Regional Subsidies Research Articles

Foreign subsidies regulation that distort competition – a goal too ambitious?

Foreign subsidies regulation that distort competition – a goal too ambitious?

A Critical Analysis of the EU’s Eclectic Foreign Subsidies Regulation: Can the Level Playing Field Be Achieved?

A Critical Analysis of the EU’s Eclectic Foreign Subsidies Regulation: Can the Level Playing Field Be Achieved?

The EU Foreign Subsidies Regulation: a Structural Change to the Internal Market

The EU Foreign Subsidies Regulation: a Structural Change to the Internal Market

International Regulation of Industrial Subsidy

ABSTRACT Subsidies are frequently used by states as an instrument of industrial policy for promoting economic growth, and are a major reason for international trade frictions. Existing industrial subsidy rules, especially the Agreement on Subsidies and Countervailing Measures (SCM Agreement), appear insufficient for effective international subsidy regulation. Subsidy rules reform has been initiated in and outside the World Trade Organization (WTO). Though subsidies are not a China-specific issue, China is an implied target and a major stakeholder of the reform, given the profound impact of its state-led economy. The reform faces a difficult situation: states are tempted to use subsidies to meet various challenges, whereas multilateral efforts in the WTO seem unpromising due to the different positions of world leading economies, and plurilateral efforts led by the trilateral group also face an unclear prospect of multilateralization. Improving international subsidy regulation calls for both rule-making efforts and political consensus and international cooperation, especially from world leading economies.

A critical appraisal of East African Community Law governing economic subsidies and their impact on competition

This article examines the effectiveness of the East African Community legal framework governing economic subsidies and their impact on competition in controlling the granting of such subsidies by Governments of the Partner States. It employs qualitative techniques involving documentary review of legal instruments, case law and scholarly writings, as well as interviews with selected officials in relevant portfolios in Kenya and Tanzania. The research concludes that the legal standards for the regulation of economic subsidies facilitate the effective limitation of the intervention in the market by Governments of the Partner States. The standards may, accordingly, be applied to limit their intervention in the market, using economic subsidies only to the extent strictly necessary to correct market failure. It also establishes, in contrast, that the regulatory institutions are unsuitable, with reference to their power, to limit the intervention in the market by the said Governments. Accordingly, it, recommends that the institutional framework of the Community be reviewed so as to safeguard the functional autonomy of the regulatory institutions and harmonise their mandates.

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

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

The Regulation of Environmentally Harmful Fossil Fuel Subsidies: From Obscurity to Prominence in the Multilateral Trading System

Abstract Environmentally harmful fossil fuel subsidies were notably absent from efforts to enhance the mutual supportiveness of trade and environment in the multilateral trading system. However, a combination of factors has recently propelled the regulation of such subsidies up the trade and environment agenda. The recently launched initiative to negotiate a plurilateral Agreement on Climate Change, Trade and Sustainability (ACCTS) represents the latest and most ambitious of the growing number of initiatives to discipline fossil fuel subsidies. This article examines the factors that brought the regulation of fossil fuel subsidies to prominence and the prospects of the ACCTS initiative to introduce binding rules on fossil fuel subsidies. The article argues that such an initiative is long overdue, but it faces significant hurdles to succeed. Drawing on past and present intergovernmental initiatives to tackle environmentally harmful subsidies, the article highlights the key challenges on the road ahead and suggests possible ways forward.

Recovery of Chinese low-cost carriers after the outbreak of COVID-19 pandemic

This study conducts a detailed analysis of the response of China's low-cost carriers (LCCs) to the threats posed by the pandemic from a route network perspective, aiming to explore the resilience of LCCs and Chinese airlines. Using geographic visualization and network analysis, we evaluate and compare the network connectivity of each Chinese LCC to see the change patterns, then elaborate on the network connection of Spring Airlines. The major results are: the LCC sector has not recovered, but some of them exceed the pre-pandemic levels in a less deregulated environment; different LCCs show different recovery patterns; Spring Airlines outperforms the other four LCCs in terms of network connectivity. The recovery process is supported by various external factors, such as the reduction of new confirmed COVID-19 local cases and international flights, the re-open of inter-provincial tour groups and tourism demand, the nationwide rebound activities promoted by the central government, and the supporting policies, especially new slot allocation processes issued by CAAC. The case study further indicates the effects of high-speed rail (HSR) and regional subsidy measures on the tactical actions of Springs in route planning. This paper serves as a referential case for the LCCs worldwide and has good application for the recovery of other LCCs in other countries. Moreover, the study conducted in this time window offers a chance to assess the development of Chinese airlines in a not fully deregulated aviation environment. It contributes to the debate on the theory of air network resilience.

Decision strategies for the WEEE reverse supply chain under the “Internet + recycling” model

Online recycling has been recognized as an efficient method to increase the recovery amount of waste electrical and electronic equipment (WEEE). However, due to lack of supply and demand coordination, the operational performance of the “Internet + recycling” model in WEEE is not ideal. Thus, the question of how to effectively balance the relationship among consumers, recyclers, and the government is of great importance for the establishment of the “Internet + recycling” model. This paper builds a dual-recycling channel reverse supply chain (RSC) decision model using the Stackelberg game model, and discusses the impact of consumer perception, efforts of online recycler, and government regulations on collection price, quantity, and profit. The findings show that increasing the consumer preference for the online recycling channel can enhance the WEEE recovery scale and the profit of the RSC, and the online recycler, through its efforts, can rectify the disadvantage of consumer preference for the online channel. Government subsidy regulation can promote the enthusiasm of consumers and enterprises for recycling. Moreover, reward-penalty regulation will disrupt the stability of forward supply chain, while the RSC is more coordinated. These findings provide valuable reference to increase the WEEE collection quantity and to promote the development of the “Internet + recycling” model.

Effects of subsidy and regulation policy on soil and water resources of cotton planted lands in Harran Plain, Turkey

Cotton (Gossypium hirsutum L.) provides essential raw material used in the textile, feed, and vegetable oil sectors. Therefore, it is a strategic crop for agricultural, economic, and political strategies around the world. Accurate monitoring of the changes in the cotton production patterns is crucial for decision-makers. Turkey is among the top ten cotton producers and ranks fourth in the world for cotton imports. One third of the total cotton production in Turkey comes from the southeastern Anatolia region of the country. This study analyzed the impact of subsidy and regulation policies on fluctuations in cotton production areas and soil and water quality in Harran Plains, southeastern Anatolia region Turkey. Time-series (between 2016 and 2021) satellite images were utilized to determine actual crop rotation in the study area. Turkish Government implemented a new rule for crop subsidies in 2020 which stated that a farmer will be eligible for subsidy for two consecutive years; however the subsidy will not be paid if the same crop is planted in the third year. Cotton was cultivated in 83 % of the Harran plains prior to new subsidy regulation, which decreased to 26 % after the new regulation. Sudden decrease in cotton cultivation area clearly indicated that farmers need public support to cover the costs in agricultural production. The Gross Production Value (BPV) for each crop was calculated to determine the impact of subsidy regulation on economic value of crops in the rotation.The GPV in 2020 was 2.903,7 $ ha−1 that was 33.6 % and 20.5 % lower than 2019 and 2021, respectively. The results indicated that crop subsidies significantly altered the crop selection behavior of farmers. Water requirement of crops in rotation between 2016 and 2021 was calculated to assess the effects of subsidy changes on water consumption. Cotton cultivation over a large part of the plains during the same season caused excessive water consumption, rise in groundwater level over time, soil salinity and severe water erosion. However, cotton cultivation area as well as water consumption in Harran plain new significantly decreased with the new subsidy regulation; therefore, water consumption in 2020 was the lowest among the time frame evaluated. Total sediment losses through surface runoff from the Harran Plain was estimated as 0.83 tons ha−1 per year. The results revealed that subsidies exert significant impacts on the gross production value in the region, amount of irrigation water consumed, and quality of soil and water resources in addition to the impact on the decision of farmers for crop selection.

The First Ten Years of WTO Jurisprudence on Renewable Energy Support Measures: Has the Dust Settled Yet?

AbstractThe last decade has witnessed the emergence and rise of trade disputes over renewable energy support measures. By pitting trade against the environment, these disputes ignited a considerable debate over the adequacy of the green policy space available under WTO law. This article examines whether and to what extent the first ten years of litigation settled the key issues in this debate by undertaking a systematic analysis of the developments in the case law and in the renewable energy policy landscape. The analysis reveals that the case law has raised more questions than answers and much uncertainty remains as to the scope of the policy space available for the subsidization of renewables. It also highlights how these disputes steered the debate away from the most contentious issue of subsidy regulation to the slam-dunk issue of non-discrimination. In doing so, they helped conceal rather than resolve the green policy space deficit in multilateral renewable energy subsidy governance.

The Influence of the Resident Subsidy on Regional Carrier Economies and the Environment in the Canary Interisland Air Traffic Network

The existence of aviation subsidies can exacerbate congestion in airports that operate near their maximum threshold. One of the main operational issues in airports, that is, aircraft taxiing operations, could become more difficult and, therefore, produce negative effects on airport capacity management. Air carrier economies, touristic mobility (leisure travel), and the environment could also be negatively affected. Greenhouse gas emissions, passenger travel time, and air carriers’ fuel costs, for example, might rise due to aircrafts’ increased taxiing time. This paper seeks to analyse the impact of regional aviation subsidies for regional hub airports in the Canary Island air traffic network; specifically, the effect it has on airports’ capacity in terms of LTO (landing and taking off) cycle delays and its repercussions for passenger travel time, air carrier economics, and the environment. Therefore, to quantify the extent that the increased traffic from subsidies cause airport ground operations to delay flights, the disturbance between aircraft categories in landing and taking off operations must be considered. The disturbance between aircrafts will be evaluated by employing a simple model of landing intervals considering two aircraft categories (i.e., ATRs-72, ATRs-42, and B737/A320 aircraft families). The above-mentioned methodology provides an approximation of the average processing rate for take-off using the ultimate capacity concept for a variety of aircrafts landing on a single runway of the airport. As a result, it must be noted that there is a potential economic and environmental impact associated with the implementation of the subsidy increase for residents’ interisland travel and from the Canary Islands to the mainland. There is also a negative effect on runways for both airports due to the capacity constraints. These impacts, however, have to be balanced with the social and economic benefits that each regional inhabitant derives from the subsidy in terms of improvement of their mobility for any purpose.

Evaluation of Financial Subsidy for Agriculture Based on Combined Algorithm

The stable development of agriculture is related to the national economy, and the fragility and foundation of agricultural production determine the inherent requirements of the government for financial support of agriculture. Based on China's policy of agricultural subsidy, in this study, the basic characteristics and classification methods of agricultural subsidies are analyzed, and an evaluation model of agricultural subsidies is established based on a combined algorithm, where the attributes of agricultural subsidies are screened by analytic hierarchy process, and the evaluation process of agricultural subsidies is constructed by data envelopment approach. Moreover, the development level of regional financial subsidies for agriculture is measured by relative efficiency value, and the implementation direction of financial subsidies is evaluated, to enhance the administrative benefits of government finance and deepen the supply-side reform of agricultural financial subsidies, which promote the sustainable development of agricultural insurance and agricultural production.

Research on Investment Decision of Construction and Demolition Waste Recycling Technology from the Perspective of Government Subsidy

To achieve more efficient recycling management of construction and demolition waste (C&D waste) and to encourage investment in recycling enterprise technology in underdeveloped areas, this study develops a dynamic Nash supply chain model, with and without government subsidy, for a C&D waste recycling treatment system comprised of two recycling enterprises and one builder. We investigate the mechanism of government subsidy regulation on recycling enterprises’ technology decisions, the optimal proportion of technology upgrades of recycling enterprises, and the effects of other exogenous factors on the decision of government and recycling enterprises in an early stage of the recycling industry. The results show that with the subsidy, the recycling enterprises’ proportion of technology upgrade and profits is always improved. And recycling enterprise will actively increase investment to increase the proportion of technology upgrades. Furthermore, the government should prioritize assisting enterprises that are among the first to invest in recycling technology. Interestingly, the proportion of subsidy and technology upgrades is also affected by the unit environmental benefit and the degree of substitution of renewable products with different technological levels. When the degree of substitution is low, not only government subsidies are required to play a role but also builders’ awareness of the benefits of using high-tech renewable products, in order to drive enterprise technology investment from the demand side. The study provides detailed information on government and recycling enterprise C&D waste recycling strategies.

Foreign Subsidies Regulation and EU International Procurement – Necessity, Changes and Challenges

Chapter 4 of the Regulation on foreign subsidies distorting the internal market is designed to fill a regulatory gap, to ensure that foreign subsidies can be addressed in individual public procurement procedures. This article describes the international context in which this “procurement pillar” is embedded, and illustrates the main features of the ex ante notification obligation that is at the heart of Chapter 4. It also explains the specific aspects and notions of the review procedure for foreign subsidies.

The EU Foreign Subsidy Regulation– What, Why and How?

The EU Foreign Subsidy Regulation– What, Why and How?

A Tool to Investigate M&A Transactions with Regard to Foreign Financial Contributions

As a result of an alleged regulatory gap, Chapter 3 of the Proposal for a Foreign Subsidies Regulation introduces a new tool to investigate M&A transactions involving a financial contribution from a non-EU government. This paper takes a closer look at this new tool, in particular comparing it to the existing Merger Regulation. In addition, the existence of the supposed regulatory gap will be assessed - as well as the new tool’s aptitude to tackle it.

The EU Foreign Subsidies Regulation:

The EU Foreign Subsidies Regulation:

Between State Aid, Trade and Antitrust: The Mixed Procedural Heritage of the Foreign Subsidies Regulation and the Overarching Principle of Non- Discrimination

The FSR intends to fill a regulatory gap between trade law, State aid and antitrust law, and achieves this through a unique blend of familiar concepts and rules, drawing from the rich legal traditions of the EU State aid, antitrust, and trade defense regimes. This legal inheritance can be observed throughout the FSR’s procedural framework, including the structure of its review procedures, the Commission’s investigative powers, and the rights of defence of undertakings. Given its legacy, there will be a continuing dialogue between the FSR and these other regulatory systems, possibly with the FSR exerting its own influence, such as on due process rights under the State aid regime.

Protecting the Internal Market from Subsidisation with the EU State Aid Regime and the Foreign Subsidies Regulation: Two Sides of the Same Coin?

Protecting the Internal Market from Subsidisation with the EU State Aid Regime and the Foreign Subsidies Regulation: Two Sides of the Same Coin?