Foreign Subsidies and the European Union Internal Market: Regulatory Challenges and Opportunities
Foreign Subsidies and the European Union Internal Market: Regulatory Challenges and Opportunities

Summary/Abstract: The European Union (EU), as a global economic power, engages in extensive trade and financial interactions with non-EU countries. Foreign governments and organisations frequently extend financial aid, including subsidies and tax incentives, to support specific sectors or enterprises. While such subsidies can bolster economic activities, drive innovation, and support regional development, they also pose significant challenges to the EU's internal market. Unregulated foreign subsidies risk distorting competition, undermining transparency, and affecting fair access in sectors such as public procurement and mergers. Recognising these risks, the EU introduced the Foreign Subsidies Regulation (FSR) to bridge regulatory gaps in state aid control for subsidies granted by non-EU states. This paper explores the impact of foreign subsidies on the EU’s market, assessing the regulatory framework's potential to ensure fair competition, protect economic sovereignty, and foster equitable trade relations with third countries.

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