The Foreign Subsidies Instrument (FSI) can have far-reaching consequences for your business
The EP started working on the new Commission’s proposal on foreign subsidies with the first INTA Committee meeting on 25 October. The goal is to fill the existing gap in EU legislation between strict domestic controls on state aid and the lack of controls – or sanctions – over non-EU companies receiving subsidies.
Background
- The Commission presented the 3 principles guiding its approach: (1) to target the most significant subsidies; (2) to be non-discriminatory; (3) to minimise the administrative burden for companies.
- Many MEPs concerned about the different thresholds triggering the application of the instrument and the lack of clear definitions over what constitutes ‘subsidies’ and ‘distortions’. They want to toughen up the legislation and have Member States and relevant EU parties participate in the investigations.
Our take
- The proposal will have far-reaching consequences. Debates over thresholds will be key, with lower threshold cascading a flood of cases for Brussels to investigate making the instrument more effective but more intrusive.
- The proposal has strong support across all political groups (and between EU institutions), but the devil lies in the detail.
- Questions were raised regarding the impact of the proposal on the EU’s access to critical raw materials. The Commission will need to tread carefully if it isn’t to cut off its nose to spite its face.
What’s next?
- EPP Rapporteur Christophe Hansen (Luxembourg) is preparing a draft report which will be adopted in the first half of 2022 under the French Presidency of the Council of the EU.
The International Procurement Instrument (IPI) likely to pass down to the French Presidency
After the Council ended in June nine years of institutional deadlock, INTA held a debate over the draft report’s amendments on IPI (26 October), which aims to give leverage to the Commission to open up third-country public procurement markets (typically more restricted than the EU).
Background
- The main point of contention relates to the EPP Rapporteur Daniel Caspary’s (Germany) suggestion for expelling underbidding companies from EU public tenders instead of hobbling them with a price premium proposed by the Commission.
- Described as the ‘other side of the same coin’, MEPs want to see it complement the Foreign Subsidies Instrument.
Our take
- The Rapporteur’s ‘tough love’ approach will not survive in the Commission even if it gets that far. Most MEPs, for the moment at least, favour the Commission’s handicapping option.
What’s next?
- The Rapporteur will present a revised text to be put to vote in INTA at the end of November. Slovenia was keen to get the IPI over the finishing line, yet it’s more likely the final agreement awaits the French presidency.