With yesterday’s proposal for a regulation on foreign subsidies, the European Commission seeks to address foreign subsidies which risk distorting the EU internal market and undermine a level playing field. The American Chamber of Commerce to the EU (AmCham EU) supports the Commission’s efforts to strengthen the resilience and competitiveness of the Single Market and find the appropriate balance between fair competition and open trade when addressing non-EU subsidies.

However, AmCham EU cautions against an overly broad application that may be disproportionate to the Commission’s goals. To promote growth, investment and trade, the rulebook should be balanced and proportionate. The new toolkit should be used to address the distortive effect of subsidies available in non-market economies with well-funded state-owned enterprises and little oversight of state aid. The proposed mechanisms, as currently drafted, may impose significant additional compliance efforts on companies who already act transparently, while still not gathering necessary information and adequately targeting genuinely distortive practices.

Ultimately, unintentional targeting of international companies whose home jurisdiction share the EU’s open market principles risks to undermine foreign investment in the EU economy currently in need of a fast and sustainable recovery post-COVID-19. For example, requiring prior notification of foreign subsidies received up to three years prior to notification will create additional burdens on non-EU companies and could hamper legitimate foreign investment in Europe.

AmCham EU is pleased that some initial concerns with the White Paper appear to have been addressed, for instance the addition of relevant thresholds to ex-ante tools are welcome. These offer clarity with regard to the applicability of measures to mergers, acquisitions and procurement processes. Further dialogue is necessary to refine this new proposal which offers an opportunity to develop appropriate solutions to distortive market practices and to building a strong Single Market fit for a sustainable and digital age. AmCham EU calls on the Commission, Council and Parliament to address genuine distortions in a targeted and proportionate manner, whilst avoiding negative consequences for jobs, trade and investment. To achieve these goals alignment with international partners will be critical. AmCham EU looks forward to our continued engagement with the EU institutions and the Member States.

For more information, please read our response to the Commission’s White Paper on foreign subsidies.