Regional Subsidies Research Articles

Retooling the regulation of net-zero subsidies: lessons from the US Inflation Reduction Act

Abstract The US Inflation Reduction Act (IRA) has heralded the advent of a new era of industrial policy within and beyond the USA. As the net-zero economy transition unfolds and national economic security paradigms entrench, industrial policy is here to stay. Net-zero subsidies are employed as multipurpose policy tools to promote domestic manufacturing, de-risk from China, and boost the net-zero transition. This new scenario prompts a fresh look at old questions surrounding environmental subsidies and their justification, actionability, and countervailability. This article makes three contributions. First, it articulates a conceptual framework to assess questions surrounding the justification of net-zero subsidies. It advocates a direct focus on their environmental effectiveness, drawing a distinction between justifiable trade-distorting effects and unjustifiable protective or discriminatory application associated with the pursuit of reshoring or geopolitical goals. Second, it employs a careful analysis of different IRA tax credits to operationalize the article’s framework and test its robustness. Third, it draws on legal and economic insights to shed some light on the environmental effects of different groups of net-zero subsidies. On these grounds, it advances a streamlined three-fold categorization and demarcates the boundaries within which different subsidies should be justifiable, non-actionable and non-countervailable.

Navigating the transition: The impacts of electricity tariff regulation on distributed generation in Brazil

Energy transition presents new challenges in electricity regulation, notably Distributed Generation (DG) tariffs. In Brazil, DG capacity surged 18 times between 2021 and 2023. The impact of recent Brazilian DG legislation (Law 14300/2022; Normative Resolution 1059/2023) on the market remains uncertain. Our analysis, from technical, social, and financial perspectives, focusing on units with up to 5 MW of installed capacity, reveals persisting and increasingly unsustainable cross-subsidy schemes. While new rules mitigate the risk of a “utility death spiral,” misguided regulations may spur DG adoption and hike electricity tariffs. Revising subsidy regulations can mitigate adverse social and financial repercussions.

Analisis Kebijakan Perumahan Subsidi di Indonesia Policy Analysis Of Subsidized Housing In Indonesia

The purpose of this research is to know the development of subsidy policy in the field of housing in Indonesia, and to know the obstacles that hinder the development of subsidized housing in Indonesia. This research is normative legal research, namely research conducted by examining secondary data (literature) consisting of: primary legal materials; secondary legal materials. In normative legal research, the data that has been collected, both through the inventory of primary legal materials and the search for secondary materials, content analysis is carried out which is then processed into general premises about general norms in the regulation of subsidies in the housing sector. Furthermore, it is analyzed deductively by using a syllogism thinking pattern composed of two statements (major premise and minor premise) and a conclusion. Conclusion: 1) the provision of subsidies to low-income people is expected to realize the community, especially low-income people to own a house; 2) the low absorption rate of subsidized housing

The FSR and Public Procurement

Distortions caused by foreign subsidies in public procurement procedures are one of the specific concerns addressed by the Foreign Subsidies Regulation (FSR). This article analyses both the substantive provisions of the FSR and specifically the notion of ‘subsidies’ and the procedure managed by the European Commission to countervail the effects of subsidies in procurement procedures. The first in-depth investigation concerning a public procurement procedure is also outlined.

Субсидии в постсоветских государствах

An analysis of the characteristics of subsidies in post-Soviet states was carried out; the main features of subsidies in some countries of the former USSR are considered; The features of the legal regulation of subsidies and their relationship with other forms of budget expenditures are identified.

Legal Issues in the European Unions Anti-Cross Border Subsidy Measures: A Study

This article provides a panoramic overview of the "Foreign Subsidies Regulation" that passed on June 30, 2022 and officially took effect throughout the European Union on July 13, 2023. It conducts a deep analysis of the Foreign Subsidies Regulation through the background analysis and discusses why is the Foreign Subsidies Regulation made. Then the basic provisions of the Foreign Subsidies Regulations are discussed in detail from the aspects of the definition of foreign subsidies, distortive effects, review procedures of foreign subsidies, and implementing agencies. In future, most of the non-EU companies doing business in Europe could be subject to the European Commission's new rules on foreign subsidies. Then this article provides an objective analysis of access for companies investing in Europe. By discussing the possible influence, this article identifies strategies for non-EU countries' companies investing in Europe from four aspects:compliance management, corporate mergers and acquisitions and investment, public procurement and corporate financing. Hope the suggestions in this article can be helpful.

Interview: Interview about the Foreign Subsidies Regulation With Eddy de Smijter, Head of the European Commission’s International Relations Unit Within DG Competition

Interview: Interview about the Foreign Subsidies Regulation With Eddy de Smijter, Head of the European Commission’s International Relations Unit Within DG Competition

Closing the Regulatory Gap? A Case Study on the Acquisition of a Semiconductor Producer under the EU Foreign Subsidies Regulation

Closing the Regulatory Gap? A Case Study on the Acquisition of a Semiconductor Producer under the EU Foreign Subsidies Regulation

Indonesia's Regulation and Implementation of Subsidies in View of Agreement on Subsidies and Countervailing Measures 1995-WTO

<em><span lang="IN">Regulation and implementation of subsidies in Indonesia is in the form of financial assistance provided by the government either directly or indirectly to companies, industries, industrial groups or exporters. With the aim of increasing export activities and reducing import activities for the welfare of the people and not violating the provisions of the 1945 Constitution, as the definition of subsidies is explained in the PP. Number 34 of 2011 concerning Anti-Dumping Measures, Compensatory Measures and Trade Security Measures Article 1 paragraph 8. In the Indonesian Government's policy, subsidies are given as long as they are to achieve people's welfare, and do not violate the order in the 1945 Constitution. However, in terms of government policy to improving people's welfare and protecting the domestic economy, often causing problems in the scope of international trade. This article aims to examine and understand how subsidies are regulated and implemented in Indonesia in terms of the Agreement On Subsidies And Countervailing Measures 1995-WTO. This research is normative legal research which examines written law based on applicable laws and regulations. The results of this research are that based on the policy issued by the Indonesian government, subsidies are given in order to realize the domestic economy, so based on this policy, basically the Agreement On Subsidies And Countervailng Measures 1995-WTO limits subsidies, so that their use does not cause harm to other countries' industries.</span></em>

Strategic Autonomy, REPowerEU And The Internal Energy Market: Untying The Gordian Knot

The “open” strategic autonomy discourse now serves altogether as a new narrative and overarching principle of EU energy policy. This article conceptualizes EU strategic energy autonomy (SEA) as the Union’s ability to choose autonomously its own path towards a decarbonized “energy mix”. Realizing EU SEA demands a more holistic energy policy to tackle external dependence on foreign suppliers of energy commodities, technologies, and raw materials critical to the green transition. In this context, joint external action is important; but coordinated internal action is even more so, as the nature and magnitude of external constraints also depend on internal choices among the Member States concerning transition pathways. The article focuses on the internal dimension of EU energy policy. The REPowerEU plan and related emergency measures adopted under Article 122 TFEU to guarantee solidarity in tackling the impending energy crisis only brought a partial answer and once again raised the question of the EU competence to act on energy security issues. It is argued that the shared competence and related limitations foreseen in the TFEU should not prevent the EU from implementing a long-term holistic policy to pursue a resilient decarbonization policy throughout the energy value chains. The EU may well become more relevant than in the past when it comes to the energy security of Member States. New regulatory tools may be needed to support the integrity of the cornerstone of EU energy policy to date – the internal energy market – in the pursuit of an “open” SEA. The potential contribution to safeguarding “open” SEA from EU foreign direct investment screening, the forthcoming carbon border adjustment mechanism, and the new EUforeign subsidy regulation are discussed in this context.

The Foreign Subsidies Regulation and European Top-Class Football – Finally a Financial Fair Play?

The Foreign Subsidies Regulation and European Top-Class Football – Finally a Financial Fair Play?

Theories of Harm in the Implementation of the Foreign Subsidies Regulation

Theories of Harm in the Implementation of the Foreign Subsidies Regulation

The EU's new Foreign Subsidy Regulation on Collision Course with the WTO

The EU's new Foreign Subsidy Regulation on Collision Course with the WTO

Assessing the practical implications of the Foreign Subsidies Regulation – revisiting the acquisition of Vossloh Locomotives by CRRC

The EU Foreign Subsidies Regulation became applicable last year. To assess its potential impact, this article explores what might have happened had the Regulation been applied to the acquisition of Vossloh Locomotives by CRRC, the Chinese state-owned supplier of rolling stock equipment. The Bundeskartellamt cleared the merger in 2020, even though it concluded that CRRC had ‘theoretically unlimited access’ to subsidies. This article highlights how, from an economics perspective, the assessment might have been different under the FSR, with the potential to lead to a different outcome.

‘Nobody Has any Intention of Building a Wall’ Some Reflections on the EU’s New-Found Assertiveness in the Sphere of Trade and Investment

A major trend in international economic law during the last decades concerns the simultaneous rise of geopolitization and securitization. In today’s world, states increasingly pursue their interests not by classic military or political means, but rather through a clever application of particular economic and investment policies. To confront the concomitant challenges, the European Union has newly embraced a creed of ‘open strategic autonomy’ (OSA): a formula that is intended as a way of coping with the changing international environment, while at the same time remaining receptive to most ordinary commercial opportunities. Concerns have been raised however that the Union’s posture might well incite (or serve as a pretext for) old-fashioned protectionism, and is likely to trigger various forms of retaliatory action. The question thus arises to what extent, with this stated goal, the EU is able to weather or withstand the aforementioned trends. The current paper, after assessing the ambition’s key merits and reviewing its recent application in a number of sectoral domains, purports to showcase that, as long as certain preconditions are fulfilled, the pursued objective may actually be labelled as timely and apposite, not least in light of the positioning of other global actors. If correct, the exposé presents a soothing response to the ever more vocal criticisms of a perceived European tendency to ‘go it alone’. open strategic autonomy, geo-economics, EU, WTO, foreign direct investment, anticoercion instrument, foreign subsidies regulation, carbon border adjustment mechanism

The race towards a more sustainable future: is current State aid policy fit for purpose?

Sustainability continues to gain traction as an important principle to be factored into competition law analysis, across antitrust, merger control and State aid. This article provides an overview of the mechanisms that are currently being introduced (and those already in place), to pursue sustainability objectives in the EU State aid framework. While the article focuses on the different aspects of the EU State aid rulebook, the analysis takes place against a broader international backdrop, with the US Inflation Reduction Act’s subsidies being a prime example of non-EU funding in the race to the ‘green transition’. As times have changed, so has the EU’s approach to State aid policy, and what comes out of the analysis of the constantly developing framework for sustainable State aid, is a gradual but clear convergence towards the incorporation of sustainability considerations into subsidies regulation, at the level of both legislative initiatives and judicial interpretation by the Court of Justice of the EU. While this is a development broadly in the right direction, the article points out the geopolitical risks associated with an inadvertent green subsidies war, as well as the risk – within the EU itself – of amplifying existing economic inequalities, due to the playing field being tilted in favour of Member States with deeper pockets.

Die Regulierungswut muss aufhören – wir ruinieren unser Land!

Abstract The ever increasing regulation is overwhelming and strangles the companies. It ties up enormous resources, foremost the upcoming EU Supply Chain Directive. Regulation is based on anecdotic examples instead of a systematic analysis. Simple proposals to ease up the burden to come along with the European supply chain regulation – e. g. excluding the supply chain parts laying within Europe – exist, but the debate does not progress. Other examples of the ever increasing regulation include the Foreign Subsidies Regulation and the Barrier-Free Reinforcement Act. Again, well intended regulation. But all adding up to an immense bureaucratic burden. That the Federal Ministry of Justice has put the reduction of bureaucracy on its to-do-list gives hope. In times of crises such as the pandemic, wars, energy crisis, climate crises and inflation, burdens on businesses should be reduced to free up resources.

Restricting freedom of contract – the EU foreign subsidies regulation and its consequences for public procurement

PurposeThe purpose of this paper is to analyze the recently enacted Regulation (EU) 2022/2560 of the European Parliament and of the Council of December 14, 2022, on foreign subsidies distorting the internal market (foreign subsidies regulation [FSR]) and its repercussions on the European Union (EU) public procurement marketplace and corporations from third countries. The purpose of this paper is to analyze the geopolitical and economic backgrounds for the Regulation and its efficiency.Design/methodology/approachIn this study, the authors used doctrinal and analytical legal methodologies, meticulously examining pertinent EU law sources. The authors systematically collated and scrutinized applicable literature and legislative process materials to discern the essence and substance of the norms enshrined in the law. In this study, the authors also applied a socio-legal methodology when focusing on the economic and geopolitical context surrounding the adoption of the FSR. The contextual analysis traces the evolution of changes in international cooperation and recent political shifts.FindingsImplementing the FSR should pave the way for a more equitable competitive landscape within the EU public procurement market, bolstering EU values. However, its potential to prolong public procurement procedures and create uncertainties regarding their outcomes could pose challenges, possibly affecting the effectiveness of public procurement regulations. Only time will reveal the extent of the EU’s interventionist approach and how necessary adjustments must be made to align with market demands.Social implicationsThis study highlights socially relevant aspects of the implementation of EU policies – European New Green Deal and European Industrial Policy in the context of public procurement. The analysis contained in this study concerns issues directly related to meeting the collective needs of the citizens.Originality/valueTo the best of the authors’ knowledge, this study is the first in-depth analysis of the solutions contained in the FSR in terms of geopolitical and economic aspects. Furthermore, there have been no studies so far, which have analyzed the FSR in detail from the point of view of its effectiveness. The effectiveness concept contained in this study is the authors’ own solution.

Tripartite evolutionary game analysis of supply chain low‐carbon transformation considering the coupling of carbon tax and subsidy regulations

AbstractConsidering the coupling of the differential carbon tax and subsidy policies, this paper constructs a tripartite evolutionary game model. Then the factors influencing the behavior of each party are analyzed. Results show that the increasing rate of manufacturer income and retailer income when taking low‐carbon strategy can affect their enthusiasm to adopt low‐carbon behavior. In terms of the external regulation, the combination of differential carbon tax policy and subsidy policy can effectively restrain manufacturer's free‐riding behavior and encourage the manufacturer to complete the low‐carbon transformation. However, such policy combination has poor supervision effect on retailer's free‐riding behavior.

Expanding Trade Remedy Scope: Cross-Border and Public Policy Subsidies

On May 9, 2023, the U.S. Department of Commerce proposed amendments to the U.S. antidumping and countervailing/anti-subsidy (ADCV) duty regulations fundamentally altering the scope of economic activities captured within the scope of trade remedy laws. The proposed regulations expand ADCD actions to include a wide range of labor, human rights, environmental and intellectual property standards. Commerce’s new regulations make the failure to rigorously enforce national public policy standards directly and indirectly remediable by trade remedy laws by treating unenforced regulations as a subsidy. Antidumping regulations are similarly modified to increase production costs where public policy regulations are deemed weak or ineffective, thereby increasing antidumping duties. Commerce also proposes to eliminate the longtime transnational subsidies regulation which held that a subsidy did not exist if the program or project was funded by a government outside of the country where the recipient was located. A transnational subsidy is financial assistance or support provided by one country to producer in another country. This modification would make transnational subsidies an actionable subsidy under the trade remedy laws. antidumping, countervailing, anti-subsidy, trade remedy laws, labor, human rights, environmental, intellectual property standards, public policy standards, subsidy, production costs, transnational subsidies, financial assistance