The European Commission adopted a proposal for a regulation on foreign subsidies in May, which seeks to expand the EU’s state aid rules to cover foreign companies active in the Single Market.
While the EU regulatory framework sets clear rules and limits for subsidies granted by EU Member States, subsidies granted by third countries have thus far not been tackled. With this proposal, the Commission aims to tackle unfair competition arising from companies receiving state aid from third countries, which distorts the EU Single Market. This proposal reflects the European Commission’s aim to defend Europe’s ‘open strategic autonomy’, as it seeks a balance between protecting Europe’s industrial capacity, and that of a more outward-looking approach. Whilst the proposal can be seen primarily as part of a broader debate on the EU’s strategic approach to China, it will apply to all foreign companies active in the EU single market.
What does the proposal entail?
As a key element in the EU’s Industrial Strategy, the proposal aims to close the regulatory gap in the Single Market, whereby subsidies granted by non-EU governments currently go largely unc
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