ERU, Alm.del - 2020-21 - Bilag 59: EMs høringssvar vedr. foreløbig konsekvensanalyse af tiltag til håndtering af udenlandske subsidier, fra erhvervsministeren

Erhvervsudvalget 2020-21
ERU Alm.del Bilag 59
Offentligt

The Danish Government’s response to the European Commission’s In-

ception Impact Assessment on the White Paper on levelling the playing

field as regards foreign subsidies

The Danish Government welcomes the opportunity to comment on the In-

ception Impact Assessment (IIA) on the White Paper on levelling the play-

ing field as regards foreign subsidies.

As stated in our response to the public consultation on the White Paper, the

Danish Government welcomes the initiative from the Commission to ad-

dress distortions from foreign subsidies since such subsidies are currently

not under the same scrutiny as state aid originating from EU countries. Un-

regulated foreign subsidies risk distorting competition in the single market

leading to unfair competition between subsidized and non-subsidized com-

panies. This is not fair. Therefore, the Danish Government agree that we

need the right tools to ensure that foreign subsidies do not distort our mar-

ket, just as we do with our European subsidies.

A well-functioning Single Market that ensures effective competition be-

tween companies

–

foreign as well as European

–

is essential for prosperity,

competitiveness, growth and consumer welfare in the European Union.

Consequently, it is paramount for the Danish Government that new instru-

ments respects the principles of open and effective competition and avoids

fencing out competition from foreign companies that would otherwise be

active in the single market on equal terms. The objective should indeed be

to ensure a level playing field to the benefit of consumers without creating

an instrument fostering protectionism.

We also mention in our response to the White Paper that we suggest the

Commission to introduce a general instrument as described in Module 1 in

the White Paper and a specific instrument as described in Module 2. We

find that these instruments will be able to address distortions of the Single

Market appropriately. In order to ensure that the instruments will detect all

distortive foreign subsidies and that enforcement is efficient, the Danish

Government suggests evaluating the instruments within a short time frame.

However, the Danish Government cannot support a specific instrument ad-

dressing foreign subsidies in public procurement. We elaborated on our

specific remarks in our response to the White Paper to which we refer.

Against this background, the Danish Government recommends the Com-

mission to take legislative action at EU level and develop new legal instru-

ments in regards to Module 1 and Module 2 in the White Paper to comple-

ment existing EU acquis (as presented in Option 2 "Take legislative action

at EU level" in the IIA). In relation to the possible instruments described

14 October 2020

2020 - 4054

son

ERU, Alm.del - 2020-21 - Bilag 59: EMs høringssvar vedr. foreløbig konsekvensanalyse af tiltag til håndtering af udenlandske subsidier, fra erhvervsministeren

2/3

under Module 1 and Module 2, we agree that the way forward could consist

of regulation on an assessment mechanism to establish potential distortive

effects of foreign subsidies and regulation on the institutional set-up for the

implementation and enforcement of the mechanisms.

In relation to public procurement, we find it appropriate that it is explored

how distortive foreign subsidies could be addressed in the existing public

procurement framework.

We also find that it will be appropriate to combine legislative action with a

non-regulatory approach, for example by developing guidance notes. The

Danish Government therefore welcomes the Commission’s initiative to de-

velop guidance based on existing EU regulation (as presented in Option 1

in the IIA) for instance concerning abnormally low tenders in the public

procurement rules and for the application of existing trade tools.

Finally, the Danish Government supports the Commission’s initiative to

address foreign subsidies by strengthening international rules for the grant-

ing of subsidies on multilateral and bilateral level (as presented in Option

3 in the IIA). In order to ensure a truly global level playing field, the EU

must also continue to engage with both bilateral trading partners on com-

prehensive provisions on subsidies in trade agreements and work towards

robust global rules and efficient enforcement against distortive subsidies in

the global market.

General issues to be addressed in the coming Impact Assessment

Analyze the economic effects and administrative burdens

We look forward to seeing the results of the Commission’s coming Impact

Assessment. As described in our response to the White Paper, we urge the

Commission to analyze both positive and negative economic effects and

the administrative burden of regulating foreign subsidies. This should in-

clude further analysis into the magnitude of current and future expected

distortions caused by foreign subsidies within the single market and to what

extent the modules will effectively address the distortive effects as well as

how they can be expected to impact consumers. Such analysis should also

include assessing the likely effects on investments, including investments

from non-EU companies, growth and prices in the Single Market. We

therefore welcome the Commission’s initiative in the IIA to identify and

assess both the likely economic and social impacts of the suggested options

to address distortions caused by foreign subsidies.

Interplay between the new instrument and existing regulation

As noted in our response to the White Paper, it is important to analyze and

consider how the proposed instruments will relate to and interact with ex-

ERU, Alm.del - 2020-21 - Bilag 59: EMs høringssvar vedr. foreløbig konsekvensanalyse af tiltag til håndtering af udenlandske subsidier, fra erhvervsministeren

3/3

isting EU regulation, including merger control and trade defense instru-

ments (cf. below) as well as the screening of foreign direct investments

(FDI) and the public procurement directive. A new instrument should pro-

vide companies with transparency and a high degree of legal certainty as

regards the regulation that applies for a certain practice or activity, and it

should minimize the economic and administrative burdens on companies

complying with or being investigated under the regulation.

Furthermore, the Danish Government finds that it is important to make

clear how the proposed instruments are conceived to interact with the trade

defense instruments and in particular make sure that foreign subsidies are

not offset twice (e.g. both by the instruments proposed in the White Paper

and by the trade defense instruments). Consequently, it is important to en-

sure effective and comprehensive cooperation concerning trade defense in-

struments investigations (conducted by DG Trade) and the investigations

proposed in relation to the instrument to tackle foreign subsidies (con-

ducted by DG COMP).

The Danish government encourages the Commission to share its views on

how the proposed instrument will possibly affect international trade and

investment relations, including the risk of retaliatory measures from other

countries keeping in mind that many EU-firms with activities outside EU

also receive domestic subsidies.

Finally, the Danish government encourages the Commission to coordinate

with the ongoing efforts to modernise the regulatory framework for the use

of public export finance under the auspices of the OECD. The modernisa-

tion aims at levelling the playing field with non-OECD countries where this

kind of finance can be used as hidden subsidies.

Legal basis should stem from the Single Market

Since the objective of the instrument is to create a level playing field in the

Single Market and addresses all economic operators operating in the Single

Market, the Danish Government finds that the legal basis of the instrument

should be article 114.

General remarks and specific remarks on Module 1-3

The Danish Government provided general remarks on the White Paper and

specific remarks on Module 1-3 in our response to the White Paper to

which we refer.

Final remarks

We hope these comments in response to the White Paper and the IIA will

be useful for your further work. The Danish Ministry of Industry, Business

and Financial Affairs would be at your disposal to further elaboration or

any follow-up questions you may have.