Comments on the European Commission’s White Paper on Foreign Subsidies

September 2, 2020

In response to the European Commission’s public consultation on its “white paper on leveling the playing field as regards foreign subsidies,” ITIF agreed there is a need for new legal instruments to address distortions of the internal market arising from subsidies granted by non-EU authorities.

 

ITIF pointed out that the Chinese government provides more distorting subsidies to its industries than any country in history. For example, without government subsidies, Huawei’s EU market share would be significantly less. China paid for the development of its first switch. State-owned Chinese banks have made a $100 billion line of credit available to Huawei customers, including free financing, loan periods up to 30 years, and payment holidays. The Wall Street Journal reported that “Huawei had access to as much as US$75 billion in state support over the past 25 years, including grants ($1.6 billion), credit facilities ($46.3 billion), tax breaks ($25 billion), and subsidized land purchases ($2 billion).” As Usha and George Haley’s detail in “Subsidies to Chinese Industry: State Capitalism, Business Strategy, and Trade Policy,” subsidies are a core part of Chinese policy. For example, the central government has allocated 50 billion Euros for subsidies to Chinese semiconductor firms.