Text adopted – External impact of EU trade and investment policy on public-private initiatives – P8_TA(2015)0250 – Tuesday, 7 July 2015 – Strasbourg – Final edition

The European Parliament,

–  having regard to Article 208 of the Treaty on the Functioning of the European Union,

–  having regard to Directive 2014/23/EU of the European Parliament and of the Council of 26 February 2014 on the award of concession contracts(1) ,

–  having regard to Directive 2014/24/EU of the European Parliament and of the Council of 26 February 2014 on public procurement and repealing Directive 2004/18/EC(2) ,

–  having regard to Directive 2014/25/EU of the European Parliament and of the Council of 26 February 2014 on procurement by entities operating in the water, energy, transport and postal services sectors and repealing Directive 2004/17/EC(3) ,

–  having regard to the respective opinions of the Committee on International Trade on the proposal for a directive of the European Parliament and of the Council on public procurement (COM(2011)0896), on the proposal for a directive of the European Parliament and of the Council on procurement by entities operating in the water, energy, transport and postal services sectors (COM(2011)0895), and on the proposal for a directive of the European Parliament and of the Council on the award of concession contracts (COM(2011)0897),

–  having regard to the Commission’s communications entitled ‘Mobilising private and public investment for recovery and long term structural change: developing Public Private Partnerships’ (COM(2009)0615), ‘A Stronger Role of the Private Sector in Achieving Inclusive and Sustainable Growth in Developing Countries’ (COM(2014)0263), ‘Europe 2020: A strategy for smart, sustainable and inclusive growth’ (COM(2010)2020), ‘Trade, Growth and World Affairs – Trade Policy as a core component of the EU’s 2020 strategy’ (COM(2010)0612), ‘Towards a job rich recovery’ (COM(2012)0173) and ‘A renewed EU strategy 2011-2014 for Corporate Social Responsibility’ (COM(2011)0681),

–  having regard to its resolution of 27 September 2011 on a New Trade Policy for Europe under the Europe 2020 Strategy(4) , of 6 February 2013 on Corporate social responsibility: promoting society’s interests and a route to sustainable and inclusive recovery(5) , and of 26 October 2006 on public-private partnerships and Community law on public procurement and concessions(6) ,

–  having regard to the 2010 report by EIM for the Commission entitled ‘Internationalisation of European SMEs’,

–  having regard to paragraph 5 of the Commission’s communication entitled ‘Strategy for equality between women and men 2010-2015’ (COM(2010)0491), to the UN Women’s Empowerment Principles launched in March 2010, to the UN Guiding Principles on Business and Human Rights and the Foreign Affairs Council conclusions of 8 December 2009, and to paragraph 46 of the final document of the United Nations Conference on Sustainable Development (Río+20),

–  having regard to the OECD Recommendation of May 2012 on Principles for Public Governance of Public-Private Partnerships(7) , the 1997 OECD Convention on combating bribery of foreign public officials in international business transactions and the OECD Guidelines for Multinational Enterprises, updated in May 2011(8) ,

–  having regard to the relevant ILO Conventions,

–  having regard to the UN Economic Commission for Europe’s 2008 Guidebook on Promoting Good Governance in Public-Private Partnerships(9) ,

–  having regard to the UN Commission on International Trade Law (UNCITRAL) Legislative Guide on Privately Financed Infrastructure Projects of 2001(10) , and to the papers presented at the UNCITRAL International Colloquium on Public-Private Partnerships (PPPs) held in Vienna on 2 and 3 May 2013,

–  having regard to the CAF report of 2010 entitled ‘Infraestructura pública y participación privada: conceptos y experiencias en América y España’,

–  having regard to the ‘Public-Private Partnerships Reference Guide: Version 2.0’ of July 2014 produced by the Asian Development Bank (ADB), the Inter-American Development Bank (IDB), the World Bank Group and the Public-Private Infrastructure Advisory Facility (PPIAF)(11) ,

–  having regard to Rule 52 of its Rules of Procedure,

–  having regard to the report of the Committee on International Trade and the opinions of the Committee on Development and the Committee on the Internal Market and Consumer Protection (A8-0182/2015),

A.  whereas countries’ societies and economic structures, and the dynamism thereof, benefit from environments which allow interaction between the public and private sectors, and cooperation between public and private entities, for example through joint initiatives and ventures;

B.  whereas, although public-private partnerships (PPPs) are a long-term tool used in government policies at international, national, regional and local level, there is no internationally recognised definition and comprehensive regulatory framework for them; whereas in practice PPPs are understood to refer to a ‘broad and varied spectrum of cooperative relationships between public actors (governments, agencies, and international organisations, or a combination thereof) and private actors (companies or not-for-profit entities)’ and usually imply supply by the private sector of infrastructure or assets traditionally provided by governments;

C.  whereas PPPs are important as a vehicle for economic growth, innovation, competitiveness and job creation, both in the single market and abroad, and have a strategic role in modernising infrastructure, in particular energy, water, road and digital infrastructure; whereas EU companies are well equipped to compete for and operate such arrangements;

D.  whereas PPP arrangements may take various forms, and single market legislation sets high procedural standards; whereas this legislation was revised and consolidated in Directives 2014/24/EU and 2014/25/EU on public procurement, in Directive 2014/23/EU on concessions, and in guidance on institutionalised PPPs;

E.  whereas public-private partnerships for the provision of infrastructure, goods and basic services are technically complex;

F.  whereas the global economic crisis has severely affected all mature, emerging and developing countries since 2007, and has had an impact on budgetary policies and on the access of both institutional and private entities, especially SMEs, to the funds needed to carry out projects, affecting the development of infrastructure and other capital-intensive projects and the provision of basic services;

G.  whereas a growing number of governments, owing to public budgetary constraints exacerbated by the economic and public debt crisis, are adopting innovative solutions such as PPPs which, if implemented appropriately, can help improve the costs, effectiveness, efficiency and quality of public services and ensure the timely delivery of public infrastructure, by an appropriate involvement of public and private actors;

H.  whereas the positive impact of PPPs is derived from improved delivery of projects, a good benefit-cost ratio, the possibility for long-term financing of costs, the stimulus provided for innovation and research, and a more flexible and skilled management environment;

I.  whereas the liberalisation of trade and investment is not an end in itself but a tool which should create wealth and help improve the quality of life for the world’s population, and whereas there is, in this context, an opportunity to develop innovative policies – together with new instruments, such as the newly designed financial instruments, and a network of free trade agreements useful to third-country governments for guaranteeing the provision of infrastructures, goods and services of general interest – while providing or paving the way for further participation by EU companies in investment projects abroad that bring together private companies and public entities;

J.  whereas PPPs are characterised by a long life-cycle, sometimes extending from 10 to 30 years, and whereas the life-cycle of PPPs should be meaningful and consistent with the pursued objectives in terms of work, goods and services to be provided, without artificially distorting competition or creating higher costs and an unnecessary burden for public administrations and tax-payers;

K.  whereas EU trade policy should neither encourage nor discourage the sovereign decision on whether or not to use a PPP, but, once the decision has been taken, the EU has an obligation to ensure that our large, medium-sized and small enterprises and micro-enterprises have the best possible access to procurement markets in the partner country, bringing added value to the local community, in line with the principles of openness, participation, accountability, effectiveness and policy coherence;

L.  whereas the fact that the private sector may undervalue social infrastructure and the cover it provides, the considerable costs associated with providing infrastructure, the position of some sectors as natural monopolies or their strategic importance mean that in many cases open competition and privatisation are not the most suitable policy option where the public interest must prevail;

M.  whereas the purpose of PPPs is therefore to combine the best of both worlds – the provision of services and infrastructure of general interest, but through enhanced participation by the private sector rather than through privatisation processes;

N.  whereas many emerging and developing countries face a mismatch between the dynamism of private businesses and the lack of reliable public infrastructure; whereas such gaps (which are striking in India or Brazil) have undermined potential growth, limiting export/import capacities or disturbing production lines owing to the absence of sufficient port infrastructure, deficiencies in internal transport (railways, freight or highways) or dysfunctional power generation units and power distribution grids; whereas these gaps also have a negative impact on human welfare (owing to scarcity of sewage and water distribution networks); whereas PPPs allow integrated solutions whereby a partner or a consortium provides ‘building’ (construction, engineering and architecture services), ‘financing’ (injection of private funds, at least to pre-finance a project) and ‘exploitation’ (maintenance, surveillance and management services);

O.  whereas intergovernmental organisations have also used PPPs to devote aid to least‑developed countries through partnerships operating in the field of development and cooperation: the World Bank, regional reconstruction banks, the Food and Agriculture Organisation, the World Health Organisation and the UN Children’s Fund (UNICEF), to name but a few, have used PPPs to implement actions; whereas, as regards geographical focus, the USA, Australia, Japan, Malaysia, Singapore, the United Arab Emirates and other Asian and Latin American countries (led by Chile) have experience of PPPs; whereas OECD countries (Finland, France, Germany, Greece, Italy, Ireland, the Netherlands, Portugal and Spain) also have relevant legislation; whereas the UK has the most developed programme in respect of PPPs (with the Private Finance Initiative accounting for around 20 % of public investment); whereas the EU leads the PPP infrastructure market, concentrating more than 45 % of the nominal value of PPPs;

P.  whereas PPPs have been used in the context of the Structural Funds, enlargement, the trans‑European networks, Joint Technology Initiatives, Europe 2020, R&D (factories for the future, energy‑efficient buildings, the green vehicles initiative, the sustainable process industry, photonics, robotics, high-performing computing, and 5G networks), e-learning, research projects with universities and other programmes in the health field (such as the innovative medicines initiative); whereas the European Investment Bank and the European PPP Expertise Centre have carried out projects in the EU, its neighbourhood and beyond; whereas the EU has also contributed through the Global Energy Efficiency and Renewable Energy Fund; whereas the European Fund for Strategic Investments intends to support a number of PPPs in the EU, in which companies from trading partners may participate;

Q.  whereas the EU has hitherto kept its public procurement markets wide open to international competition and has put in place rules seeking to ensure genuine and fair competition on the single market and to enable international investors to compete on an equal footing; whereas inside the EU there is no discrimination on grounds of foreign ownership or control, and whereas companies from abroad may set up a local base in order to participate in PPPs;

R.  whereas EU free trade agreements include provisions which pave the way for companies to bid in PPPs via market access and pre-establishment; whereas the treatment and possibilities open in respect of Korea, Colombia/Peru, Central America, Singapore and Canada (and Vietnam and Japan) are defined differently and specifically; whereas there has to be a relatively flexible approach as regards negotiations with different partners; whereas, however, the aim must continue to be to help foster social and economic development, environmental sustainability, democracy and good governance, the observance of human rights and the promotion of internationally recognised standards of protection, as well as the creation of decent jobs; whereas, at the multilateral level, the General Agreement on Trade in Services (GATS) and the Agreement on Government Procurement (GPA) also establish a number of commitments, as may other plurilateral instruments such as the Trade in Services Agreement (TiSA); whereas the environment in the EU is therefore becoming more competitive;

Background

1.  Stresses the need to stimulate decent job creation, competitiveness and productivity inside the EU and in third countries through innovative policies and new instruments designed to encourage the activity of economic actors in order to re-launch sustainable growth, including through investments outside the Single Market; believes that PPPs could be – as one of several options – a potential source of growth for EU companies and, at the same time, be useful for our partner third countries, as these PPPs could provide infrastructures, goods and services of general interest;

2.  Recalls that PPPs should bring high added value to citizens and consumers, ensure quality services and/or goods, and provide concrete competitive and economic advantages for public administrations, both at government and local level, while avoiding creating additional burdens or losses for the public sector;

3.  Urges the Commission to promote a definition of PPPs that can gain international recognition as a long-term relationship between public entities and private investors geared to the provision of high-quality, accessible public services and infrastructures on the basis of terms and conditions clearly laid down in contracts, compliance with which may easily be assessed by means of indicators ensuring that such compliance is rewarded with fair and appropriate remuneration;

4.  Notes that both SMEs and larger companies alike can provide unique private-sector know-how, experience and good practices, as well as networks involving public authorities in non-EU countries, effectively helping to deliver on sustainable development policies; considers that SMEs can best achieve their potential if they create networks and perform at the global level, and enter markets outside Europe, inter alia through PPPs; calls, in this respect, on the Commission to promote and encourage the formation of consortia and other forms of cooperation between large companies and SMEs in order to facilitate access for the latter to PPP-projects;

5.  Stresses that the development of PPPs must take into account, in particular, the challenges for EU-based SMEs competing on international markets under a PPP, and the need to ensure that SMEs gain concrete, fair and reciprocal access, notably in the utilities sectors, as set out in Directive 2014/25/EU; highlights, in this respect, the importance of specific rules allowing for cluster or grouped tendering by SMEs and the use of open and transparent subcontracting chains;

Challenges

6.  Considers it regrettable that, so far, the EU has kept its government procurement markets largely open to international competition, while EU companies still face substantial barriers abroad; calls on the Commission to guarantee that EU trade agreements contain instruments for our companies, especially SMEs, to compete abroad on equal terms with foreign national companies; demands as well clear regulation of, and easy access to information concerning, tenders and awarding criteria, and the lifting of discriminatory and unjustified trade barriers in the field of government procurement, services or investment (such as fiscal discrimination, regulatory barriers to the establishment of branches or subsidiaries, and restrictions on access to financing); calls on our partner countries to apply principles of open government in order to guarantee transparency and avoid conflicts of interest, and to use PPPs practice with caution, taking into account not only cost-benefit analyses and the viability of the projects, but also the financial and technical capacity of public authorities to supervise services or infrastructure delivery in line with general public interest;

7.  Acknowledges that PPP-related challenges can be overcome through principles of good governance, such as transparency and clarity of rules, where the following issues are key: the award, execution and evaluation of projects from the initial stages; the modelling and definition of risk-transfer (in particular, the evaluation of medium- and long-term cost-effectiveness); the participation of stakeholders and civil society organisations; the fight against corruption and fraud; the financial and technical capacity of the responsible administration to adequately plan and supervise the implementation of contracts; and the reinforcement of legal certainty, within a framework that guarantees exercise by the public authorities of their legitimate power; invites the Commission and the Member States (which are vital parties in this regard) to promote these principles and the related good practices beyond our borders;

8.  Recalls that PPPs are characterised by their high value and technical complexity, and by the parties’ long-term commitment; notes that they consequently require appropriate levels of both flexibility and procedural safeguards to ensure transparency, non-discrimination and equal treatment;

9.  Recalls that there are a number of inherent risks in infrastructure projects (in particular those relating to building, the environment, telecommunications and energy networks), and that the government, through PPPs, transfers part of the risk to the private contractor so that both can reap the benefits but also share the risks and responsibilities of such projects; stresses, furthermore, that adequate risk sharing is essential in order to reduce the costs of a project and ensure its successful implementation and viability;

10.  Recalls that the delivery of high-quality, accessible and cost-effective services to the public, both inside and outside the EU, is an essential condition to ensure successful implementation and viability of PPPs; recalls that the complex choice of models and contracts has an impact on a project’s evolution; warns that, at some stages, PPPs have been used merely to achieve the objective of complying formally with public-deficit objectives; highlights the need for an adequate institutional framework combining political commitment, good governance and adequate underlying legislation to guarantee that PPPs offer better quality and broad coverage of services to the citizens; stresses, in this regard, the importance of an adequate evaluation of the profile and past experiences of the companies involved to determine the quality of the services they have provided and whether their business conduct has been responsible;

Involving the private sector in development

11.  Stresses that EU trade, investment and development policies are interlinked and that Article 208 of the Lisbon Treaty establishes the principle of policy coherence for development, requiring that the objectives of development cooperation be taken into account in policies that are likely to affect developing countries; emphasises as well the importance of ensuring that EU investment policies are oriented to financial choices that include a real assessment of the social impact;

12.  Stresses the increasing potential of PPPs, as one option among others, to foster innovative solutions and mobilise long-term private finance and domestic resources for development objectives, given that massive investments are required in developing countries – in terms of infrastructure, water supply and energy – that the public sector will not be able to provide on its own, and the majority of which would profit from private sector involvement; believes that PPPs can also generate innovation in technologies and business models, and build mechanisms for holding the private sector accountable; points, however, to instances in which the participation of the private sector in PPPs in some developing countries has not delivered the expected results; notes that, in consequence, a contribution of technical assistance is needed to reinforce the legal and institutional frameworks in which PPPs are developed, in particular as regards the capacity to evaluate, plan and supervise the execution of such projects in a proper manner, and provide the option for public partners to claim compensation from private companies in case of contractual non-compliance;

13.  Notes that PPPs are high on the development agenda and are increasingly being promoted as a means of closing the infrastructure financing gap in developed and developing countries alike;

14.  Urges the Commission – as it has indicated its wish to extend considerably the use of blending in future years – to implement the recommendations made in the European Court of Auditors Special Report on the use of blending, and to evaluate the mechanism of blending loans and grants, particularly in terms of development and financial additionality, transparency and accountability;

15.  Calls on EU bodies to encourage EU companies participating in PPPs in third countries, in particular in less-developed countries, to work in accordance with the principle of policy coherence, in line with existing OECD Guidelines for multinationals, so that development cooperation objectives are taken into consideration; calls on the Commission to encourage sustainable investments, taking into account development objectives by prioritising the long-term development of domestic economies in particular, and to promote projects focused on environmental protection, poverty reduction, education, waste management or the use of renewable energies, for instance;

16.  Stresses that in the area of development aid, PPPs are an effective way to spend European funds while supporting EU priorities and coherence with other policies; calls for greater Commission involvement and investment in the development PPPs, and for PPPs to be used as a vehicle to allow the extension of the Union’s limited development budget;

17.   Underlines the fact that private investment and finance are likely to be the key engine for sustainable growth, which is projected to be approximately 5 % in developing countries in the coming years; recognises that such private funding can help support local economies and companies and provide decent jobs, and therefore lead to poverty eradication, provided that foreign direct investment is properly regulated and linked to concrete improvements in the partner countries’ economies, e.g. through technology transfers and training opportunities for the local labour force; considers, under these circumstances, that PPPs may benefit the LDCs, as the disproportionate investment risk does not sufficiently incentivise private investments; emphasises that future PPPs within the post-2015 development agenda should pursue poverty reduction and other sustainable development goals, and should be aligned with partner countries’ national development plans;

18.  Notes that properly structured and efficiently implemented, PPPs can bring many benefits, including innovation, greater efficiency in the use of resources, and quality assurance and scrutiny; notes as well that PPPs in developing countries need to be assessed on the basis of their capacity to deliver development outcomes, and that a fair distribution of the risk burden between public and private sectors is needed; stresses that PPPs in developing countries have until now mostly been concentrated in the energy and telecommunications sectors while private engagement in social infrastructure remains rare; encourages, therefore, those PPPs that have as their primary objective the achievement of sustainable development goals;

19.  Calls for increased technical assistance – including the training of local staff and sharing of technology – to the governments of the partner countries in order to boost their capacity to claim ownership of the PPPs and assume their share of responsibility for the management of PPP projects, i.a. by helping them set up banking systems and tax administrations capable of providing financial governance for, and managing, public and private funds; points out that past experience shows that poorly negotiated PPP contracts can, in some instances, add to state indebtedness, and calls for the regulatory framework on responsible financing to be set up; calls on the Commission to consider the possibility of providing developing countries with technical assistance and advice on how to prepare and implement EU standards on their markets;

20.  Strongly supports the effective and comprehensive dissemination and implementation of the UN Guiding Principles on Business and Human Rights (UNGPs) within and outside the EU, and emphasises the need to take all necessary policy and legislative measures to address gaps in the effective implementation of the UNGPs, including in the area of access to justice;

21.  Stresses that development agencies must ensure that public development finance is used to support local economic networks in developing countries and is not diverted to promote private firms and multinationals from the donor countries; stresses, in particular, that PPPs should be aimed at building the capacity of domestic micro, small and medium-sized enterprises;

22.  Recalls that the European Union is committed to promoting gender equality and ensuring gender mainstreaming in all its actions; calls for the gender dimension be integrated into the planning and delivery of PPPs, e.g. by using gender-disaggregated data and analyses for targeted investments, and by establishing in contracts key performance indicators for benefits to women; calls, in this context, for increased support to local SMEs, and especially to female entrepreneurs, so as to enable them to gain from private, sector-led growth;

Potential tools to enable EU companies to engage in PPPs outside the EU

23.  Calls on the Commission to work towards gaining substantial market access commitments internationally in the World Trade Organisation (WTO), and in ongoing bilateral negotiations with third countries, in a positive and reciprocal approach that allows for international competition, in order to redress asymmetries between the EU and other trading partners as regards the level of openness of government procurement markets; asks the Commission to work to eliminate administrative, procedural and technical barriers that prevent EU companies from taking part in foreign PPPs;

24.  Calls on the Commission, while negotiating trade and investment agreements with other countries, to support the dismantling of barriers for EU companies, in particular SMEs, so that they can enter PPPs in these countries and support the professional mobility of EU citizens in these states, and so that they can compete on equal footing with domestic companies and companies from third countries;

25.  Calls on the Commission to monitor EU businesses abroad, to draw conclusions on success stories, models and good practices, with a view to drawing up guidelines, and to consider creating virtual documentation centres or observatories to facilitate access for EU companies, especially SMEs, to information on PPP opportunities; calls on the Commission to encourage the creation of user-friendly platforms and networks so as to promote a structured dialogue between stakeholders, and to provide technical support as regards the legal framework and expected challenges; asks the Commission to undertake a study on the effects of the Union’s FTAs and their implementation on access to foreign PPPs by EU companies; believes that such a study could give insight into the concrete impacts of FTAs in the PPP field and, eventually, allow the identification of barriers that have not yet been addressed;

26.  Calls on the Commission to promote the use of clear and comprehensive accounting rules at international level in order to reduce the uncertainties associated with PPPs, while, at the same time, promoting sound budgetary policies and project sustainability;

27.   Calls on the Commission to ensure that EU-backed bodies such as the European Agency for Small and Medium-sized Enterprises (EASME) and the Enterprise Europe Network (EEN) can also access and share information with SMEs on how to enter PPPs in states outside the EU, and on how to promote small and medium-sized companies’ participation in PPPs in third countries;

28.  Underlines that to attract cross-border private-sector funds into PPPs, it is paramount to provide sufficient assurances that these long-term investments will benefit from a clear, stable and secure environment with good governance, legal certainty, transparency, equal treatment, non-discrimination and effective dispute settlement; calls on the Commission and the Council to work together to this end in the competent international fora, and in international financial institutions, so as to ensure that the necessary legal framework in this area exists and is transparent, democratic, inclusive, effective and cost-efficient;

PPPs outside the EU: new jobs and growth opportunities for EU companies

29.  Is convinced that increased participation by EU companies in large-scale international PPPs could lead to substantial benefits in terms of the creation of decent jobs, productivity, competitiveness, technological capabilities and innovation development in the EU; recalls that the 2010 Commission study on the ‘Internationalisation of European SMEs’ highlights the positive link between internationalisation and innovation in terms of products, services and processes;

30.  Stresses that the work in this area must take into account, in particular, the challenges for EU-based SMEs in competing on international markets as parts of PPPs, and the need to ensure that SMEs gain concrete and fair access; highlights, in this regard, the importance of specific rules allowing for cluster or grouped tendering by SMEs and the use of open and transparent subcontracting chains; believes that SMEs should be encouraged to take part either as sub-contractors or as part of consortiums tendering for contracts;

31.  Recalls the achievements made in the EU through the use of PPPs, in infrastructure development as well as in vanguard fields of technology, research, e-learning and other high-added-value sectors, and encourages the Commission to identify those projects which have yielded the best results in the EU, and to promote participation by all types of EU companies, especially SMEs, in such initiatives abroad;

o
o   o

32.  Instructs its President to forward this resolution to the Council, the Commission and the European Investment Bank.

(1) OJ L 94, 28.3.2014, p. 1.
(2) OJ L 94, 28.3.2014, p. 65.
(3) OJ L 94, 28.3.2014, p. 243.
(4) OJ C 56 E, 26.2.2013, p. 87.
(5) Texts adopted, P7_TA(2013)0050.
(6) OJ C 313 E, 20.12.2006, p. 447.
(7) http://www.oecd.org/governance/budgeting/PPP-Recommendation.pdf
(8) http://www.oecd.org/daf/anti-bribery/ConvCombatBribery_ENG.pdf
(9) www.unece.org/fileadmin/DAM/ceci/publications/ppp.pdf
(10) http://www.uncitral.org/pdf/english/texts/procurem/pfip/guide/pfip-e.pdf
(11) http://api.ning.com/files/Iumatxx-0jz3owSB05xZDkmWIE7GTVYA3cXwt4K4s3Uy0NtPPRgPWYO1lLrWaTUqybQeTXIeuSYUxbPFWlysuyNI5rL6b2Ms/PPPReferenceGuidev02Web.pdf

Leave a Reply