Europe is open but not naive

Today, Parliament's International Trade Committee votes on the Instrument against distortive Foreign Subsidies (IFS) to pave the way for negotiations with Member States. “We must remain an open market, but - as Jean-Claude Juncker said - ‘Europe is open but not naive’. With this new instrument, the EU's internal market remains open to anyone who plays by the rules. Those who do not play fair are left out. Re-establishing fair competition on the EU Single Market is not only important for the companies, but also to restore the faith of all Europeans in the virtues of global trade”, said Christophe Hansen MEP, European Parliament Chief Negotiator of the new law and EPP Group Spokesman on International Trade.

“With this instrument, we are ensuring that the strict competition and state aid rules for European companies also apply to competitors that receive subsidies from abroad. If foreign companies want to take control of European companies or participate in European public procurement, the European Commission has to ensure that they operate under similar conditions as European companies which have to stick to a strict state aid regime”, explained Hansen. “We have to fill this longstanding regulatory gap”, he stressed.

“Unfair, uncontrolled subsidies from third countries make the European economy less competitive. Accordingly, the European Union is now developing a control and sanctioning instrument to detect and prevent unfair, hidden subsidies. In this way, we also want to enforce our fair rules - and we will be able to do so”, Hansen said. As Chief Negotiator, Hansen wants to introduce a third country dialogue into the instrument in order to prevent the misuse of the IFS for protectionism. “Overall efficacy of the instrument has been my guiding compass. Protectionism would be enormously damaging to our economy, which operates globally”, he added.

With the rules voted today, the MEPs propose that mergers or investments that involve a threshold of €50 million in foreign subsidies or more for companies with a yearly turnover of €400 million must in the future be notified to the European Commission where non-EU entities acquire control over EU entities. The same applies to public procurements exceeding €200 million if foreign subsidies are involved. Mirroring EU competition rules, mergers, foreign investments and biddings could be forbidden or granted under conditions like in EU internal procedures. If a merger or investment concerned is not notified, fines may apply. The Commission could also open procedures ex officio if suspicions emerge.