UNIFE alarmed by decision to award UK Intercity Express Programme to Hitachi

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UNIFE, the European rail industry, is alarmed by the UK Government’s decision to resume negotiations on the Intercity Express Programme (IEP) with Hitachi. The IEP is considered to be amongst the largest orders to have ever been awarded to a rolling stock manufacturer in the world.

While the promised creation of 500 new jobs is no doubt welcomed in the UK economy at this time, this figure is extremely low compared to what could have been secured if the IEP was executed by a European supplier. The decision further reinforces the lack of reciprocity between Europe and Japan in rail procurement.

Thanks to clear and transparent public procurement rules transport-related tenders in Europe are largely open to foreign companies, while the Japanese market remains completely inaccessible to European rolling stock suppliers. Indeed, only 2% of the Japanese rail equipment market is opened to foreign suppliers. This de facto market closure is achieved through the extensive use of the so-called “Operational Safety Clause” by which foreign bidders are effectively excluded.

This situation provides Japanese companies with an unfair advantage when responding to tenders in Europe, and is unacceptable. With no competition to face in their home market, such companies are then able to submit highly competitive offers in EU countries, and are supported by the Japanese government to do so.

UNIFE and its member companies supply more than 50% of the worldwide production of rail equipment and services and strongly favor global market opening initiatives. However, we equally consider that reciprocity is a pre-requisite for fair competition. The rail industry cannot accept that European markets are increasingly opened to other countries’ suppliers while their home markets remain closed to Europeans.

UNIFE calls European governments to put an end to such an unbalanced market situation. In this respect, UNIFE Director-General Michael Clausecker stated: “The decision to accept the Hitachi bid weakens the European position vis-à-vis Japan and shows the lack of interest of some governments to support Europe’s industrial base in the fight for open markets and against unfair trade practices.”

UNIFE also notes that under the existing WTO agreements, Japanese firms do not enjoy any legal right to participate in procurement procedures in the field of railways. European entities may therefore exclude Japanese bidders under the provisions of the existing European Directives on public procurement. The UK Government chose not to do so despite the Japanese insistence on maintaining a closed market to reciprocal opportunities for European rail suppliers.

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