Uniform legal EU instrument for subsidies from third countries necessary

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VDMA is in favour of the EU Commission taking a closer look at subsidies from third countries, because these subsidies distort production costs in the machinery sector and influence competition in the EU internal Market.

VDMA, therefore, calls for a uniform legal EU-instrument without different modules, such as proposed in a report from July 2020 by the Monopolies Commission in Germany. Such an instrument would ensure that subsidies from third countries and aid from EU Member States are put on an equal footing. Moreover, the EU Commission should be solely responsible for its enforcement.

Moreover, the new uniform instrument should not conflict with already existing EU instruments (e.g. the Regulation establishing a framework for the screening of foreign direct investment in the EU). VDMA is also against ex officio investigations. Other important demands of VDMA are that efforts to combat illegal state subsidies should primarily be made at WTO level. The problem of subsidies from third countries should also be addressed via EU trade and investment agreements, such as an investment agreement with China.

The background is formed by planned proposals for regulations, which the EU-Commission has planned for Q2 2021. The aim is to eliminate distortions caused by foreign subsidies in the internal Market in general and in specific cases of takeovers and public procurement. For this reason, the EU-Commission has launched a now closed public consultation and an inception impact assessment. In this inception impact assessment, the EU-Commission analyses the problem, sets political goals and works out different solutions and their potential effects. VDMA, therefore, submitted a response to the inception impact assessment on subsidies in October 2020.

Further information:

VDMA Position paper: Subsidies from third countries, attached as PDF

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