| In the context of increasingly fierce global competition,subsidies have become an important measure for countries to implement trade intervention and improve industrial competitiveness.With the development of global cross-border investment,the subsidy rules under the WTO system are no longer able to solve the subsidy disputes related to overseas investment.Therefore,the rules on cross-border subsidies have gradually appeared in the legislation and practice of Europe and the United States in recent years.Among the legislation regulating cross-border subsidies,the Foreign Subsidies Regulations promulgated by the European Union is the most typical one.Based on the Foreign Subsidies Regulation and the EU woven and/or stitched glass fiber fabrics countervailing case,this article focuses on the analysis of the EU’s cross-border subsidy rules on the identification standard of illegal subsidies,and discusses whether this standard itself is reasonable and whether it is in line with relevant regulations under the WTO system.Finally,according to the research of this paper,some suggestions are put forward for China and Chinese enterprises to deal with such anti-cross-border subsidy rules.Before introducing the Foreign Subsidies Regulation,this paper first outlines the definition of cross-border subsidies,i.e.,subsidies provided by the government or public agencies of the subsidizing country to subsidy recipients outside its territory,and then compares this concept with the "non-commercial assistance" in CPTPP.The motivation of the regulation is then analyzed from three perspectives:safeguarding economic interests,closing regulatory loopholes,and strengthening industrial security and strategic autonomy.From the legislative proposal in 2020 to the adoption of the draft in 2022,and then to the entry into force of the regulation in 2023,the speed of the EU’s promulgation of this regulation fully demonstrates its determination to protect local enterprises.Then comes the focus of this article,which is the criteria for judging illegal subsidies in the Foreign Subsidies Regulations.The EU’s anti-cross-border subsidies rule determines the existence of irregular subsidies in two steps:first,the existence of foreign subsidies is determined by the three criteria of financial support,granting of benefits,and specificity,followed by a determination that they distort the internal market.This rule is characterized by an ex ante mandatory declaration and an ex post comprehensive review.Finally,the legal basis of the rule is presented.The EU has launched three anti-cross-border subsidies investigations in recent years,and although all three cases occurred before the Foreign Subsidies Regulation came into force,they exhibit a philosophy of anti-cross-border subsidies that is consistent with the Regulation.The second part of this paper uses the EU woven and/or stitched glass fiber fabrics countervailing case as an example to analyze how the EU identified cross-border subsidies prior to the Regulation and how to attribute subsidies provided by one country to another country.In June 2020,the EU issued a regulation on imposing definitive anti-dumping duties on imports of certain woven and/or stitched glass fiber fabrics originating in the People’s Republic of China(China)and Egypt,finding that both China and Egypt provided subsidies to enterprises in the Suez Economic Cooperation Zone.Egypt provided land and tax breaks to domestic enterprises,an act that constituted a subsidy that will not be discussed in this paper.The European Commission interpreted the"by a government" clause in the chapeau of Article 1.1(a)(1)of the SCM Agreement in light of rules of the State responsibility,which have been codified by the International Law Commission(ILC Articles on the Responsibility of States for Internationally Wrongful Acts)and found that Egypt recognized and adopted the preferential financing provided by China and that this subsidy could be attributed to Egypt.However,the persuasiveness of this path to identify cross-border subsidies is limited.Therefore,this paper argues that the introduction of Foreign Subsidies Regulation is related to the reason why the EU needs to regulate cross-border subsidies more rationally.The limitations of the EU’s anti-cross-border subsidy rules and their legality under the WTO framework are presented next in Part Ⅲ.The current EU anti-cross-border subsidy rules are mainly reflected through the Foreign Subsidies Regulation.The two main limitations of the EU anti-cross-border subsidy rules are the unclear criteria for identifying market distortions and the lack of legal basis for requiring third countries to provide information.In addition,the rule violates the EU’s WTO-based national treatment obligations and market access obligations.Although this regulation plays a positive role in maintaining a level playing field in the EU’s internal market,its presumption of interest clauses makes it more stringent than general anti-subsidy laws,and at the same time,it also plays the substantive role of foreign investment review.Moreover,since disputes are settled within the EU,this approach also weakens the role of the WTO dispute settlement mechanism to a certain extent.Finally,there are proposals for EU rules on cross-border subsidies.At the national level,first of all,China should strengthen international consultations,actively participate in the construction of international rules,and promote the facilitation of trade and investment;second,it should reduce direct financial assistance to enterprises and replace them with equity investment to avoid overseas investment risks;finally,introducing a similar cross-border subsidy regulatory mechanism to adjust China’s policies for absorbing and utilizing foreign capital is worth considering.At the enterprise level,enterprises should actively study the laws and regulations of the host country to prepare for resolving legal disputes;it should also deepen the reform of the state-owned enterprise system,continuously promote the separation of government and enterprise and the separation of government and capital,and improve the market competitiveness of state-owned enterprises.Against the background that the traditional global economic and trade pattern has begun to change,countries such as the United States and Europe hope to restrict and limit the foreign investment from other countries through cross-border subsidy rules.This approach is full of trade protectionism.In the face of the emerging issue of cross-border subsidies,China should contribute Chinese wisdom to promote the construction of an open and shared economic pattern to achieve win-win cooperation. |
