EU Moves To Shrink Foreign Influence In Its Economy

The European Union plans to tighten its defenses against subsidized foreign companies, marking a sharp increase in the bloc’s effort to assert “strategic autonomy” from China and the US while defending its economic interests, reported the Wall Street Journal. 

The European Commission, the EU’s executive body and top antitrust enforcer, on Wednesday, June 17, outlined options to redress what it described as market distortions stemming from state-subsidized foreign firms. The proposals aim to prevent foreign companies that have received significant grants, loans, tax credits, or other forms of State aid from acquiring European companies or competing with them for certain contracts inside the EU.

Many observers see the action as aimed at state-owned Chinese companies, but it could also affect US rivals of European companies.

The proposed restrictions were put forward after several European countries, including France, Germany, and Italy, tightened their foreign-investment scrutiny in a bid to protect companies reeling from the coronavirus-induced economic crisis from being scooped up by Chinese and US investors. The proposals also fit changing attitudes in the EU over the past year toward China, which the bloc has labeled an economic and political rival. 

“We need the right tools to ensure that foreign subsidies do not distort our market,” said European Commission Vice-President Margrethe Vestager, in charge of competition and digital policy. “It’s not because Europe is free of state aid, but it’s because we have transparency and control [of subsidies],” Ms. Vestager said. “When it comes to foreign subsidies, we have no control.”

Full Content: Wall Street Journal

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