ERT Expert Paper on the White Paper on Foreign Subsidies

White Paper on levelling the playing field as regards foreign subsidies

European companies are increasingly faced with competition from companies outside the EU that benefit from State support but that are not subject to the same rigorous State aid scrutiny. This puts EU companies at a significant competitive disadvantage. The WTO subsidies regime is insufficient, as the Commission has correctly identified. Its dispute settlement procedures have been critically undermined leading to the inability to deal with unfair State and market practices to the extent that they are covered by WTO rules.

The EU needs a broad, effective and workable regime to appropriately address distortive foreign subsidies, but without making inward investments less attractive or prompting third countries to adopt tit-for-tat rules that would be harmful for European investments abroad. ERT considers that this will require:

1. Legal certainty, starting with clear definitions of key concepts such as foreign subsidy, State-owned enterprise (“SoE”) and distortion.
2. Enforcement procedures that are not overly burdensome and that can be completed within short timeframes leading to effective redress.

Ensuring that the New Instrument is proportionate, does not discriminate, and is based on transparent and fair processes, will not only minimise the risk of third-country retaliation, but might even help to establish a multilateral or global solution for the control of unfairly distortive subsidies