Q: We have noted that MOFCOM recently submitted comments to the European Commission regarding the EU’s proposed Industrial Accelerator Act (IAA). Could you provide more details?

A: On April 24, MOFCOM officially submitted comments to the European Commission regarding the EU’s proposed IAA, outlining its official position and grave concerns.

China believes the act sets out restrictive requirements for foreign investment in four emerging strategic sectors including batteries, electric vehicles, photovoltaics, and critical raw materials, and introduces exclusionary “union-origin” requirements in public procurement and other forms of public intervention. These practices constitute serious investment barriers and institutional discrimination.

In its comments, China points out the major problems with the act. First, it could violate fundamental WTO principles, such as most-favored-nation treatment and national treatment, as well as specific rules under the GATT 1994, the Agreement on Trade-Related Investment Measures, the Agreement on Trade-Related Aspects of Intellectual Property Rights, and the Agreement on Subsidies and Countervailing Measures. Second, it will subject Chinese investors to discrimination, violating basic market economy principles such as voluntary participation in commercial activities and fair competition. This runs counter to the important consensus reached between Chinese and EU leaders on properly managing frictions and differences, and severely undermines the investment expectations of Chinese enterprises for the EU market. Third, it will hinder the EU’s green transition, distort the level playing field in the EU market, and bring new shocks to multilateral trade rules.

In its comments, China advised the EU to remove the act’s discriminatory requirements against foreign investors, requirements of local content, forced intellectual property and technology transfer, and public procurement restrictions. China hopes that the EU will seriously consider China’s comments, strictly adhere to WTO rules, and avoid discriminatory restrictions.

China will closely follow the relevant legislative process and stands ready for dialogue and communication with the EU on it. If the EU ignores China’s suggestion and insists on pushing the legislation through, thereby harming the interests of Chinese companies, China would have to take countermeasures to resolutely safeguard the legitimate rights and interests of Chinese enterprises. (Released on April 27)