Brussels latest weapon could hit the UK harder than expected as it plans to crack down on Chinese state-funded companies so as to prevent them undercutting European Union rivals.
Just yesterday, the European Commission announced plans to fight firms with excessive support from non-EU governments in a fresh move to stamp out the unfair competition by China and other major capitals as well.
What should be expected? Eurocrats are moving to block non-European enterprises from participating from bids on procurement projects within the single market or even scupper takeovers by companies that are benefiting from third-country government subsidies. This weapon is a well-calculated move that was coined as a part of a defence against China’s expansive foreign policy move.
“These tools are for everyone, there are no specific countries we are thinking of,” European Commission vice-president Margrethe Vestager revealed.
The EU’s single market commissioner Thierry Breton has noted that the UK companies could fall foul of the new rules. Hence he suggested Brussels could concentrate on companies with UK-state subsidies that are operating right inside the bloc.
“You’re welcome but here are our rules… especially when a major partner has decided to leave us,” he said without missing lines. However, the Commission’s proposal would include four major protections that will spark panic against subsidised companies that risk the single market.
Then Eurocrats will assess the likely harm and benefits put forward by the company, like job losses or job creations, then, they would decide on what exact part of the solution to give attention to if any harm is spotted, which will include financial or structural implications for the firm.
“It is obvious that some non-European companies bidding for procurement contracts have been benefiting from government subsidies – and we cannot permit this distortion of the internal market to continue.
“This is a market that amounts to €2 trillion a year, and it will be particularly sensitive in the post-crisis era… When it comes to ensuring reciprocity in access to procurements China still has some progress to make,” Breton told the FT.
Why the weapon was formed
As it stands, China is a target for major European Union countries as they believe it’s a threat, like France whose leader Emmanuel Macron said that the bloc should have more powers to enforce competition rules for third countries.
“Reciprocity is not there. China is a threat to Europe’s economic interests and the western way of life. In some fields, China is a partner. But in the economic field, it is a clear competitor,” Manfred Weber, who leads the European People’s Party in the EU Parliament, noted.