EU rebuffs threat of Beijing probe, stands by foreign subsidies law

4 months ago 18

The European Commission has dismissed China’s announcement that it could launch an investigation into the EU executive’s alleged misuse of anti-subsidy legislation, saying the framework fully respects business confidentiality rules.

The Commission spokesperson for competition, Lea Zuber, told Euractiv on Monday (1 July) that the EU will continue to make “full use” of its legal and investigative mechanisms to ensure that non-European companies don’t unfairly benefit from state subsidies.

Zuber also denied Chinese firms’ allegation that the Commission abused its Foreign Subsidies Regulation (FSR) to steal business secrets.

“We’re making full use of the tools we have at our disposal, including the Foreign Subsidies Regulation,” she said, noting that the regulation applies to “all companies, regardless of their seat or nationality”.

“Moreover, when conducting any competition investigation, including under the FSR, the Commission is legally bound by confidentiality and has an obligation to protect business secrets,” she added.

The bloc’s FSR measures – which came into force in July 2023 – have been called upon by the EU executive during different recent probes into Chinese companies – including into manufacturers of trains, wind turbines, and solar panels.

In April, the Commission also cited the FSR after carrying out a raid of the Dutch and Polish offices of Chinese security equipment firm Nuctech – which was blacklisted by the US Bureau of Industry and Security in 2020.

Zuber’s comments follow the Chinese Ministry of Commerce’s announcement on Thursday (27 June) that it had received an official request from domestic firms to conduct a “barrier investigation” into these recent EU probes.

Ministry of Commerce spokesperson He Yadong was quoted by Chinese state media as saying some FSR practices had “a serious negative impact on Chinese enterprises’ exports to and investment in Europe, to which we have repeatedly expressed strong dissatisfaction”.

The Ministry’s announcement, which followed an official complaint by the China Chamber of Commerce for Import and Export of Machinery and Electronic Products (CCCME), was welcomed by the China Chamber of Commerce to the EU (CCCEU), which represents more than a thousand Chinese firms operating across the bloc.

In a statement, the CCCEU expressed its “strong support” for the Ministry’s position, adding that it is “committed to collaborating closely with [the Ministry] in conducting the barrier investigation”.

Echoing previous comments, the CCCEU said the EU had “exceeded the scope” of its FSR probes, and specifically accused the Commission of “using investigations to gather intelligence on the advanced technologies of Chinese enterprises”.

Growing trade uncertainty

The investigations come as the two blocs are engaging in bilateral talks after the EU announced preliminary tariffs on Chinese electric vehicle manufacturers, and China launched its own anti-dumping investigation into EU pork exports.

On 24 June, Canada also announced a 30-day public consultation to determine whether Chinese firms had benefited from “unfair” levels of state subsidies.

Canada’s Deputy Prime Minister Chrystia Freeland said Ottawa was using its “strongest trade action tools” to address Beijing’s “state-directed policy of overcapacity”.

“We’re not ruling anything out,” she added.

He Yadong, the Chinese Commerce Ministry spokesperson, called on Canada on Thursday to resist the move toward “protectionism”.

“China will pay close attention to the follow-up actions of Canada and firmly safeguard the legitimate rights and interests of Chinese enterprises,” the representative said.

Last month, the US declared steep new duties on a range of Chinese products, including a quadrupling of tariffs on Chinese EVs from 25% to 100%.

The announcement elicited an angry reaction in Beijing, which vowed to take “resolute measures to safeguard its own rights and interests”.

[Edited by Anna Brunetti/Zoran Radosavljevic]