The EU suggested a raft of measures to protect its industries from the potential threat of takeovers by companies bankrolled by foreign powers.
EU Commissioner for Competition Margrethe Vestager on Wednesday unveiled plans to bolster local industries in fighting back against mergers and acquisitions, and unfair competition from rivals subsidized by foreign states.
The suggested curbs, which could be formalized in a draft next year, could eventually lead to a ban on some firms from making acquisitions, or force them to divest assets, and allow the European Commission to impose fines. They effectively extend Europe’s system of state-aid limits to businesses worldwide.
“We want to be in control within our own territory,” Vestager told reporters at a news conference. “When it comes to foreign subsidies, we have absolutely no control and no transparency.”
Europe is seeking to carve out its place in the global order. Its latest move comes just after it deployed tariffs to curb China’s Belt and Road Initiative, and just before new legislation on screening foreign-direct investment on national security grounds comes into effect.
In response to Wednesday’s proposals, China urged the EU to stick with WTO rules and “keep clear of protectionist moves, refrain from creating new trade barriers under the pretext of subsidies.”
Subsidies are a commonly used policy instrument, China’s Mission to the EU said in an e-mail to Bloomberg, adding that “developed countries such as those in Europe and the United States are the primary users of subsidy policies.”
Vestager said that the EU remains open for business and that “there is no specific country that we are thinking about” in the demand for “reciprocity” and a level playing field.
The 27-nation EU has been under pressure to better protect its local industries and repatriate supply chains after the COVID-19 pandemic caused the steepest recession in almost a century and spurred a rout in equity prices.
A post-pandemic rescue plan presented last month by German Chancellor Angela Merkel and French President Emmanuel Macron aims to fortify Europe internally, but also contains measures to equip it to better face outside threats.
The 750 billion euro (US$845 billion) recovery package would seek to help those countries most affected by the pandemic and includes a proposal that would allow the EU to take equity stakes in companies.
Governments are particularly alarmed at the prospect of European companies being bought by firms with unlimited credit lines or being forced out of business because rivals can afford to sell below cost.
Manfred Weber, a German lawmaker who heads the biggest European Parliament group, said in a statement that his Christian Democrats party are “extremely concerned that China will benefit from the economic recession in Europe.”
He urged the EU to move faster.
“China will not be impressed by a discussion paper. What we urgently need is legislative proposals to prevent outsiders from buying our strategic companies and know-how at a bargain price,” Weber said.
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
CROSS-STRAIT TENSIONS: The US company could switch orders from TSMC to alternative suppliers, but that would lower chip quality, CEO Jensen Huang said Nvidia Corp CEO Jensen Huang (黃仁勳), whose products have become the hottest commodity in the technology world, on Wednesday said that the scramble for a limited amount of supply has frustrated some customers and raised tensions. “The demand on it is so great, and everyone wants to be first and everyone wants to be most,” he told the audience at a Goldman Sachs Group Inc technology conference in San Francisco. “We probably have more emotional customers today. Deservedly so. It’s tense. We’re trying to do the best we can.” Huang’s company is experiencing strong demand for its latest generation of chips, called
GLOBAL ECONOMY: Policymakers have a choice of a small 25 basis-point cut or a bold cut of 50 basis points, which would help the labor market, but might reignite inflation The US Federal Reserve is gearing up to announce its first interest rate cut in more than four years on Wednesday, with policymakers expected to debate how big a move to make less than two months before the US presidential election. Senior officials at the US central bank including Fed Chairman Jerome Powell have in recent weeks indicated that a rate cut is coming this month, as inflation eases toward the bank’s long-term target of two percent, and the labor market continues to cool. The Fed, which has a dual mandate from the US Congress to act independently to ensure