Global protectionism has been on the rise in recent years。Europe, which prides itself on being liberal and open, is also introducing new policy tools to create regulatory barriers to foreign investment。In November 2022, the European Parliament adopted the Regulation on Foreign Government Subsidies distorting the Internal Market (hereinafter referred to as the Regulation), which will enter into force on 12 January 2023 and be implemented on 12 July 2023。The Regulations will have a significant impact on the investment and operation of Chinese enterprises in Europe。At the critical moment when the Regulations have been passed and are about to be implemented, how should Chinese enterprises understand the specific content of the regulations and how to deal with potential risks？At the 26th public interest lecture on "How to Deal with the EU's Foreign Government Subsidy Regulations" in the Lecture Hall of the Expert Committee of the China Chamber of Commerce of Machinery and Machinery on March 2, Bai Yong, partner of the anti-monopoly practice group of Clifford Chance Law Firm in the UK and head of anti-monopoly business in Greater China, suggested that Chinese enterprises should actively respond and safeguard their own rights and interests。This lecture hall is highly concerned by related enterprises。
It is understood that the logic behind the introduction of the Regulation is that the EU has always believed that the openness of investment is the basis for the EU to maintain competitiveness, but the openness must be based on a fair competitive environment。Foreign government subsidies can distort the EU's internal market and undermine a level playing field, and must therefore be controlled。However, existing mechanisms cannot fully address this problem, so new instruments need to be proposed to fill the gaps in the current EU regulatory regime。On this basis, the EU introduced the Regulation, which proposed the concept of "foreign government subsidies that distort the internal market" and proposed a "three-step" analysis framework, that is, foreign government subsidies, distorting effects and weighing tests。
"The Regulations only provide an analytical framework, as well as provisions in principle, and lack detailed rules and guidelines on how to define 'foreign government subsidies', how to determine the' distorting effect ', how to conduct the 'balancing test', and ultimately how to reach the conclusion that the relevant foreign government subsidies distort the internal market.。Bai Yong said that based on experience, it may be several years after the implementation of the Regulations to formulate rules and guidelines based on the summary of law enforcement experience。Therefore, in the years after the implementation of the Regulation, Chinese enterprises will face great uncertainties and need to rely on professional advisory bodies to maintain close and effective communication with the European Commission, and strive to achieve favorable results in the declaration and examination。
The Regulations already provide an analytical framework and screening tools that, while lacking rules and guidelines, have an operational basis。For Chinese enterprises, only active response can solve practical problems。In this regard, Bai Yong suggested that Chinese enterprises investing and operating in Europe must deeply study and understand the analysis framework and screening tools stipulated in the Regulations, establish and improve the compliance system as soon as possible, collect relevant statistical information, investigate and evaluate, and prepare response plans。For proposed investments and public tenders in Europe, a careful assessment of project risks and reasonable expectations of timing are required before decisions are taken。At the same time, once it is necessary to declare subsidies or subject to subsidy review, it should actively use EU legal rules to safeguard its own rights and interests。Before and for a period of time after the official implementation of the Regulation, the European Commission will carry out a series of legislative work, issue implementation rules and guidelines, and solicit public opinions in advance, suggesting that Chinese enterprises actively participate, submit opinions, and express their demands and concerns。
(Source: International Business Daily)