many thanks to our sponsor Esdebe who helped us prepare this research report.

2. Legal Framework of the International Procurement Instrument: A Blueprint for Reciprocity

2.1. Establishment and Core Objectives under Regulation (EU) 2022/1031

The International Procurement Instrument finds its legal bedrock in Regulation (EU) 2022/1031 of the European Parliament and of the Council, adopted on 23 June 2022. This comprehensive regulation establishes the procedural and substantive rules governing the EU’s response to third countries’ restrictive public procurement practices. The very genesis of this regulation underscores a fundamental shift in the EU’s trade policy, moving towards a more assertive stance in defending its economic interests and ensuring fair treatment for its businesses globally.

The Regulation’s foundational legal basis is Article 207 of the Treaty on the Functioning of the European Union (TFEU), which grants the EU exclusive competence in the common commercial policy. This competence allows the EU to adopt measures concerning trade in goods and services with third countries, including those related to market access. The IPI specifically addresses situations where third countries apply measures or practices that ‘severely and recurrently impede’ the access of EU economic operators to their public procurement and concession markets.

At its core, the IPI pursues several interconnected and strategic objectives:

• Ensuring Reciprocal Market Access: This is arguably the primary objective of the IPI. The EU, as an inherently open economy, advocates for global markets where access is mutually granted. The IPI is designed to address situations where EU companies face significant barriers in third country markets, while their counterparts from those very countries enjoy relatively unfettered access to the vast EU public procurement market. Reciprocity, in this context, does not necessarily imply identical market openness but rather a comparable level of opportunity and non-discrimination. The IPI seeks to leverage the attractiveness of the EU market to incentivise third countries to liberalise their own procurement regimes, thereby creating a truly level playing field for EU firms.

• Promoting Fair Competition and Good Governance Globally: Discriminatory procurement practices, such as local content requirements, mandatory technology transfers, arbitrary licensing, or opaque tendering procedures, distort competition not only within the targeted third country but also globally. By empowering the Commission to investigate and address such practices, the IPI aims to encourage greater transparency, predictability, and non-discrimination in public procurement worldwide. It serves as a strong signal that the EU will not tolerate practices that undermine the principles of fair competition, thereby indirectly promoting good governance and international best practices in procurement.

• Protecting EU Economic Interests and Strategic Autonomy: Beyond the philosophical pursuit of fairness, the IPI serves the concrete purpose of safeguarding the economic interests of EU businesses and industries. Public procurement contracts often involve significant financial value and critical strategic sectors, such as infrastructure, telecommunications, energy, and medical devices. When EU companies are unfairly excluded from these markets, it can lead to lost revenue, reduced export opportunities, and a weakening of their global competitiveness. The IPI directly tackles these barriers, ensuring that EU businesses have equitable opportunities to compete, grow, and innovate on the international stage. Furthermore, the IPI contributes to the broader EU agenda of ‘open strategic autonomy’, allowing the Union to protect its core interests and resilience in a more volatile geopolitical landscape, while remaining committed to openness.

2.2. Mechanisms and Procedural Safeguards for Application

The IPI outlines a meticulously structured investigative and remedial process designed to ensure that any measures taken are proportionate, evidence-based, and compliant with international obligations. The regulation grants the European Commission significant powers to act, but also embeds layers of consultation and review.

2.2.1. Initiation of Investigations

An investigation under the IPI can be initiated in several ways. The European Commission has the authority to launch an investigation on its own initiative, typically triggered by market intelligence, ongoing monitoring of third country trade policies, or information from EU Delegations abroad. Alternatively, an investigation can be initiated following a reasoned request from an EU Member State or a complaint from an EU economic operator (or an association thereof) that can demonstrate a legitimate interest and provide prima facie evidence of discriminatory practices. For a complaint to be admissible, it must demonstrate that the alleged measures or practices from the third country severely and recurrently impede access for EU economic operators, goods, or services, causing or threatening to cause material harm.

Upon initiation, the Commission publishes a notice in the Official Journal of the European Union, formally announcing the investigation, outlining the practices under scrutiny, and inviting interested parties to submit comments. This initial phase involves extensive information gathering, which may include questionnaires to affected EU businesses, consultations with Member States, and detailed analysis of the third country’s procurement legislation and practices.

2.2.2. Dialogue and Consultations

Crucially, the IPI prioritises dialogue and negotiation over immediate punitive action. Once an investigation has gathered sufficient evidence to indicate discriminatory practices, the Commission is mandated to engage in formal consultations with the concerned third country. This consultation phase is designed to seek a satisfactory resolution, whereby the third country commits to eliminating or rectifying the identified discriminatory measures. The Regulation specifies timelines for these consultations, typically allowing for a period of up to 12 months, which can be extended under certain circumstances. The objective is to achieve a negotiated outcome, such as the third country joining the WTO Government Procurement Agreement (GPA), removing specific discriminatory laws, or providing equivalent market access through bilateral commitments. Measures under the IPI are explicitly presented as a ‘last resort’, to be applied only if consultations fail to yield a satisfactory outcome.

2.2.3. Imposition of Measures

If consultations prove unsuccessful in addressing the identified impediments, and if the Commission concludes that the third country’s practices severely and recurrently impede access to its procurement market, it may propose the imposition of IPI measures. These measures are designed to be proportionate to the harm suffered by EU economic operators and to serve as an incentive for the third country to change its behaviour. The IPI provides for a range of possible measures, which can be tailored to the specific context:

• Score Adjustment: This involves adjusting the scores of bids submitted by economic operators from the third country in EU public procurement procedures. A specified percentage (e.g., up to 20%) can be added to the bid price, effectively making their offer less competitive. This allows their bids to still be considered but at a disadvantage.
• Exclusion from Tenders: For specific, severely discriminatory practices, the IPI allows for the complete exclusion of economic operators, goods, or services from the third country from participating in certain EU public procurement or concession procedures above a defined value threshold (e.g., tenders exceeding €5 million or €15 million). This is considered a more stringent measure.
• Limitation of Participation: A less absolute form of exclusion, where participation is allowed but subject to specific conditions or restrictions.

Before any measures are adopted, the Commission must consult with the Member States, who vote on the proposed measures through the examination procedure (comitology). The measures are then adopted by an implementing regulation, which specifies the type of measure, its scope, duration, and the affected third country and economic operators. The measures are typically applied for a period of up to five years, subject to review, and can be suspended or terminated if the third country takes satisfactory corrective action.

2.2.4. Safeguards and WTO Compatibility

The Regulation incorporates several important safeguards and exemptions. For instance, IPI measures generally do not apply to tenders for humanitarian aid, those awarded by international organisations, or those falling under specific international agreements. Furthermore, measures must respect the EU’s international obligations, particularly under the World Trade Organization (WTO) agreements. The EU asserts that the IPI is consistent with WTO rules, arguing that it is a leverage tool for market opening, not a protectionist measure. While the WTO’s Government Procurement Agreement (GPA) promotes non-discrimination, not all major trading partners are signatories to the GPA, and even signatories may maintain non-covered discriminatory practices. The IPI thus aims to address gaps in multilateral procurement rules and create a more level playing field for non-GPA parties or non-covered procurement.

Many thanks to our sponsor Esdebe who helped us prepare this research report.

3. Legislative Journey of the International Procurement Instrument: A Decade of Deliberation

3.1. From Initial Proposal to Eventual Adoption

The legislative path of the International Procurement Instrument was exceptionally long and fraught with political complexities, spanning over a decade from its initial conceptualisation to its final adoption. The proposal for an IPI first emerged in 2012, championed by then-Trade Commissioner Karel De Gucht. Its genesis was rooted in a growing frustration within the EU over the persistent lack of reciprocal access to public procurement markets in major third countries, especially rapidly growing economies like China, which were simultaneously benefiting significantly from the EU’s open market. The initial motivation was clear: to create a powerful leverage tool that would incentivise third countries to open their own procurement markets to EU companies, rather than simply accepting discriminatory practices.

However, the original proposal encountered substantial resistance and subsequently stalled for several years. Key points of contention included:

• Concerns over WTO Compatibility: Some Member States and industry groups worried that the IPI might be perceived as protectionist and could trigger retaliatory measures from trading partners, potentially leading to disputes at the WTO. There was a delicate balance to strike between asserting EU interests and upholding multilateral trade rules.
• Divergent Member State Interests: Member States held differing views on the IPI’s scope and stringency. Some, particularly those with strong export-oriented industries facing significant market access barriers, advocated for a robust and automatically triggered instrument. Others, cautious of potential trade frictions or concerned about the impact on specific import-dependent sectors, preferred a more discretionary and less confrontational approach.
• Scope and Thresholds: Debates raged over the types of procurement (goods, services, concessions), the value thresholds for applying measures, and the definition of ‘discrimination’ itself. The initial proposals were sometimes perceived as too broad or too punitive.
• The ‘Nuclear Option’ Debate: The most severe proposed measures, such as outright exclusion from EU tenders, were dubbed the ‘nuclear option’ by some, raising concerns about their proportionality and potential for escalation.

Despite these hurdles, the political will to revive the IPI gained momentum in the mid-2010s, particularly under the Jean-Claude Juncker Commission and later, with renewed vigour, under Ursula von der Leyen’s mandate, which explicitly championed the concept of ‘open strategic autonomy’. The global geopolitical landscape was shifting, with increasing concerns about unfair trade practices, state-backed enterprises, and the weaponisation of economic interdependence. The need for the EU to equip itself with effective defensive trade tools became more pressing. The prolonged legislative journey involved extensive negotiations between the European Parliament and the Council, often mediated by the Commission. Significant compromises were made to refine the instrument, including:

• Emphasis on Negotiation and Dialogue: The final text strongly prioritises dialogue and negotiation, establishing a clear consultation phase before any measures can be imposed, transforming the IPI from a purely punitive tool into a powerful incentive for market opening.
• Proportionality and Discretion: The range of measures (score adjustment, partial exclusion, full exclusion) and the discretion granted to the Commission in their application ensured a degree of flexibility and proportionality, addressing earlier ‘nuclear option’ concerns.
• Clearer Criteria: The criteria for initiating investigations and imposing measures were made more precise, requiring ‘severe and recurrent’ impediments causing ‘material harm’ to EU economic operators.
• Inclusion of Concessions: The scope was broadened to explicitly include concession contracts, reflecting their growing importance in public projects.

After a decade of intense discussions and revisions, Regulation (EU) 2022/1031 was finally adopted by the European Parliament and the Council on 23 June 2022. Its adoption was hailed as a significant milestone, marking the culmination of a long-standing effort to equip the EU with a robust, reciprocal trade instrument.

3.2. Implementation and the Inaugural Application: The China Medical Devices Case

Following its adoption, the IPI entered a critical preparatory phase, during which the European Commission developed the necessary implementing regulations, detailed guidelines, and internal procedures to ensure its effective and consistent application. This included setting up internal market intelligence units to monitor third-country procurement practices and preparing the legal and administrative infrastructure required for investigations.

On April 24, 2024, the European Commission officially initiated its first-ever investigation under the International Procurement Instrument, targeting China’s public procurement practices concerning medical devices. This decision followed extensive market monitoring and numerous complaints from European industry stakeholders, which highlighted systemic issues in the Chinese market. The investigation focused on specific practices identified as discriminatory, including:

• ‘Buy Chinese’ Policies: Formal and informal preferences for domestic medical device manufacturers and suppliers in public tenders.
• Local Content Requirements: Mandates for foreign companies to use a certain percentage of locally sourced components or to conduct significant manufacturing operations within China as a condition for winning contracts.
• Technology Transfer Demands: Requirements for foreign firms to transfer sensitive technology or intellectual property to Chinese partners as a prerequisite for market access or contract awards.
• Opaque Tendering Processes: Lack of transparency, arbitrary decision-making, and non-objective criteria in tender evaluations that effectively favour Chinese bidders.
• Burdensome Licensing and Certification: Disproportionately complex or lengthy regulatory approval processes for foreign medical devices that delay or prevent market entry.

The Commission’s investigation involved rigorous evidence gathering, including detailed questionnaires to EU companies active in the medical device sector, consultations with relevant industry associations (such as MedTech Europe), and extensive legal analysis of Chinese procurement laws and regulations. The findings indicated a clear pattern of severe and recurrent impediments that significantly disadvantaged EU medical device manufacturers seeking to compete in China’s burgeoning public healthcare market, causing substantial economic harm.

Following the investigative phase, the Commission engaged in formal consultations with Chinese authorities as mandated by the IPI Regulation. These consultations commenced in October 2024, with the EU outlining its concerns and requesting concrete commitments from China to rectify the discriminatory practices. However, after several months of dialogue, the consultations concluded in January 2025 without a satisfactory resolution. The Commission determined that China had not offered sufficient commitments to genuinely open its medical device procurement market to EU operators on a reciprocal basis.

Consequently, on June 19, 2025, the European Union imposed its first IPI measure through Implementing Regulation (EU) 2025/1197. The measure restricted Chinese medical device firms and products from participating in EU public procurement tenders for medical devices exceeding a value of €5 million. Specifically, this meant that:

• Chinese economic operators and their medical devices identified as beneficiaries of the discriminatory practices would be excluded from EU tenders above the threshold.
• The exclusion primarily targeted tenders where Chinese suppliers had demonstrated significant presence in the EU market, thereby ensuring proportionality.
• The €5 million threshold was carefully chosen to impact significant contracts while allowing for continued participation in smaller, less strategic tenders, demonstrating a calibrated response.

This landmark application of the IPI sent a strong signal globally. It marked a definitive shift in the EU’s trade policy, demonstrating its willingness to move beyond diplomatic remonstrations to impose concrete, legally binding measures when faced with persistent and systemic non-reciprocity. The decision was met with varied reactions: EU industry largely welcomed it as a necessary step to rebalance trade relations, while China expressed strong disapproval, threatening potential retaliatory measures and escalating trade frictions, as reported by various international news agencies at the time.

Many thanks to our sponsor Esdebe who helped us prepare this research report.

4. Objectives of the International Procurement Instrument: A Pillar of EU Trade Policy

The IPI is more than just a punitive measure; it is a strategic tool designed to achieve specific, far-reaching objectives that align with the EU’s broader economic and political ambitions. These objectives are deeply embedded in the spirit and letter of Regulation (EU) 2022/1031.

4.1. Ensuring Fair and Reciprocal Market Access: The Bedrock Principle

At its core, the IPI is an embodiment of the principle of reciprocity in international trade. The EU’s internal market is widely acknowledged as one of the most open and transparent procurement markets globally, governed by clear, non-discriminatory rules. This openness, however, is not always mirrored by the EU’s major trading partners, many of whom employ various direct and indirect measures to favour domestic suppliers, creating a significant imbalance. The IPI’s primary aim is to rectify this asymmetry. By addressing discriminatory practices, the IPI strives to create a genuinely level playing field where EU companies can compete fairly for public contracts in third countries, just as companies from those countries can compete freely within the EU.

This pursuit of reciprocity is not about demanding identical market structures or policies, but rather about ensuring comparable opportunities for EU economic operators. It is a fundamental aspect of the EU’s trade strategy that seeks to leverage the Union’s substantial market power to encourage liberalisation abroad. Without mechanisms like the IPI, the EU risks being a ‘naïve’ free trader, unilaterally opening its markets while others maintain protective barriers, which ultimately disadvantages EU businesses and citizens. Reciprocity, therefore, is essential for fostering international trade relations that are truly based on mutual respect, fairness, and shared benefits, rather than a one-sided openness.

4.2. Promoting Global Fair Competition and Good Governance

The IPI’s objectives extend beyond bilateral market access to influence the global trading system itself. Discriminatory public procurement practices, such as national champions’ policies, forced technology transfers, or obscure tendering processes, not only harm specific foreign competitors but also fundamentally distort global competition. They lead to inefficient allocation of resources, stifle innovation, and can result in higher costs for public authorities due to a lack of genuine competitive pressure.

By empowering the European Commission to impose measures against non-EU countries engaging in such unfair practices, the IPI acts as a powerful deterrent. It sends a clear message that the EU will actively challenge protectionist measures that hinder legitimate market access. In doing so, the IPI encourages the adoption of more transparent, non-discriminatory, and competitive procurement policies worldwide. It serves as an indirect means of promoting good governance in public procurement, pushing for adherence to international best practices, and potentially strengthening multilateral rules within forums like the WTO’s Government Procurement Agreement (GPA). The ultimate goal is to foster a more open and predictable global procurement environment where merit and competitiveness, not nationality, determine success.

4.3. Protecting EU Economic Interests and Advancing Strategic Autonomy

Finally, and perhaps most tangibly, the IPI is designed to directly safeguard the economic interests of the European Union. Public procurement markets represent significant economic opportunities, underpinning innovation, job creation, and industrial competitiveness. When EU companies face unfair barriers in third countries, it translates into lost contracts, reduced export revenues, and a diminished competitive edge on the international stage. The IPI directly addresses these economic disadvantages by providing a mechanism to open closed markets or, failing that, to level the competitive playing field within the EU’s own market.

Moreover, the IPI is a vital component of the EU’s broader strategy for ‘open strategic autonomy’. This concept, which has gained prominence in recent years, reflects the EU’s ambition to be able to act autonomously in a complex global environment, protecting its interests and values without being excessively dependent on other powers. In the context of trade, strategic autonomy means having the tools to defend EU interests against unfair practices, ensuring resilience in supply chains, and fostering domestic industrial capacities in critical sectors. The IPI enables the EU to exert influence and leverage in a way that contributes to its overall economic resilience and its capacity to withstand external pressures. By addressing barriers to market access, the IPI helps maintain the competitiveness of EU businesses, supports high-quality employment within the Union, and strengthens the EU’s position as a major global economic actor capable of defending its legitimate interests.

Many thanks to our sponsor Esdebe who helped us prepare this research report.

5. Potential Future Applications of the International Procurement Instrument: Expanding Scope and Reach

The successful, albeit contentious, inaugural application of the IPI in the medical device sector against China has firmly established its operational viability and the EU’s commitment to its enforcement. This precedent sets the stage for the IPI’s potential expansion into other strategically important sectors and its application against a broader array of non-EU countries, marking a significant evolution in the EU’s proactive trade policy.

5.1. Expansion Beyond the Medical Device Sector

While medical devices represented a critical initial target due to significant reported discrimination and the strategic nature of the sector, the IPI’s legal framework is designed to be sector-agnostic. Its provisions can be invoked across any sector where non-EU countries’ procurement practices impede EU companies’ access. Potential areas for future application are numerous and reflect global economic trends and geopolitical priorities:

• Infrastructure Projects: Large-scale infrastructure projects, encompassing transportation networks (rail, roads, ports), energy infrastructure (power plants, grids, renewable energy installations), and digital infrastructure (fibre optic networks, data centres), are often pivotal for national development and security. These projects frequently involve significant public procurement components and are susceptible to discriminatory practices such as ‘local content’ rules, preferential treatment for state-owned enterprises (SOEs), or complex, non-transparent qualification criteria that disadvantage foreign bidders. Major global players in infrastructure, including Chinese and, to a lesser extent, US and Indian firms, operate under varying degrees of domestic favouritism. Applying the IPI here could open up vast markets for EU engineering, construction, and technology firms.

• Technology and Innovation (Digital Services, AI, 5G): The rapidly evolving technology sector, encompassing digital services, artificial intelligence (AI) systems, cloud computing, and next-generation telecommunications like 5G, is increasingly intertwined with national security and economic sovereignty. Procurement in these areas often involves concerns over data localisation, cybersecurity requirements that implicitly favour domestic suppliers, and preferences for national champions. For instance, some countries might mandate the use of domestic AI algorithms or cloud service providers for government contracts. The IPI could be instrumental in ensuring that EU tech companies, leaders in many digital domains, are not unfairly excluded from these critical and growing procurement opportunities, addressing issues like ‘Huawei-like’ restrictions or data flow impediments.

• Pharmaceuticals and Healthcare: Similar to medical devices, the pharmaceutical sector is characterised by extensive public procurement through national health services, hospitals, and government agencies. Discriminatory practices can manifest as preferential pricing for domestic drugs, complex registration procedures, or policies favouring local production or R&D. Ensuring reciprocal access would be vital for EU pharmaceutical companies, which are global leaders in research and manufacturing, to compete fairly in foreign markets for essential medicines and healthcare solutions.

• Green Technologies and Renewable Energy: With the global push towards decarbonisation and sustainable development, the procurement of green technologies (e.g., solar panels, wind turbines, electric vehicles, battery storage) is rapidly expanding. Many countries are investing heavily in domestic green industries, sometimes at the expense of fair competition. Policies promoting ‘green protectionism’, such as subsidies tied to local manufacturing or overly complex environmental certifications for foreign products, could become targets for IPI action, ensuring that EU innovators in renewable energy and sustainable solutions have fair global market access.

• Defence and Security: While typically subject to national security exemptions under WTO GPA and bilateral agreements, certain dual-use goods and services with defence applications, or components of defence procurement that are not strictly sensitive, might fall under the IPI’s purview if discriminatory practices are identified and are not justified by legitimate security concerns. The line here is fine and highly sensitive, requiring very careful consideration.

The Commission’s future decisions on targeting specific sectors will likely be informed by factors such as the scale of reported discrimination, the economic importance of the sector to the EU, and the strategic implications for EU competitiveness and supply chain resilience.

5.2. Application Against Other Countries

Beyond China, the IPI is inherently designed for broad application against any non-EU country that employs discriminatory public procurement practices. Several major trading partners exhibit policies that could potentially trigger future IPI investigations:

• United States: The ‘Buy American’ policies, enshrined in various legislative acts (e.g., the Bipartisan Infrastructure Law, the Defence Production Act, and broader procurement regulations), are a perennial concern for EU businesses. These policies mandate that federal agencies give preference to domestically produced goods and services in procurement. While some ‘Buy American’ provisions are covered by the WTO GPA (to which both the EU and US are parties), many procurement activities at state, local, or federal agency level (e.g., Department of Defence) fall outside GPA commitments. The impact on EU companies, particularly in sectors like construction, transportation, and certain manufactured goods, is significant. Application of the IPI against the US, while politically sensitive given the transatlantic alliance, would aim to open up these non-GPA covered procurements or incentivise the US to expand its GPA commitments. The EU would need to carefully calibrate its approach to avoid a full-blown trade dispute.

• India: India’s ‘Make in India’ initiative and related public procurement policies often involve significant domestic preference schemes, local content requirements, and a preference for public sector undertakings (PSUs). These policies, particularly in sectors like electronics, solar energy equipment, and certain manufactured goods, can severely impede market access for EU firms. India is not a signatory to the WTO GPA, providing the EU with fewer multilateral avenues to challenge these practices. The IPI could serve as a direct tool to address these barriers, pushing India towards greater openness and transparency in its vast and growing public procurement market, albeit acknowledging the complexity of trade relations with India and its development imperatives.

• Brazil: Brazil also has a history of implementing local content requirements, particularly in strategic sectors such as oil and gas, defence, and infrastructure projects, as well as providing preferences for domestic suppliers. While Brazil is an observer to the GPA, it is not a party, meaning many of its procurement practices are not subject to GPA disciplines. The IPI could be used to challenge these ‘Buy Brazilian’ policies, promoting more competitive access for EU companies in Latin America’s largest economy. Similar to India, the strategic implications would need careful consideration given broader EU-Mercosur trade negotiations.

• Other Potential Targets: While perhaps less prominent, countries like Japan (despite being a GPA party, some sectors or sub-national entities might still have issues), Gulf states (which often impose offset requirements as a condition for major contracts), or even certain South East Asian nations with nascent but protectionist industrial policies could become future targets if systemic discrimination is evidenced. The IPI’s scope is genuinely global, allowing for a flexible response to emerging trade barriers.

5.3. Strategic Implications and Considerations for Future Application

The future application of the IPI carries significant strategic implications, necessitating a nuanced approach that balances trade enforcement with broader geopolitical and economic objectives. The effectiveness and legitimacy of the IPI will depend on several critical considerations:

• Compliance with International Trade Obligations (WTO): While the EU maintains that the IPI is WTO-compatible, particularly by aiming to incentivise market opening rather than purely penalising, its implementation must continually navigate the complex rules of the WTO, including the Most Favoured Nation (MFN) principle and national treatment obligations. The EU’s argument rests on the IPI being a specific tool to address lack of reciprocity, rather than a general discriminatory measure. Any future IPI application would need robust legal backing to withstand potential WTO challenges, focusing on non-GPA procurement or specific practices that fall outside the scope of existing commitments. The challenge lies in ensuring that measures are seen as proportionate responses to identified unfairness, rather than arbitrary protectionism.

• Diplomatic Relations and Geopolitics: The application of the IPI is inherently a highly sensitive diplomatic act. Imposing trade restrictions, even in response to discriminatory practices, can strain bilateral relations, trigger retaliatory measures, or complicate broader geopolitical cooperation (e.g., on climate change, security, or global governance). The Commission will need to carefully balance the pursuit of fair procurement access with the maintenance of positive diplomatic ties and strategic partnerships. This requires robust economic diplomacy, clear communication of the EU’s rationale, and efforts to de-escalate potential trade frictions through continued dialogue, even as measures are in place. The IPI is a tool of leverage, and its success hinges as much on its deterrent effect and its ability to compel negotiations as on the direct impact of its measures.

• Effectiveness and Proportionality: The long-term success of the IPI will be measured not just by the imposition of measures, but by its ability to genuinely open third-country procurement markets for EU businesses. The Commission will need to continuously assess the effectiveness of its measures – do they lead to policy changes in the targeted country? Do they result in increased market access for EU firms? Furthermore, ensuring that any measures taken are proportionate to the identified harm and are calibrated to minimise unintended consequences for EU businesses (e.g., increased costs for public buyers) is paramount. The ability to review, suspend, or terminate measures swiftly in response to a third country’s corrective actions will be crucial for maintaining the IPI’s credibility and flexibility.

• Internal EU Cohesion: The application of the IPI also requires sustained cohesion among EU Member States, which may have divergent economic interests or diplomatic priorities concerning specific third countries. Maintaining a united front is essential for the IPI to wield its full weight and for the EU to speak with a single, authoritative voice on international trade matters.

Many thanks to our sponsor Esdebe who helped us prepare this research report.

6. Conclusion

The International Procurement Instrument represents a profound evolution in the European Union’s trade policy, marking a decisive shift towards a more assertive and reciprocal approach to global market access. After a protracted legislative journey spanning over a decade, Regulation (EU) 2022/1031 has equipped the EU with a powerful and nuanced mechanism to address persistent discriminatory public procurement practices by non-EU countries. Its meticulously crafted legal framework, prioritising dialogue and evidence-based action, underscores the EU’s commitment to ensuring a level playing field for its companies in international markets while upholding its international obligations.

The IPI’s objectives are multifaceted and strategically aligned with the EU’s broader economic and political ambitions. Beyond ensuring fair and reciprocal access to lucrative public contracts, the instrument seeks to promote global fair competition, encourage transparency and good governance in procurement worldwide, and robustly protect the economic interests of EU businesses. Crucially, the IPI serves as a tangible manifestation of the EU’s pursuit of ‘open strategic autonomy’, empowering the Union to defend its values and interests in an increasingly complex and competitive global trade environment.

The inaugural application of the IPI in the medical device sector against China in June 2025 marked a watershed moment, demonstrating the EU’s resolve to operationalise this instrument and signalling its willingness to take concrete measures when diplomatic efforts prove insufficient. This precedent not only validated the IPI’s procedural efficacy but also sent a clear message to trading partners globally regarding the EU’s commitment to reciprocity.

Looking ahead, the IPI holds immense promise for expansion into other strategically vital sectors, including large-scale infrastructure, cutting-edge technology, pharmaceuticals, and green industries. Its potential application against a broader range of countries, such as the United States (concerning ‘Buy American’ provisions), India (regarding ‘Make in India’ preferences), and Brazil (addressing local content requirements), highlights its universal applicability as a tool to counteract systemic protectionism. However, the future effectiveness and legitimacy of the IPI will hinge upon careful and consistent implementation, an unwavering adherence to international trade obligations, particularly within the WTO framework, and astute diplomatic engagement to manage potential escalations. The IPI is not merely a retaliatory measure; it is a sophisticated instrument of leverage, designed to open markets and foster a more equitable, transparent, and competitive global trading system. As the EU continues to navigate the complexities of international trade, the International Procurement Instrument stands poised to play an increasingly central role in shaping its external economic relations and championing the principles of fairness and reciprocity on the world stage.

Many thanks to our sponsor Esdebe who helped us prepare this research report.

References

• European Commission. (2022). Regulation (EU) 2022/1031 of the European Parliament and of the Council of 23 June 2022 on the access of third-country economic operators, goods and services to the Union’s public procurement and concession markets and procedures supporting negotiations on access of Union economic operators, goods and services to the public procurement and concession markets of third countries. Official Journal of the European Union, L 173/1.
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