In 2004, the European Commission issued a report on the functioning of public procurement markets in the EU.[28]  The report states that the EU directives on public procurement adopted in the 1970s have contributed considerably to improving competition and transparency and also to increasing cross-border activity through the requirement of invitations to tender and contract award notices above a certain threshold.[29]  The report also suggests that direct cross-border procurement remains low, at approximately 3% of the total number of bids.  The rate of indirect cross-border public procurement-that is, bids won by foreign firms through their local subsidiaries-is higher, constituting close to 30% of the total bids.  Application of the EU rules also contributed to:

　　Reducing prices paid by national, regional and local authorities for supplies, works, and services by around 30%; and

　　Increasing intra-EU competition and prices paid by public authorities for goods traded between Member States have been less.  For example, regarding small iron and steel rails traded between EU countries, export prices dropped from around 21% in 1988-92 to over 7% in 1998-2002.[30]

　　Prepared by Theresa Papademetriou

　　Senior Foreign Law Specialist