The IPI: A New Era in Fair Global Public Procurement

Public procurement represents nearly 15–20% of global GDP, making it one of the most influential levers in international trade. Yet, when countries close off their procurement markets to foreign competition while enjoying open access abroad, trade imbalances and unfair practices emerge. To address this, the European Union (EU) has created a new legal tool: the International Procurement Instrument (IPI).

What is the International Procurement Instrument

The IPI is a regulatory tool adopted by the European Union under Regulation (EU) 2022/1031. It allows the EU to impose measures against non-EU countries that restrict EU suppliers’ access to their public procurement markets, particularly when those markets are large and lucrative.

The IPI is essentially a “reciprocity mechanism”:

• If a country discriminates against EU suppliers,
• The EU can restrict that country’s suppliers from bidding on certain public contracts within the EU.

Why IPI Was Introduced?

The EU has some of the world’s most open procurement markets, valued at around €2 trillion annually. In contrast, many trading partners—such as China, Russia, or other large economies—maintain restrictive practices, limiting foreign access to their public tenders.

The IPI ensures fair play and a level playing field by giving the EU a negotiation tool to open foreign markets or, if necessary, to defend EU companies through targeted restrictions.

How Does the IPI Work ?

The IPI operates in three main stages:

1. Investigation

The European Commission investigates whether EU companies face discrimination in a country’s procurement market.

2. Consultation & Dialogue

The EU seeks to resolve the issue through dialogue with the third country.

3. Restrictive Measures (if no resolution)

If no progress is made, the EU can apply IPI measures such as:

• • • • Exclusion of foreign bidders from EU tenders above a certain threshold (e.g., €5 million).
      • Mandatory price penalties (mark-ups applied to non-EU bids to make them less competitive).

The First Case: Chinese Medical Device Suppliers (2025)

In June 2025, the EU applied the IPI for the first time. Chinese suppliers of medical devices were barred for five years from bidding on EU public contracts above €5 million.

This action followed a January 2025 investigation, which found that China discriminated against EU medical device companies in its domestic procurement processes. The EU’s decision marks a historic precedent, showing that the IPI is not just theoretical but a real enforcement mechanism.

Implications of the IPI

• For EU Companies – Better access to global procurement opportunities and protection from unfair competition.

• For Third Countries – Strong incentive to open their markets and engage in fairer trade practices.

• For Global Procurement – A potential shift toward reciprocity-based procurement regimes, where access is conditional on fairness.

• For Developing Economies – Could act as both a challenge (restricted access to EU markets) and an opportunity (to align with transparent, open procurement standards).

Why It Matters for Bangladesh

Bangladesh and similar economies often rely on international procurement markets for infrastructure, energy, and technology. The IPI signals that access to EU procurement markets will no longer be unconditional—countries will need to demonstrate non-discriminatory practices in their own systems.

For policymakers in developing nations, the lesson is clear:

Openness and transparency in procurement are no longer just domestic governance issues but strategic tools for maintaining access to global markets.

Conclusion

The International Procurement Instrument (IPI) is a landmark tool reshaping global procurement dynamics. By linking market access to reciprocity and fairness, the EU has elevated procurement from a technical exercise to a strategic trade policy instrument.

For procurement professionals, policymakers, and suppliers worldwide, understanding the IPI is crucial to navigating the future of international trade and market access.

Reference:

• European Commission – First measure under International Procurement Instrument
• White & Case LLP – EU imposes first IPI measure restricting Chinese suppliers
• Regulation (EU) 2022/1031 on the International Procurement Instrument