European Union regulation on foreign subsidies which distort the internal market

Dimitrijević Duško (Institut za međunarodnu politiku i privredu, Beograd), dimitrijevicd@diplomacy.bg.ac.rs

In recent years, foreign subsidies have significantly damaged the EU internal market. They led to unequal market competition among companies in various economic sectors, which, thanks to foreign financial aid, achieved profits that they could not have achieved under normal market conditions. The approval of subsidies by third countries negatively impacted public procurement procedures, capital concentration, and the acquisition of strategic assets, such as critical infrastructure or innovative technologies. Since no existing EU instrument on the provision of state aid dealt with this issue specifically, especially not with the problem of subsidised investments, financial investments, and subsidies in the field of service provision, it was necessary to fill the existing legal gap by adopting a new regulatory framework that would improve this situation. Therefore, in May 2021, the EU Commission presented a proposal for the Regulation on Foreign Subsidies. The proposal was adopted by the European Parliament and the Council after a mutual agreement in December of the same year. The regulation on foreign subsidies establishes a set of rules for the EU to deal more effectively with foreign subsidies that cause distortions and undermine the level playing field in its internal market based on a competitive market economy.

Keywords: EU, foreign subsidies, undermining the internal market