Yao Yao, Law School

Abstract: The European Commission published a White Paper in 2020 to pursue a more open model of strategic autonomy, further build a new global governance system, and accelerate the process of developing mutually beneficial bilateral relations. The document was published to maintain the environment of the EU's single large market and to promote fair competition. Among other things, the distortion of the EU market by foreign subsidies, mergers carried out against EU companies, and government purchases involved in minimizing the negative impact of foreign subsidies on the EU market. The idea of competition law is clearly attempted to replace trade remedy law to further regulate subsidies. The rationality of its functional positioning is worth exploring, and the actual impact produced may not be fully compatible with the value objectives pursued. Its unclear definition of market distortion, vague criteria and lack of specific constraints on the right to determine, there is a mix of trade remedy and competition law in the application of norms, which may easily lead to the abuse of the right to review, the prevalence of trade protectionism and other adverse consequences. The European Commission published the Draft Regulation on Foreign Subsidies Distorting the Internal Market on May 5, 2021, which adopts the legislative paradigm of integrating competition law with trade remedy law. According to the EU legislative timetable, foreign subsidies are regulated in a completely new regime. According to the EU legislative process schedule, the full legislative process of the draft regulation will be completed by the end of 2022. The regulation lacks operability and certainty, which will increase the cost of compliance for foreign enterprises operating or investing in the EU, and will also increase the risk of enterprises being regulated, which will have a disruptive negative impact on both the business and investment environment, and also shows a tendency of rising trade protectionism. For the method of identifying subsidies, the regulatory mechanism has a model role for other countries' countervailing legislation. It contains three kinds of regulations for the control of foreign subsidies, respectively, to deal with market distortion, the implementation of concentration behavior of enterprises to review the declaration, and mandatory declaration and audit in government procurement. The European Commission collected a wide range of opinions from the community, on the basis of which the Draft Anti-Foreign Subsidies was formed. Regulation of foreign subsidies through a new mandate. A number of provisions in the regulation violate the provisions related to subsidies under the WTO, such as the SCM Agreement and GATS Agreement and cannot be justified on the basis of the WTO general exceptions, concluding that the regulation is not legitimate in the WTO system. Friction and disputes in the field of international trade and commerce are on the rise, and the problem of foreign subsidies has been hotly debated in the field of international trade and commerce. It has been proved that if the subsidy policy is not properly applied, it will lead to overcapacity, unfair competition and trade distortion. The purpose of this topic is to investigate the real-life dilemma of the regulation in international practice cases and whether the regulation violates the WTO multilateral rules on subsidies and the provisions of regional trade agreements, to see through the restrictive and discriminatory nature of the regulation and the cumbersome procedures the negative impact it will have on China and Chinese enterprises when the regulation comes into force, and to propose Chinese recommendations on international disciplines related to the regulation of foreign subsidies. More Chinese companies involved in EU trade activities should explore effective measures to deal with the issue of foreign subsidy regulation, which can continuously enhance the international competitiveness of China and Chinese companies while maintaining the fairness and freedom of international trade.

Read the full article here:   欧盟《外国补贴条例》研究.pdf