EU launches investigation into Chinese medical device market

[April 24, 2024]  By Philip Blenkinsop and Ingrid Melander

BRUSSELS (Reuters) - The European Commission launched a probe into China's public procurement of medical devices on Wednesday, the latest in a series of moves that ratchet up trade tensions ahead of President Xi Jinping's visit to Europe next month.

The investigation - which Beijing swiftly criticized - is meant to determine if European suppliers of devices ranging from needles and orthopaedic appliances to complex scanners have been granted fair access in China.

If it concludes that they have not, it could lead to the bloc placing restrictions on Chinese medical device companies bidding in EU public tenders, ranging from enforcing a lower score for bidding Chinese companies to full exclusion.

The probe is the first under the EU International Procurement Instrument, which aims to promote reciprocity in access to international public procurement markets, following long-running complaints from European companies and governments over access to the Chinese market.

"The International Procurement Instrument is a powerful new mechanism to support our European companies in markets that are less open than ours," Commission Vice-President Valdis Dombrovskis said.

He added that discussions with China on medical devices so far had been "fruitless" but he hoped that launching the probe would lead to "mutually agreeable solutions".

With the EU flexing its trade muscles, this investigation follows the launch in October of a major probe into cheaper Chinese electric vehicle.

And it comes just a day after a Chinese security equipment company was raided by the European Commission at its Dutch and Polish offices.

The EU is also looking at subsidies received by Chinese suppliers of wind turbines and solar power destined for Europe.

German Chancellor Olaf Scholz lobbied for better market access for German firms in China in talks with Xi this month.

Trade will also be high on the agenda when Xi meets French President Emmanuel Macron in Paris in May, sources say. It will be Xi's first Europe trip in five years.

'PROTECTIONISM'?

"The EU has always boasted that it is the most open market in the world, but of course what the outside world sees is that the EU is moving step by step towards protectionism," Chinese foreign ministry spokesperson Wang Wenbin told reporters.

 A European Union flag flutters outside the EU Commission headquarters, in Brussels, Belgium, February 1, 2023 REUTERS/Yves Herman/File Photo

The EU should "stop using all kinds of excuses to suppress and restrict Chinese enterprises for no reason", he said.

The EU's more robust stance dovetails with Washington's firm approach.

U.S. Treasury Secretary Janet Yellen has warned China that Washington would not accept new industries being "decimated" by Chinese imports. U.S. Secretary of State Antony Blinken arrived in Shanghai on Wednesday, with trade issues high on the agenda.

The European Union Chamber of Commerce in China, whose members include Philips, Siemens and other medical equipment providers, welcomed the new probe.

"A lack of fair access to government procurement in China has been a longstanding issue for European companies operating in the country," it said.

The EU official journal listed a number of ways in which the Commission suspected China was unfairly favoring Chinese bidders for medical devices, including a "Buy China" policy, restrictions on imports and conditions leading to abnormally low bids that profit-oriented companies could not offer.

"The Commission's preliminary assessment is that the above measures and practices result in a de jure and de facto serious and recurrent impairment of access of (European) Union economic operators," it said.

The Commission has invited China to submit its views and to enter consultations to eliminate or remedy the alleged issues.

The investigation is to be concluded within nine months, but the Commission can extend this period by five months.

(Reporting by Philip Blenkinsop; Additional reporting by Joe Cash in Beijing, Nette Noslinger and Jan Strupczewski in Brussels and Bart Meijer in Amsterdam; Writing by Ingrid Melander in Paris and Philip Blenkinsop; Editing by Tom Hogue, Miral Fahmy and Alison Williams)

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