The EU Foreign Subsidies Regulation: Green Subsidies Treading the Line Between the FSR, State Aid, and WTO Law

This article provides an overview of the ongoing regulatory ‘competition’ between major global economies to boost renewable energy through public resources, i.e. through subsidies. Against this backdrop, the article focuses on the ‘extraterritorial’ perspective of these initiatives (i.e. efforts to counter within one jurisdiction the effects of subsidies stemming from another), in order to probe how these competing approaches will play out under the international trade rules that are established on a multilateral level under the WTO. The article examines the new EU Foreign Subsidies Regulation and the brewing green subsidies war – specifically the likely implications of the new EU regime on the U.S. Inflation Reduction Act’s green subsidies – as a case study on the likely interaction of these different legal disciplines at the international level. 

By Liliane Gam & Argyrios Papaefthymiou^[1]

I. INTRODUCTION

On December 23, 2022, the European Union adopted the Foreign Subsidies Regulation (“FSR”),^[2] which introduces mandatory notification requirements for concentrations and public tenders involving financial contributions from non-EU countries (if certain thresholds are met). The FSR, which entered into force on January 12, 2023, also gives the European Commission (“EC”) the power to investigate all other market situations (including M&A and public tenders falling below the thresholds) where ther