Playing the Game: The EU’s Proposed Regulation on Foreign Subsidies

Abstract

The objective of ‘level playing field’ has become increasingly more present in international trade affairs. The European Union (EU) has recently embarked on a quest to promote and protect the level playing field within and outside the borders of the internal market. The most recent manifestation of this objective is the regulation of foreign subsidies, i.e., subsidies provided by non-EU countries to undertakings operating within the EU. The European Commission issued its proposal for a new Regulation with the goal of tackling distortions to the level playing field caused by foreign subsidies. The present article introduces the major concepts of the Proposal and provides a comparative analysis with EU State Aid law and the WTO Subsidies and Countervailing Measures (SCM) Agreement. Further, it pursues an economic analysis of the anticipated impact of the Proposal with a view of examining whether the Proposal is capable of addressing global distortions caused by foreign subsidies and ensure a level playing field. Lastly, the article examines the compatibility of the Proposal with Article 32.1 of the SCM Agreement. Trade Remedies, WTO Law, Subsidies, Treaty Interpretation, EU Law, International Trade Law