EU Touts Proposal to Block Goods Made With Excessive Government Subsidies
Margrethe Vestager, the European Union's commissioner for competition, connected overreliance on China to the Russian invasion of Ukraine in a speech in Paris on March 7. Vestager didn't mention China by name, but spoke of the need to have more European production of semiconductors, and said if Europe then partners "with like-minded democracies we can stabilize our supply chain. Because, crisis or not, Europe cannot do it alone."
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Vestager added, "And I think we should face it, the current events in Ukraine showed us what we already knew -- that our strategic dependency on Russian gas makes our energy sector vulnerable both in the short and in the medium term. It also gives us yet another reason to intensify our commitment to the green energy transition."
Europe and the U.S. are under political pressure to impose a ban on imports of Russian oil. For the U.S., Russian oil is just 7% of imports, but for Europe, natural gas, coal and oil from Russia are central to their economies.
She also referred to China when talking about a "foreign subsidies proposal," that would punish companies with sales in the EU that were made with too-high governmental subsidies. She said the proposal is "making it clear that distortive foreign subsidies will not be tolerated in the Single Market, at the same time while keeping the Union open to foreign investment, to innovation, to global competition, because we have something to offer.
"The proposal will empower the Commission to take action against foreign subsidies granted to companies operating in our Single Market. This is not about protectionism; it's about fairness. Our proposal strikes a careful balance between effectiveness and the burden it, of course, also creates. And it respects the balance between our own State aid rules and our international commitments, making sure everyone is treated fairly in the Single Market.
"That said, for the instrument to work, it must be targeted. There have been calls to broaden the scope to address aspects that go well beyond subsidies -- things like lower labor standards or lower environmental standards with trading partners.
"These issues are anything but trivial. They are as important as they are complex. What does and does not constitute a ‘fair' competitive advantage in trade between two very different countries? Well, that's a question trade policy has been concerned with for decades.
"But the Foreign Subsidies Regulation cannot resolve all these issues. This is a Single Market instrument, and that is where its focus should be: on maintaining fair competition in the Single Market."