The proposal to introduce a “Buy European” criterion in public procurement raises significant legal and economic considerations for all 30 states in the European Economic Area (EEA). This idea, essentially giving preference to European-origin goods, services, or firms in certain tenders, marks a potential shift in the EU’s longstanding open procurement policy. It comes at a time of heightened strategic focus on European industrial resilience, but it must be carefully calibrated to avoid undermining the single market principles of fair competition and market access. Here we examine the implications of such criteria, focusing on the internal EEA level playing field, competition law concerns, and the stance of the EFTA member states (Iceland, Liechtenstein, and Norway).
EEA Internal Market: Ensuring a Level Playing Field
Legally, any “Buy European” provisions must align with the EEA Agreement, which extends the EU Single Market to the three EFTA states. Under the EEA Agreement, Iceland, Liechtenstein and Norway participate fully in the EU’s internal market, meaning their companies have the same right to bid on public contracts throughout the EEA as EU companies do. Procurement directives adopted by the EU are implemented in these countries, ensuring identical rules across all 30 EEA states.
As such, a European preference in procurement cannot exclude EEA EFTA firms without breaching the fundamental non-discrimination principle that underpins the single market. The EEA EFTA countries have been quick to assert this point. In a joint comment on the upcoming EU procurement reform, they underline that if “European preference criteria”, “EU content requirements” or other “Buy European” measures are introduced, it must be “clarified that these terms encompass all 30 EEA States”. Failure to do so could create an uneven playing field inside the internal market, “distorting competition in favour of certain economic operators” within the EU at the expense of EEA EFTA bidders.
In practical terms, excluding trusted EEA partners like Norway or Iceland from “European-only” contracts would arbitrarily shut out some of Europe’s own suppliers, reducing competition and potentially driving up costs for public authorities. It would also violate the legal obligations of the EEA Agreement, which mandates equal treatment for EEA firms in public procurement. To illustrate, Norwegian companies are active participants in EU procurement markets, often bidding via consortia or as subcontractors on large projects.
If suddenly tenders for strategic sectors were reserved strictly for EU-27 firms, those Norwegian (or Icelandic or Liechtenstein) suppliers would be unjustly disadvantaged despite their countries’ single market membership. This is why EEA members are seeking formal assurances that “Buy European” will be interpreted inclusively. They point to precedents like the new Internal Market Emergency and Resilience Act (IMERA), which explicitly provided that joint procurements for crisis-response are open equally to EFTA states, treating them legally as participating Member States. Clarity at the legislative level is crucial. As the EEA EFTA comment notes, unambiguous rules “remove uncertainty for contracting authorities” and decrease the number of unnecessary disputes in procurement processes. In short, the legal framework must unequivocally integrate the EEA states into any European preference scheme to maintain the integrity of the single procurement market.
Market Access and Competition Considerations
Beyond the EEA internal dynamics, a “Buy European” criterion has broader economic implications for market access and competition. The European Union has traditionally championed open and competitive public procurement. Unlike some countries, the EU until now has had no general “Buy European” rules, and in fact has enshrined reciprocal market access in a wide network of international agreements. Through the WTO Government Procurement Agreement (GPA) and bilateral free trade agreements, foreign bidders from dozens of partner countries (including the United States, Japan, Canada, and others) are permitted to compete for many EU public contracts on equal footing.
This openness has been a hallmark of EU procurement law and is credited with fostering competition, value for money for taxpayers, and international trade cooperation. Introducing a preference for European bidders, even if limited to strategic sectors, therefore represents a notable policy shift. It may reduce access for companies from outside the EEA in certain high-value industries like defense, digital technology or clean energy. Economically, fewer eligible bidders can mean less competition, which risks higher prices or less innovation over time. The EU’s own analysis acknowledges a trade-off between new strategic goals and competition/efficiency in procurement: prioritising sustainability, resilience or domestic supply may “on the one side” raise costs. In the context of European preference rules, the potential cost is that excluding global suppliers might lead to procurement markets with fewer competitors and possibly more “home bias” among contracting bodies. Even today, without formal buy-national rules, around 40% of public contracts in the EU are awarded to firms located in the same region as the contracting authority.
A Buy European policy could reinforce such parochial outcomes if not carefully designed to still encourage robust bidding. On the other hand, the strategic rationale for Buy European is to bolster European industries and reduce reliance on external suppliers who might not share Europe’s standards or strategic interests. This industrial policy motive has grown stronger in light of global developments (e.g. supply chain disruptions, security concerns, and other powers’ protectionist measures). The EU’s move is in part a response to trading partners’ practices, notably the United States’ expansive “Buy American” laws and similar local-content rules worldwide.
In fact, to address lack of reciprocity, the EU implemented the International Procurement Instrument (IPI) in 2022, empowering Brussels to restrict access for bidders from countries that shut out EU firms. From a legal standpoint, any European preference will need to be crafted in harmony with the EU’s international commitments. GPA rules do allow exceptions for national security and public order, which could justify limiting certain strategic procurements to domestic (EEA) suppliers. The European Commission will likely invoke these exceptions or exclude strategic sectors from GPA coverage to ensure a Buy European clause is WTO-compliant. Indeed, the early signals suggest the preference will be focused on critical areas not fully covered by existing trade obligations.
Nonetheless, some of the EU’s trading partners may view such measures as a protectionist turn. The risk of disputes or reduced access to third-country markets is an economic consideration the EU must weigh as it proceeds down this path. Within the EEA itself, competition law principles also come into play. EU procurement directives and the EEA Agreement prohibit discrimination based on nationality for EEA bidders, a principle that a correctly implemented Buy European rule would uphold by encompassing all EEA states. As long as EEA suppliers are included, the internal market competition remains between the industries of 30 countries, which is a broad base. However, excluding non-EEA firms does shrink the pool of potential bidders, potentially impacting price competition. There is also the question of state aid and protectionism: if public contracts systematically favor domestic suppliers beyond what is proportional, it could blur into an industrial subsidy. The European Commission will need to ensure that any preference is narrowly applied (for example, a modest evaluation bonus for EU/EEA content in critical contracts) to avoid unduly distorting the market. Transparency and proportionality will be key legal tests, procurement awards must still respect the EU principles of equal treatment and sound financial management, even when a preference policy is in effect.
EFTA Members’ Perspective and the Road Ahead
The EFTA members inside the EEA have reacted proactively to the Buy European proposal, indicating general support for Europe’s strategic objectives but insisting on an inclusive approach. Iceland, Liechtenstein and Norway jointly stressed their “more than 30 years of deeply integrated cooperation” with the EU and the importance of one Internal Market with the same rules for all participants.
In their view, European procurement initiatives should strengthen the bloc’s economic security without fragmenting the Single Market. The draft European preference measure appears aimed at global competitors, not at EEA partners – a nuance EFTA states want clearly reflected in the legal text. By securing explicit wording that EEA EFTA states are covered by any ‘European’ preference in the revised directives, they seek to remove any ambiguity. The European Commission has been receptive to this input so far, engaging in dialogue with EEA EFTA representatives and acknowledging the need to avoid Internal Market distortions.
From a legal process perspective, once the Commission drafts the new procurement legislation (expected by late 2025 or 2026), it will be reviewed by the European Parliament and Council, where EEA relevance should be addressed. After adoption at EU level, the EEA Joint Committee would then incorporate the new rules into the EEA Agreement, formally extending them to the EFTA states. This mechanism ensures that the legal implications of Buy European are uniform across the EEA, reinforcing, rather than undermining, the homogeneity of the internal market. For the EFTA states, a worst-case scenario (now unlikely) would have been an EU legislative text that left their status unclear, potentially necessitating political fixes or even dispute resolution under the EEA Agreement. Fortunately, early engagement via the EEA Standing Committee’s comment process allows such issues to be ironed out in advance. In conclusion, the “Buy European” procurement initiative embodies a careful balancing act. Legally, it must reconcile the EU’s desire for strategic autonomy with its single market commitments and international obligations. Economically, it promises potential benefits for European industries and supply chain security, but at the possible cost of reduced competition and efficiency in public tenders. The inclusion of all 30 EEA states in any preference scheme is both a legal necessity and a logical step to preserve Europe’s unity, indeed, excluding close EEA allies would only harm European cohesion while doing nothing to address external dependencies.
As the policy debate continues, European procurement officials will need to craft solutions that strengthen domestic capacity while upholding the core tenets of fairness and openness that define the Internal Market. With clear legislation and cooperative engagement from EFTA partners, a “Buy European” criterion can be implemented in a way that supports Europe’s strategic interests without fracturing the integrated procurement landscape that EU and EEA members have built together.
Sources:
The Participation of Foreign Bidders in EU Public Procurement: Too Much or Too Little?
“Buy European” criteria in public procurement should include all 30 EEA States
