The evolving global political landscape has brought forth the emergence of unfair trading practices, particularly the phenomenon of subsidization as a non-tariff barrier to trade. Within the European Union (EU), the persistent subsidization of companies by third countries has undermined the vision of an internal market without internal frontiers. In response to these challenges, the EU legislators have introduced the Foreign Subsidies Regulation (FSR) to address the distortions induced by subsidization and to empower the European Commission to take remedial action. Yet, the formulation of the FSR has given rise to several complications with existing state aid law and the frameworks of the World Trade Organization (WTO). Conversely, it has been argued that the approach proposed by the German Monopoly Commission regarding thirdcountry aid could have pre-empted these discrepancies.
Thus, this article conducts a brief examination of the FSR’s interaction with state aid law, alongside a more in-depth analysis of its interaction with WTO subsidy law. In addition, it evaluates the feasibility of the German Monopoly Commission’s proposal to identify potential solutions for these challenges. Ultimately, it provides concrete legal recommendations to refine the FSR, whilst also acknowledging the political complexities in amending the FSR, including geopolitical streams and the EU’s ‘open strategic autonomy’ policy.
European Foreign Affairs Review