The European Commission (E.C.) last week proposed a new instrument to address potential distortive effects of foreign subsidies in the Single Market. The legislative proposal follows the adoption of the White Paper in June 2020 and an extensive consultation process with stakeholders.
The proposal aims at closing the regulatory gap in the Single Market, whereby subsidies granted by non-E.U. governments currently go largely unchecked, while subsidies granted by Member States are subject to close scrutiny, the E.C. said in a May 5 statement.
The new tool is designed to effectively tackle foreign subsidies that cause distortions and harm the level playing field in the Single Market in any market situation. It is also a key element to deliver on the updated E.U. Industrial Strategy also adopted on May 5, by promoting a fair and competitive Single Market, thereby setting the right conditions for the European industry to thrive, according to the statement.
Fertilizers Europe has welcomed the Commission’s proposal.
“The European fertilizer industry acknowledges the Commission’s proposal to add a new instrument in their toolbox to tackle distortions caused by foreign subsidies,” said the Brussels-based organization that represents the majority of Europe’s major fertilizer manufacturers.
“At a time when the E.U. fertilizer industry is engaged in the ‘Green Deal’ decarbonization transformation, it is important that fair competition conditions prevail especially on the E.U.’s Single Market,” it said.
The fertilizer producer’s body said it can foresee this proposal as “a contribution to both strengthening E.U. competition law and, in part, a contribution to the E.U.’s strategic trade policy direction of ‘Open Strategic Autonomy.’”
“Over the past years, the E.U. fertilizer industry has employed trade defense instruments to correct injurious dumping and subsidy campaigns often based on subsidized non-market gas costs in competitor countries exporting to the E.U.,” said Fertilizers Europe Director General Jacob Hansen.
“Given that the E.U. anti-dumping and anti-subsidy instruments cannot address every particular market distortion situation arising, this new instrument might have potential corrective powers,” he said.
For the European fertilizer producers, distortions arising from foreign subsidies that impact the general Single Market situation or acquisitions on the Single Market are the most relevant new channels set down in the E.C.’s proposal for a new regulation.
“On paper, this new instrument will help the E.U. to effectively tackle foreign subsidies that harm the level playing field in the Single Market. However, the true workability and effectiveness of this proposal will need to be proven in practice,” said Hansen.
“At a time when the E.U. fertilizer industry is engaged in the Green Deal decarbonization transformation, it is all the more important to ensure a level playing field, allowing European industry to stay competitive and fit to invest in low carbon technologies,” he said.
The European Parliament and the Member States will now discuss the Commission’s proposal with a view to adopt a final text of the regulation. The proposal will be open for feedback for eight weeks.