US Chamber of Commerce and others warn of practical impossibilities of EU subsidy plan

The United States Chamber of Commerce building is seen in Washington, DC, U.S., May 10, 2021. REUTERS/Andrew Kelly

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BRUSSELS, June 1 (Reuters) – An EU bill targeting foreign state-backed buyers of European companies, driven by fears of a Chinese buying spree, could be impossible to comply with in the practical, said the American Chamber of Commerce and peer groups for Indian and Japanese businesses. said Wednesday.

The groups’ concerns come as European Union governments and EU lawmakers are due to meet this month to discuss and possibly adopt the European Commission’s proposal announced last year that targets subsidies which harm competition.

The proposal also covers bids in public tenders to prevent the use of foreign subsidies to increase market share or underbid European rivals to access strategically important markets or critical infrastructure. .

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“(The proposal) imposes a significant administrative burden on European and non-European businesses by introducing extensive notification requirements and long investigation periods,” the US Chamber of Commerce to the EU said in a statement.

The other signatories of the letter are the Europe-India Chamber of Commerce, the European Australian Business Council, the Japan Business Council in Europe, the Korea Business Association Europe and the Swiss-American Chamber of Commerce.

“A number of the concepts introduced may even pose practical impossibilities for businesses seeking to act in accordance with the regulations, and failure to comply could result in the imposition of substantial penalties,” the group said.

They insisted that the scope of foreign subsidies should be narrower, for example the supply or purchase of goods or services under competitive, non-discriminatory and unconditional bidding should be excluded from the calculation.

Legislation should set a minimum threshold for financial contribution so that subsidies used to pay public authorities for water, electricity or employee health insurance are not included, the group said.

To avoid breaching World Trade Organization rules, the EU should also consider whether the foreign subsidy pursues an objective in the foreign country such as job growth, innovation, climate change, sustainability, supply chain resilience, they said.

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Reporting by Foo Yun Chee Editing by Tomasz Janowski

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