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June 21, 2005. Due to a WTO agreement currently being renegotiated in Geneva, European small and medium size companies (SMEs) cannot compete on equal footing with American SMEs .
Under the so-called Government Procurement Agreement of the World Trade Organization (WTO), the US government has secured a preferred supplier position for American SMEs and awards 40 % of its public procurement to SMEs, a market worth US$ 95 Billion in 2003.
As European governments do not have the right to give European SMEs a preferred supplier status, this level of participation is out of reach for Europe. It is known that, for innovative areas such as healthcare, defense, energy, transportation and space, the main public agencies generally award only 5% of their purchases to SMEs.
SUN&SUP, a group of 20 European high-tech start-up companies advising the EC, is arguing that both the EU and national governments need to act NOW to ensure that European SMEs get equal rights in the new 10-year WTO treaty that is currently being renegotiated in Geneva for the period 2005-2015.
It is widely recognized that small and medium size businesses are the engine of economic growth and innovation. But today European SMEs do not succeed to grow and become global companies. Only 2000 European companies have a turnover higher than € 100 Million, compared to 3200 American ones.
Annual public procurement in Europe amounts to € 1500 Billion. Public buyers can considerably enhance the growth of the best European innovative SMEs and enable the emergence of the 1000 new global companies which Europe needs today. They just need to balance the competition playground, increasing the competitiveness of European public procurement and enhancing open innovation.
These initiatives are critical for Europe to be able to compete on equal footing with the USA and accomplish the objectives of the Lisbon Agenda.
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Neither the European Commission, nor any person acting on behalf of the European Commission is responsible for the use that might be made of the following information. The views that are expressed are those of the authors and do no not necessarily reflect those of the European Commission.
For more information contact Eric Jourdain jourdain@hitech-sme.com
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