EU’s new anti-foreign-subsidies tool likely to invoke new wave of protectionism
Box 1. Foreign subsidies
According to the white paper, a foreign subsidy is any financial contribution by a government or public body of a non-EU State to an undertaking in the EU:
· An interest-free loan
· Unlimited guarantees
· Capital injections
· Preferential tax treatment
· Tax credits
- In theory, the rules should apply equally to subsidies granted by all non-EU countries and ought not to be discriminatory towards any specific country
- Contrary to the previous proposal, the new proposal is not only targeting state-owned companies. It generally focuses on all subsidies from third countries with which, in addition to state-owned companies, also private companies can undercut competition in the EU.
- The proposal enables complaints from market participants themselves. This will enable the commission to have a more detailed understanding about the market situation.
- A low subsidy threshold of EUR 200 thousand is planned over three years, so that small and medium-sized companies can also be protected.
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