ARTICLES  

In May 2021, the European Commission published the Draft Regulation on Foreign Subsidies (DRFS), proposing to establish a comprehensive and concrete foreign subsidies regime（FSR). Its relationship and compliance with the WTO rules have attracted wide-ranging attention. The commitments and redressive measures provided for in the DRFS are suspected of violating ASCM and the General Agreement on Trade in Services, which cannot be justified under relevant WTO exceptions. Being restrictive, discriminatory and laden with onerous procedures, if the FSR comes into effect, it may have adverse impact on China’s economic and trade interests. China should challenge the consistency with WTO rules of the DRFS through multiple channels and be prepared for WTO litigation, watch closely the development of the relevant domestic legislations of the US and other countries as well as international rules on foreign subsidies, and actively participate in the development of international disciplines on foreign subsidies and propose China’s approaches to key issues, including the public body and out-of-country benchmarking in the determination of foreign subsidies, the causal relationship between foreign subsidies and domestic market distortions, and the investigation procedure on and remedies against foreign subsidies.