### 2. harmonised system code , free-text description , and quantity70 of the relevant commodity or product that is intended to be placed on the union market by the operator; ### 2. harmonised system code , free-text description , and quantity70 of the relevant commodity or product that is intended to be placed on the union market by the operator; for wood products where the species is a critical piece of information , the scientific name of the species or species that make up the product shall be incorporated.


### (46) the risk of non-compliant commodities and products being placed on the union market varies depending on the commodity and product as well as on its country of origin and production. operators sourcing commodities and products from countries or parts thereof that present a low risk of growing , harvesting or producing relevant commodities in violation of this regulation should be subject to fewer obligations , thereby reducing compliance costs and administrative burden. commodities and products from high-risk countries or parts thereof should be subject to enhanced scrutiny by the competent authorities. ### (46) the risk of non-compliant commodities and products being placed on the union market varies depending on the commodity and product as well as on its country of origin and production. operators that source commodities and products from countries or parts thereof that do not present a risk should be subject to fewer obligations than those sourcing from negligible-risk ones. operators sourcing commodities and products from countries or parts thereof that present a negligible risk of growing , harvesting or producing relevant commodities in violation of this regulation should be subject to fewer obligations , thereby reducing compliance costs and administrative burden. commodities and products from high-risk countries or parts thereof should be subject to enhanced scrutiny by the competent authorities.


### 2. paragraph 1 shall not apply to eba beneficiary countries , nor shall it apply to countries with a share for the relevant products referred to in paragraph 1 not exceeding 6 % of total union imports of the same products. ### 2. paragraph 1 shall not apply to countries with a share for the relevant products referred to in paragraph 1 not exceeding 6 % of total union imports of the same products.


### (11) the special incentive arrangement for sustainable development and good governance (gsp+) is based on the integral concept of sustainable development , as recognised by international conventions and instruments such as the 1986 un declaration on the right to development , the 1992 rio declaration on environment and development , the 1998 international labour organisation (ilo) declaration on fundamental principles and rights at work , the 2000 un millennium declaration , the 2002 johannesburg declaration on sustainable development , the ilo centenary declaration for the future of work of 2019 , the outcome document of the un summit on sustainable development of 2015 "transforming our world: the 2030 agenda for sustainable development" , the un guiding principles on business and human rights , and the paris agreement on climate change under the un framework convention on climate change. consequently , the additional tariff preferences provided for under the special incentive arrangement for sustainable development and good governance should be granted to those developing countries which , due to a lack of diversification , are economically vulnerable , have ratified core international conventions on human and labour rights , climate and environmental protection and good governance , and commit to ensuring the effective implementation thereof. the special incentive arrangement for sustainable development and good governance should help those countries to assume the additional responsibilities resulting from the ratification and effective implementation of these conventions. the list of conventions relevant for gsp should be updated to better reflect the evolution of core international instruments and standards and take a proactive approach to sustainable development in keeping with the sustainable development goals and agenda 203018 . in this regard , the following conventions are added: the paris agreement on climate change (2015) – replacing the kyoto protocol; the convention on the rights of persons with disabilities (crpd); the optional protocol to the convention on the rights of the child on the involvement of children in armed conflict (op-crc-ac); ilo convention no 81 on labour inspection; ilo convention no 144 on tripartite consultation; and the un convention against transnational organized crime. ### (11) the special incentive arrangement for sustainable development and good governance (gsp+) is based on the integral concept of sustainable development , as recognised by international conventions and instruments such as the 1986 un declaration on the right to development , the 1992 rio declaration on environment and development , the 1998 international labour organisation (ilo) declaration on fundamental principles and rights at work , the 2000 un millennium declaration , the 2002 johannesburg declaration on sustainable development , the ilo centenary declaration for the future of work of 2019 , the outcome document of the un summit on sustainable development of 2015 "transforming our world: the 2030 agenda for sustainable development" , the un guiding principles on business and human rights , and the paris agreement on climate change under the un framework convention on climate change. consequently , the additional tariff preferences provided for under the special incentive arrangement for sustainable development and good governance should be granted to those developing countries which , due to a lack of diversification , are economically vulnerable , have ratified core international conventions on human and labour rights , climate and environmental protection and good governance , and commit to ensuring the effective implementation thereof. the special incentive arrangement for sustainable development and good governance should help those countries to assume the additional responsibilities resulting from the ratification and effective implementation of these conventions. the list of conventions relevant for gsp should be updated to better reflect the evolution of core international instruments and standards and take a proactive approach to sustainable development in keeping with the sustainable development goals and agenda 203018 . in this regard , the following conventions are added: the paris agreement on climate change (2015) – replacing the kyoto protocol; the convention on the rights of persons with disabilities (crpd); the optional protocol to the convention on the rights of the child on the involvement of children in armed conflict (op-crc-ac); ilo convention no 81 on labour inspection; ilo convention no 144 on tripartite consultation; the un convention against transnational organized crime and the first optional protocol to the international covenant on civil and political rights.


### (26) orderly international migration can bring important benefits to the countries of origin and destination of migrants and contribute to their sustainable development needs. increasing coherence between trade , development and migration policies is key to ensure that the benefits of migration accrue mutually to both the origin and destination countries. in this respect , it is essential for both origin and destination countries to address common challenges , such as , stepping up cooperation on readmission of own nationals and their sustainable reintegration in the country of origin , in particular in order to avoid a constant drain in active population in the countries of origin , with the ensuing long-term consequences on development , and to ensure that migrants are treated with dignity. ### (26) orderly international migration can bring important benefits to the countries of origin and destination of migrants and contribute to their sustainable development needs. increasing coherence between trade , development and migration policies is key to ensure that the benefits of migration accrue mutually to both the origin and destination countries. in this respect , it is essential for both origin and destination countries to address common challenges , such as , stepping up cooperation on readmission of own nationals and their sustainable reintegration in the country of origin , in particular in order to avoid a constant drain in active population in the countries of origin , with the ensuing long-term consequences on development , and to ensure that migrants are treated with dignity and that their human rights are fully respected.


### (27) return , readmission and reintegration are a common challenge for the union and its partners. in particular , every state has the obligation to readmit its own nationals under international customary law , and multilateral international conventions such as the convention on international civil aviation signed in chicago on 7 december 1944. improving sustainable reintegration and capacity building would significantly strengthen the local development in the partner countries. ### (27) return , readmission and reintegration are a common challenge for the union and its partners. in particular , every state has the obligation to readmit its own nationals under international customary law , and multilateral international conventions such as the convention on international civil aviation signed in chicago on 7 december 1944. improving the living conditions and resilience to global challenges to mitigate the need for migration must be encouraged , as this would lead to improved sustainable reintegration and capacity building , which would significantly strengthen the local development in the partner countries.


### it gives a binding undertaking to maintain ratification of the relevant conventions and to ensure the effective implementation thereof , accompanied by a plan of action for the effective implementation of the relevant conventions; ### it gives a binding undertaking to maintain ratification of the relevant conventions and to ensure the effective implementation thereof , accompanied by a plan of action for the effective implementation of the relevant conventions that shall be approved by the commission in consultation with the european parliament;


### the commission's and where appropriate the european external action service’s conclusions on whether each gsp+ beneficiary country respects its binding undertakings to comply with reporting obligations , to cooperate with relevant monitoring bodies in accordance with the relevant conventions and to ensure the effective implementation thereof; ### the commission's and where appropriate the european external action service’s conclusions on whether each gsp+ beneficiary country respects its binding undertakings to comply with reporting obligations , to cooperate with relevant monitoring bodies in accordance with the relevant conventions and to ensure the effective implementation thereof , and


### 3. in drawing their conclusions concerning effective implementation of the relevant conventions , the commission and where appropriate the european external action service shall assess the conclusions and recommendations of the relevant monitoring bodies , as well as , without prejudice to other sources , information submitted by the european parliament or the council as well as third parties , including governments and international organisations , civil society , and social partners. ### 3. in drawing their conclusions concerning effective implementation of the relevant conventions , the commission and where appropriate the european external action service shall assess the conclusions and recommendations of the relevant monitoring bodies. it shall also request the opinion of the european parliament and the council , and shall assess , without prejudice to other sources , information submitted by third parties , including complaints submitted through the single entry point , such as governments and international organisations , civil society , and social partners.


### 3. where , either on the basis of the conclusions of the report referred to in article 14 or on the basis of the evidence available , including evidence submitted through a complaint , the commission has a reasonable doubt that a particular gsp+ beneficiary country does not respect its binding undertakings as referred to in article 9 , points (d) , (e) and (f) , or has formulated a reservation which is prohibited by any of the relevant conventions or which is incompatible with the object and purpose of that convention as established in article 9 , point (c) , it shall , in accordance with the advisory procedure referred to in article 39(2) , adopt an implementing act to initiate the procedure for the temporary withdrawal of the tariff preferences provided under the special incentive arrangement for sustainable development and good governance. the commission shall inform the european parliament and the council thereof. ### 3. where , either on the basis of the conclusions of the report referred to in article 14 or on the basis of the evidence available , including evidence submitted by the european parliament through its competent committees and through the relevant resolutions adopted during plenaries , and evidence submitted through a complaint , the commission has a reasonable doubt that a particular gsp+ beneficiary country does not respect its binding undertakings as referred to in article 9 , points (d) , (e) and (f) , or has formulated a reservation which is prohibited by any of the relevant conventions or which is incompatible with the object and purpose of that convention as established in article 9 , point (c) , it shall , in accordance with the advisory procedure referred to in article 39(2) , adopt an implementing act to initiate the procedure for the temporary withdrawal of the tariff preferences provided under the special incentive arrangement for sustainable development and good governance. the commission shall inform the european parliament and the council thereof.


### 9. where the commission considers that the findings justify temporary withdrawal for the reasons referred to in paragraph 1 of this article , it is empowered to adopt delegated acts , in accordance with article 36 , to amend annex i and annex ii in order to temporarily withdraw the tariff preferences provided under the special incentive arrangement for sustainable development and good governance referred to in article 1(2) , point (b). in adopting the delegated act the commission may , when appropriate , consider the socio-economic effect of the temporary withdrawal of tariff preferences in the beneficiary country. ### 9. where the commission considers that the findings justify temporary withdrawal for the reasons referred to in paragraph 1 of this article , it is empowered to adopt delegated acts , in accordance with article 36 , to amend annex i and annex ii in order to temporarily withdraw the tariff preferences provided under the special incentive arrangement for sustainable development and good governance referred to in article 1(2) , point (b). the commission shall clearly and publicly state the grounds for withdrawing preferences and set clear benchmarks that the beneficiary country should meet for the preferences to be reinstated; such benchmarks may also guide a phased approach , including the progressive withdrawal or reinstatement of part of the benefits against clear benchmarks and conditions.


### 9. where the commission considers that the findings justify temporary withdrawal for the reasons referred to in paragraph 1 of this article , it is empowered to adopt delegated acts , in accordance with article 36 , to amend annex i and annex ii in order to temporarily withdraw the tariff preferences provided under the special incentive arrangement for sustainable development and good governance referred to in article 1(2) , point (b). in adopting the delegated act the commission may , when appropriate , consider the socio-economic effect of the temporary withdrawal of tariff preferences in the beneficiary country. ### 9. where the commission considers that the findings justify temporary withdrawal for the reasons referred to in paragraph 1 of this article , it is empowered to adopt delegated acts , in accordance with article 36 , to amend annex i and annex ii in order to temporarily withdraw the tariff preferences provided under the special incentive arrangement for sustainable development and good governance referred to in article 1(2) , point (b).


### 1. the preferential arrangements referred to in article 1(2) may be withdrawn temporarily , in respect of all or of certain products originating in a beneficiary country , for any of the following reasons: ### 1. the preferential arrangements referred to in article 1(2) may be withdrawn temporarily , fully or partly , in respect of all or of certain products originating in a beneficiary country , for any of the following reasons:


### serious shortcomings in customs controls on the export or transit of drugs (illicit substances or precursors) , or related to the obligation to readmit the beneficiary country’s own nationals or serious failure to comply with international conventions on antiterrorism or anti-money laundering; ### serious shortcomings in customs controls on the export or transit of drugs (illicit substances or precursors) , or related to the obligation to readmit the beneficiary country’s own nationals under international customary law and multilateral international conventions , whilst fully respecting human rights and dignity , or serious failure to comply with international conventions on antiterrorism or anti-money laundering;


### 10. where the commission considers that the findings justify temporary withdrawal for the reasons referred to in paragraph 1 of this article , it is empowered to adopt delegated acts , in accordance with article 36 , to amend annex i and annex ii , in order to temporarily withdraw the tariff preferences provided under the preferential arrangements referred to in article 1(2). in adopting the delegated act the commission may , where appropriate , consider the socio-economic effect of the temporary withdrawal of tariff preferences in the beneficiary country. ### 10. where the commission considers that the findings justify temporary withdrawal for the reasons referred to in paragraph 1 of this article , it is empowered to adopt delegated acts , in accordance with article 36 , to amend annex i and annex ii , in order to temporarily withdraw the tariff preferences provided under the preferential arrangements referred to in article 1(2).


### 16. where the commission considers that there is sufficient evidence to justify temporary withdrawal for the reason set out in paragraph 1 , point (a) and the exceptional gravity of the violations calls for a rapid response in view of the specific circumstances in the beneficiary country , it shall initiate the procedure for temporary withdrawal in accordance with paragraphs (3) to (15). however , the period referred to in paragraph 4 , point (b) is reduced to 2 months and the deadline referred to in paragraph 8 is reduced to 5 months. ### 16. where the commission considers that there is sufficient evidence to justify temporary withdrawal for the reason set out in paragraph 1 , point (a) and the exceptional gravity of the violations calls for a rapid response in view of the specific circumstances in the beneficiary country , it shall initiate the procedure for temporary withdrawal in accordance with paragraphs (3) to (15). however , the period referred to in paragraph 4 , point (b) is reduced to 1 month and the deadline referred to in paragraph 8 is reduced to 3 months.


### (1) a strong , open and competitive internal market enables both european and foreign undertakings to compete on merits. the union benefits from a sophisticated and effective system of state aid control , aiming at ensuring fair conditions for all undertakings engaging in an economic activity in the internal market. this state aid control system prevents member states from granting state aid that unduly distorts competition in the internal market. ### (1) a strong , open , dynamic , durable and competitive internal market enables both european and foreign companies to compete on merit , while ensuring a level playing field. the union benefits from a sophisticated and effective system of state aid control , aiming at ensuring fair conditions for all undertakings engaging in an economic activity in the internal market. this state aid control system prevents member states from granting state aid that unduly distorts competition in the internal market and affects trade between member states.


### (2) at the same time , undertakings might receive subsidies from third countries , that provide public funds which are then used , for instance , to finance economic activities in the internal market in any sector of the economy , such as participation in public procurement tenders , or acquisitions of undertakings , including those with strategic assets such as critical infrastructure and innovative technologies. such subsidies are currently not subject to union state aid rules. ### (2) however , no mechanism yet exists to address internal market distortions caused by foreign subsidies. specifically , undertakings operating on eu territory might receive subsidies from third countries , that provide public funds which are then used , for instance , to finance economic activities in the internal market in any sector of the economy , such as participation in public procurement tenders , or acquisitions of undertakings , including those with strategic assets such as critical infrastructure and innovative technologies. such subsidies are currently not subject to union state aid rules.


### (2) at the same time , undertakings might receive subsidies from third countries , that provide public funds which are then used , for instance , to finance economic activities in the internal market in any sector of the economy , such as participation in public procurement tenders , or acquisitions of undertakings , including those with strategic assets such as critical infrastructure and innovative technologies. such subsidies are currently not subject to union state aid rules. ### (2) at the same time , undertakings might receive subsidies from third countries , that provide public funds which are then used , for instance , to finance economic activities in the internal market in any sector of the economy , such as participation in public procurement tenders , or acquisitions of undertakings , including those with strategic assets such as critical infrastructure and innovative technologies. such subsidies are currently not subject to union state aid rules. similar concerns apply in relation to state-owned enterprises.


### (3) foreign subsidies can distort the internal market and undermine the level playing field for various economic activities in the union. this could in particular occur in the context of concentrations entailing a change of control over union undertakings , where such concentrations are fully or partially financed through foreign subsidies , or if undertakings benefiting from foreign subsidies are awarded public contracts in the union. ### (3) foreign subsidies can distort the internal market , upset the functional balance thereof and undermine the level playing field for various economic activities in the union. this could in particular occur in the context of concentrations entailing a change of control over union undertakings , where such concentrations are fully or partially financed through foreign subsidies , or if undertakings benefiting from foreign subsidies are awarded public contracts in the union.


### (4) no existing union instruments address distortions caused by foreign subsidies. trade defence instruments enable the commission to act when subsidised goods are imported into the union , but not when foreign subsidies take the form of subsidised investments , or when services and financial flows are concerned. under the wto agreement on subsidies and countervailing measures , the union has the possibility to initiate state-to-state dispute settlement against certain foreign subsidies granted by wto members and limited to goods. ### (4) no existing union instruments are such as to deter foreign governments from distorting the internal market through subsidies. trade defence instruments enable the commission to act when subsidised goods are imported into the union , but not when foreign subsidies take the form of subsidised investments , or when services and financial flows are concerned. under the wto agreement on subsidies and countervailing measures , the union has the possibility to initiate state-to-state dispute settlement against certain foreign subsidies granted by wto members and limited to goods.


### (5) it is therefore necessary to complement existing union instruments with a new tool to effectively deal with distortions in the internal market caused by foreign subsidies and ensure a level playing field. in particular , the new tool complements union state aid rules which deal with distortions in the internal market caused by member state subsidies. ### (5) the member states have not adopted national legislation regarding foreign subsidies , although countries such as france , germany , poland , italy or the netherlands have highlighted the need for harmonised eu rules to address the issue. it is therefore necessary to complement existing union instruments with a new tool to effectively deal with distortions in the internal market caused by foreign subsidies and ensure a level playing field together with an internal market climate that remains attractive to foreign investors. in particular , the new tool complements union state aid rules which deal with distortions in the internal market caused by member state subsidies.


### (7) to ensure a level playing field throughout the internal market and consistency in the application of this regulation , the commission should be the sole authority competent to apply this regulation. the commission should have the power to examine any foreign subsidy to the extent it is in the scope of this regulation in any sector of the economy on its own initiative relying on information from all available sources. to ensure effective control , in the specific case of large concentrations (mergers and acquisitions) and public procurement procedures above certain thresholds , the commission should have the power to review foreign subsidies based on a prior notification by the undertaking to the commission. ### (7) to ensure a level playing field throughout the internal market and consistency in the application of this regulation , the commission should be the sole authority competent to apply this regulation. the commission should have the power to examine any foreign subsidy to the extent it is in the scope of this regulation in any sector of the economy on its own initiative relying on information from all available sources. to ensure effective control , in the specific case of large concentrations (mergers and acquisitions) and public procurement procedures above certain thresholds , the commission should have the power to review foreign subsidies based on a prior , mandatory notification by the undertaking to the commission.


### (9) there should be a financial contribution provided , directly or indirectly , by the public authorities of a third country. the financial contribution may be granted through public or private entities. whether a public entity provides a financial contribution should be determined on a case-by-case basis with due regard to elements such as the characteristics of the relevant entity and the legal and economic environment prevailing in the country in which the entity operates including the government’s role in the economy. financial contributions may also be granted through a private entity if its actions can be attributed to the third country. ### (9) there should be a financial contribution provided , directly or indirectly , by the public authorities of a third country. the financial contribution may be granted through public or private entities. whether a public entity provides a financial contribution should be determined on a case-by-case basis with due regard to elements such as the characteristics of the relevant entity and the legal and economic environment prevailing in the country in which the entity operates including the government’s role in the economy. financial contributions may also be granted through a private entity if its actions can be attributed to the third country. special or exclusive rights that are not adequately remunerated , could also be considered as a financial contribution.


### (16) the commission should take into account the positive effects of the foreign subsidy on the development of the relevant subsidised economic activity. the commission should weigh these positive effects against the negative effects of a foreign subsidy in terms of distortion on the internal market in order to determine , if applicable , the appropriate redressive measure or accept commitments. the balancing may also lead to the conclusion that no redressive measures should be imposed. categories of foreign subsidies that are deemed most likely to distort the internal market are less likely to have more positive than negative effects. ### (16) the commission should take into account the positive effects of the foreign subsidy on the development of the relevant subsidised economic activity. the commission should weigh these positive effects against the proven negative effects of a foreign subsidy in terms of distortion on the internal market in order to determine , if applicable , the appropriate and proportional redressive measure or accept commitments. the balancing may also lead to the conclusion that no redressive measures should be imposed. categories of foreign subsidies that are deemed most likely to distort the internal market are less likely to have more positive than negative effects.


### (16) the commission should take into account the positive effects of the foreign subsidy on the development of the relevant subsidised economic activity. the commission should weigh these positive effects against the negative effects of a foreign subsidy in terms of distortion on the internal market in order to determine , if applicable , the appropriate redressive measure or accept commitments. the balancing may also lead to the conclusion that no redressive measures should be imposed. categories of foreign subsidies that are deemed most likely to distort the internal market are less likely to have more positive than negative effects. ### (16) the commission should take into account the positive effects of the foreign subsidy on the development of the relevant subsidised economic activity. the commission should weigh these positive effects against the proven negative effects of a foreign subsidy in terms of distortion on the internal market in order to determine , if applicable , the appropriate redressive measure or accept commitments. the balancing may also lead to the conclusion that no redressive measures should be imposed. categories of foreign subsidies that are deemed most likely to distort the internal market are less likely to have more positive than negative effects.


### (16) the commission should take into account the positive effects of the foreign subsidy on the development of the relevant subsidised economic activity. the commission should weigh these positive effects against the negative effects of a foreign subsidy in terms of distortion on the internal market in order to determine , if applicable , the appropriate redressive measure or accept commitments. the balancing may also lead to the conclusion that no redressive measures should be imposed. categories of foreign subsidies that are deemed most likely to distort the internal market are less likely to have more positive than negative effects. ### (16) the commission should take into account the positive effects of the foreign subsidy on the development of the relevant subsidised economic activity , where the subsidised activity is in line with eu policy objectives. the commission should weigh these positive effects against the negative effects of a foreign subsidy in terms of distortion on the internal market in order to determine , if applicable , the appropriate redressive measure or accept commitments. the balancing may also lead to the conclusion that no redressive measures should be imposed. categories of foreign subsidies that are deemed most likely to distort the internal market are less likely to have more positive than negative effects.


### (23) furthermore , where necessary to restore competition in the internal market immediately and to prevent irreparable harm , the commission should have the power to adopt interim measures. ### (23) furthermore , where necessary to restore competition in the internal market immediately and to prevent irreparable harm , the commission should have the power to adopt temporary interim measures.


### (24) in all cases where , as a result of the preliminary review , the commission has sufficient indications of the existence of a foreign subsidy distorting the internal market , the commission should have the power to launch an in-depth investigation to gather additional relevant information to assess the foreign subsidy , and to allow the interested parties to exercise their rights of defence. ### (24) in all cases where , as a result of the preliminary review , the commission has sufficient indications of the existence of a foreign subsidy distorting the internal market , the commission should have the power to launch an in-depth investigation to gather additional relevant information to assess the foreign subsidy. it should inform the undertaking and member states concerned about this fact and allow the interested parties to exercise their rights of defence.


### (24) in all cases where , as a result of the preliminary review , the commission has sufficient indications of the existence of a foreign subsidy distorting the internal market , the commission should have the power to launch an in-depth investigation to gather additional relevant information to assess the foreign subsidy , and to allow the interested parties to exercise their rights of defence. ### (24) in all cases where , as a result of the preliminary review , the commission has sufficient indications of the existence of a foreign subsidy distorting the internal market , the commission should have the power to launch an in-depth investigation to gather additional relevant information to assess the foreign subsidy and how it might distort the internal market , and to allow the interested parties to exercise their rights of defence.


### (24) in all cases where , as a result of the preliminary review , the commission has sufficient indications of the existence of a foreign subsidy distorting the internal market , the commission should have the power to launch an in-depth investigation to gather additional relevant information to assess the foreign subsidy , and to allow the interested parties to exercise their rights of defence. ### (24) in all cases where , as a result of the preliminary review , the commission has sufficient indications of the existence of a foreign subsidy distorting the internal market , the commission should have the power to launch an in-depth investigation to gather additional relevant information to assess the foreign subsidy , and to allow the interested parties to exercise their rights of defence. such in-depth investigations should be concluded swiftly in order not to put on hold the underlying economic activities for too long.


### (26) the commission should have appropriate instruments to ensure the effectiveness of commitments and redressive measures. if the undertaking concerned does not comply with a decision with commitments , a decision imposing redressive measures , or a decision ordering interim measures , the commission should have the power to impose fines and periodic penalty payments. ### (26) the commission should have appropriate instruments to ensure the effectiveness of commitments and redressive measures , ensuring that they are suitable and proportional. if the undertaking concerned does not comply with a decision with commitments , a decision imposing redressive measures , or a decision ordering temporary interim measures , the commission should have the power to impose fines and periodic penalty payments.


### (27) in order to ensure the correct and effective application of this regulation , the commission should have the power to revoke a decision and adopt a new one , where the decision was based on incomplete , incorrect or misleading information , or where an undertaking acts contrary to its commitments or the redressive measures imposed. ### (27) in order to ensure the correct and effective application of this regulation , the commission should have the power to revoke a decision and adopt a new one , where the decision was based on incomplete , incorrect or misleading information , or where an undertaking acts contrary to its commitments or the redressive measures imposed. the commission should duly justify the revocation of a decision and the need to adopt a new decision.


### (31) below the notification thresholds , the commission could require the notification of potentially subsidised concentrations that were not yet implemented or the notification of potentially subsidised bids prior to the award of a public contract , if it considers that the concentration or the bid would merit ex-ante review given their impact in the union. the commission should also have the possibility to carry out a review on its own initiative of already implemented concentrations or awarded public contracts. ### (31) below the notification thresholds , the commission should require the notification of potentially subsidised concentrations that were not yet implemented or the notification of potentially subsidised bids prior to the award of a public contract , if it considers that the concentration or the bid would merit ex-ante review given their impact in the union. the commission should also have the possibility to carry out a review on its own initiative of already implemented concentrations or awarded public contracts.


### (39) in the interest of transparency and legal certainty , it is appropriate to publish either in full or in a summary form all decisions adopted by the commission. ### (39) in the interest of transparency and legal certainty , it is appropriate to publish either in full or at least in a summary form all decisions adopted by the commission and forward them as soon as possible to all concerned.


### (43) the implementation of this regulation by the union should comply with union law , the wto agreement and be consistent with commitments made under other trade and investment agreements to which the union or the member states are parties. ### (43) the implementation of this regulation by the union should comply with union law , the wto agreement and be consistent with commitments made under other trade and investment agreements to which the union or the member states are parties. this regulation should be without prejudice to the development of multilateral rules to address distortive subsidies.


### (1) this regulation lays down rules and procedures for investigating foreign subsidies that distort the internal market and for redressing such distortions. such distortions may arise with respect to any economic activity , and in particular in concentrations and public procurement procedures. ### (1) this regulation lays down rules and procedures for investigating foreign subsidies that distort the internal market and for redressing such distortions with a view to ensuring a level playing field for the functioning of the internal market. such distortions may arise with respect to any economic activity , and in particular in concentrations and public procurement procedures.


### (ii) the foregoing of revenue that is otherwise due; or ### (ii) the foregoing of revenue that is otherwise due;


### the level of economic activity of the undertaking concerned on the internal market; ### the level and evolution of economic activity of the undertaking concerned on the internal market;


### (2) a foreign subsidy is unlikely to distort the internal market if its total amount is below eur 5 million over any consecutive period of three fiscal years. ### (2) a foreign subsidy is unlikely to distort the internal market if:


### (1) the commission shall , where warranted , balance the negative effects of a foreign subsidy in terms of distortion on the internal market with positive effects on the development of the relevant economic activity. ### (1) the commission shall , where warranted , balance the proven negative effects of a foreign subsidy in terms of distortion on the internal market with positive effects on the development of the relevant economic activity.


### (1) the commission shall , where warranted , balance the negative effects of a foreign subsidy in terms of distortion on the internal market with positive effects on the development of the relevant economic activity. ### (1) the commission shall , where warranted , balance the negative effects of a foreign subsidy in terms of distortion on the internal market with positive effects on the development of the relevant economic activity , where this economic activity is in line with the eu's policy goals.


### (2) the commission shall take into account the balancing between the negative and positive effects when deciding whether to impose redressive measures or to accept commitments , and the nature and level of those redressive measures or commitments. ### (2) the commission shall take into account the balancing between the proven negative and positive effects when deciding whether to impose redressive measures or to accept commitments , and the nature , suitability and proportionality of those redressive measures or commitments.


### (2) the commission shall take into account the balancing between the negative and positive effects when deciding whether to impose redressive measures or to accept commitments , and the nature and level of those redressive measures or commitments. ### (2) the commission shall take into account the balancing between the proven negative and positive effects when deciding whether to impose redressive measures or to accept commitments , and the nature and level of those redressive measures or commitments.


### (2) the commission shall take into account the balancing between the negative and positive effects when deciding whether to impose redressive measures or to accept commitments , and the nature and level of those redressive measures or commitments. ### (2) the commission shall take into account the balancing between the negative and positive effects when deciding whether to impose redressive measures or to accept commitments , and the nature and level of those redressive measures or commitments. the commission shall base its analysis on the general principles applied when assessing the compatibility of state aid with the single market.


### (1) to remedy the distortion on the internal market actually or potentially caused by a foreign subsidy , the commission may impose redressive measures. the undertaking concerned may also offer commitments. ### (1) to remedy the distortion on the internal market actually or potentially caused by a foreign subsidy , the commission may impose suitable and proportional redressive measures. the undertaking concerned may also offer commitments.


### (2) commitments or redressive measures shall fully and effectively remedy the distortion caused by the foreign subsidy in the internal market. ### (2) commitments or redressive measures shall fully and effectively remedy the distortion actually or potentially caused by the foreign subsidy in the internal market.


### (3) commitments or redressive measures may consist of the following: ### (3) commitments or redressive measures may inter alia consist of the following:


### (4) the commission may impose reporting and transparency requirements. ### (4) the commission may impose reporting and transparency requirements and follow-up on them.


### (6) where the undertaking concerned proposes to repay the foreign subsidy including an appropriate interest rate , the commission shall accept such repayment as commitment if it can ascertain that the repayment is transparent and effective , while taking into account the risk of circumvention. ### (6) where the undertaking concerned proposes to repay the foreign subsidy including an appropriate interest rate , the commission shall accept such repayment as commitment only where it can ascertain that the repayment is transparent , effective and adequately remedies the actual distortion caused , while taking into account the risk of circumvention.


### the commission may on its own initiative examine information from any source regarding alleged distortive foreign subsidies. ### the commission may on its own initiative examine information from any source , including member states and undertakings or their professional associations , regarding alleged distortive foreign subsidies.


### inform the undertaking concerned; and ### inform the undertaking and member states concerned; and


### (3) where the commission , after a preliminary assessment , concludes that there are no sufficient grounds to initiate the in-depth investigation , either because there is no foreign subsidy or because there are no indications of an actual or potential distortion on the internal market , it shall close the preliminary review and inform the undertaking concerned. ### (3) where the commission , after a preliminary assessment , concludes that there are no sufficient grounds to initiate the in-depth investigation , either because there is no foreign subsidy or because there are no indications of an actual or potential distortion on the internal market , it shall close the preliminary review and inform the undertaking and member states concerned.


### the commission may take interim measures , where: ### the commission may take temporary interim measures , where:


### to enter any premises and land of the undertaking concerned; ### to enter any premises , land and means of transport of the undertaking concerned;


### in order to carry out the duties assigned to it by this regulation , the commission may conduct inspections in the territory of a third country , provided that the undertaking concerned has given its consent and the government of the third country has been officially notified and has agreed to the inspection. article 12(1) , (2) , and (3) points (a) and (b) shall apply by analogy. ### in order to carry out the duties assigned to it by this regulation , the commission may conduct inspections in the territory of a third country and the government of the third country has been officially notified and has agreed to the inspection. article 12(1) , (2) , and (3) points (a) and (b) shall apply by analogy.


### in order to carry out the duties assigned to it by this regulation , the commission may conduct inspections in the territory of a third country , provided that the undertaking concerned has given its consent and the government of the third country has been officially notified and has agreed to the inspection. article 12(1) , (2) , and (3) points (a) and (b) shall apply by analogy. ### in order to carry out the duties assigned to it by this regulation , the commission may conduct inspections in the territory of a third country , provided that the government of the third country has been officially notified and has agreed to the inspection. article 12(1) , (2) , and (3) points (a) and (b) shall apply by analogy.


### (1) the commission may impose by decision fines and periodic penalty payments where an undertaking concerned or an association of undertakings , intentionally or negligently: ### (1) the commission may impose by decision fines and periodic penalty payments where an undertaking or an association of undertakings concerned , intentionally or negligently:


### (5) where an undertaking concerned does not comply with a decision with commitments pursuant to article 9(3) , a decision ordering interim measures pursuant to article 10 or a decision imposing redressive measures pursuant to article 9(2) , the commission may impose by decision: ### (5) where an undertaking or association of undertakings concerned does not comply with a decision with commitments pursuant to article 9(3) , a decision ordering interim measures pursuant to article 10 or a decision imposing redressive measures pursuant to article 9(2) , the commission may impose by decision:


### the undertakings concerned received from third countries an aggregate financial contribution in the three calendar years prior to notification of more than eur 50 million. ### the undertakings concerned received from third countries an aggregate financial contribution in the three calendar years prior to notification of more than eur 25 million.


### the joint venture itself or one of its parent undertakings is established in the union and generates an aggregate turnover in the union of at least eur 500 million; and ### the joint venture itself or one of its parent undertakings is established in the union and generates an aggregate turnover in the union of at least eur 250 million; and


### the joint venture itself and its parent undertakings received from third countries an aggregate financial contribution in the three calendar years prior to notification of more than eur 50 million. ### the joint venture itself and its parent undertakings received from third countries an aggregate financial contribution in the three calendar years prior to notification of more than eur 25 million.


### (4) if the undertakings concerned fail to meet their obligation to notify , the commission may review a notifiable concentration in accordance with this regulation by requesting the notification of that concentration. in that case the commission shall not be bound by the time limits referred to in article 23(1) and (4). ### (4) if the undertakings concerned fail to meet their obligation to notify , the commission shall review a notifiable concentration in accordance with this regulation by requesting the notification of that concentration. in that case the commission shall not be bound by the time limits referred to in article 23(1) and (4).


### (2) for the purpose of article 28 , a notifiable foreign financial contribution in an eu public procurement procedure shall be deemed to arise where the estimated value of that public procurement is equal or greater than eur 250 million. ### (2) for the purpose of article 28 , a notifiable foreign financial contribution in an eu public procurement procedure shall be deemed to arise where the estimated total value of that public procurement is equal or greater than eur 250 million.


### (2) the commission shall carry out a preliminary review no later than 60 days after it received the notification. ### (2) the commission shall carry out a preliminary review no later than 25 days after it received the notification.


### (1) a financial contribution notified in the context of a concentration under article 19 may be relevant and assessed again in relation to another economic activity. ### (1) a financial contribution notified in the context of a concentration under article 19 may be relevant and assessed again under this regulation in relation to another economic activity.


### (2) a financial contribution notified in the context of a public procurement procedure under article 28 may be relevant and assessed again in relation to another economic activity. ### (2) a financial contribution notified in the context of a public procurement procedure under article 28 may be relevant and assessed again under this regulation in relation to another economic activity.


### (2) the commission may publish a report on the results of its market investigation into particular sectors , particular types of economic activity or particular subsidy instruments and invite comments from interested parties. ### (2) subject to the legislation in force regarding the protection of trade secrets and other confidential business information , the commission may publish a report on the results of its market investigation into particular sectors , particular types of economic activity or particular subsidy instruments and invite comments from interested parties.


### (14) when applying these indicators , the commission could take into account different elements such as the size of the subsidy in absolute terms or in relation to the size of the market or to the value of the investment. for instance , a concentration , in the context of which a foreign subsidy covers a substantial part of the purchase price of the target , is likely to be distortive. similarly , foreign subsidies covering a substantial part of the estimated value of a contract to be awarded in a public procurement procedure are likely to cause distortions. if a foreign subsidy is granted for operating costs , it seems more likely to cause distortions than if it is granted for investment costs. foreign subsidies to small and medium-sized undertakings may be considered less likely to cause distortions than foreign subsidies to large undertakings. furthermore , the characteristics of the market , and in particular the competitive conditions on the market , such as barriers to entry , should be taken into account. foreign subsidies leading to overcapacity by sustaining uneconomic assets or by encouraging investment in capacity expansions that would otherwise not have been built are likely to cause distortions. a foreign subsidy to a beneficiary that shows a low degree of activity in the internal market , measured for instance in terms of turnover achieved in the union , is less likely to cause distortions than a foreign subsidy to a beneficiary that has a more significant level of activity in the internal market. finally , foreign subsidies not exceeding eur 5 million should be deemed , as a general rule , unlikely to distort the internal market within the meaning of this regulation. ### (14) when applying these indicators , the commission could take into account different elements such as the size of the subsidy in absolute terms or in relation to the size of the market or to the value of the investment. for instance , a concentration , in the context of which a foreign subsidy covers a substantial part of the purchase price of the target , is likely to be distortive. similarly , foreign subsidies covering a substantial part of the estimated value of a contract to be awarded in a public procurement procedure are likely to cause distortions. if a foreign subsidy is granted for operating costs , it seems more likely to cause distortions than if it is granted for investment costs. foreign subsidies to small and medium-sized undertakings may be considered less likely to cause distortions than foreign subsidies to large undertakings. furthermore , the characteristics of the market , and in particular the competitive conditions on the market , such as barriers to entry , should be taken into account. foreign subsidies leading to overcapacity by sustaining uneconomic assets or by encouraging investment in capacity expansions that would otherwise not have been built or bought are likely to cause distortions. a foreign subsidy to a beneficiary that shows a low degree of activity in the internal market , measured for instance in terms of turnover achieved in the union , is less likely to cause distortions than a foreign subsidy to a beneficiary that has a more significant level of activity in the internal market. foreign subsidies not exceeding eur 5 million should be deemed , as a general rule , unlikely to distort the internal market within the meaning of this regulation. where the commission has found that a third country has in place a system for the provision of subsidies which ensures in law and in practice a level of protection against undue state intervention into market forces and unfair competition which is at least equivalent to the level within the union and which effectively protects not only the market of the third country but also the internal market of the union , foreign subsidies by this third country should also be deemed , as a general rule , to be unlikely to distort the internal market within the meaning of this regulation. when assessing whether there is an equivalent level of subsidy control in a third country the commission should take into account the relevant legal provisions as well as their effective implementation in practice. these findings by the commission should be valid for a limited period of time and be subject to a periodic review. the commission should also consider whether the third country has concluded a bilateral agreement with the union which includes substantive level playing field provisions , whether the third country complies with international subsidy obligations and is aligned with the union on initiatives with regard to improving international rules on subsidies and competitive neutrality , notably within the wto. the commission should draft and publish , in close cooperation with the member states , guidelines with further details for assessing the distortive nature of a subsidy in order to provide legal certainty for all market participants. the guidelines should also provide examples and typical cases of distortive and non-distortive subsidies.


### (22) the commission should be given adequate investigative powers to gather all necessary information. it should therefore have the power to request information from any undertaking or association of undertakings throughout the whole procedure. in addition , the commission should have the power to impose fines and periodic penalty payments for failure to timely supply the requested information or for supplying incomplete , incorrect or misleading information. the commission could also address questions to member states or to third countries. furthermore , the commission should have the power to make fact-finding visits at the union premises of the undertaking , or , subject to agreement by the undertaking and the third country concerned , at the premises of the undertaking in the third country. the commission should also have the power to take decisions on the basis of facts available if the undertaking in question does not cooperate. ### (22) the commission should be given adequate investigative powers to gather all necessary information. it should therefore have the power to request information from any undertaking or association of undertakings throughout the whole procedure. in addition , the commission should have the power to impose fines and periodic penalty payments for failure to timely supply the requested information or for supplying incomplete , incorrect or misleading information. the commission could also address questions to member states or to third countries. furthermore , the commission should have the power to make fact-finding visits at the union premises of the undertaking , or , subject to agreement the third country concerned , at the premises of the undertaking in the third country. the commission should also have the power to take decisions on the basis of facts available if the undertaking in question does not cooperate.


### (5) if an undertaking offers commitments which fully and effectively remedy the distortion on the internal market , the commission may accept them and make them binding on the undertaking in a decision with commitments according to article 9(3). ### (5) if an undertaking offers commitments which fully and effectively remedy the distortion on the internal market , the commission may accept them and make them binding on the undertaking in a decision with commitments according to article 9(3). the commission shall monitor the compliance of the undertaking with the commitments offered.


### (2) there is a serious risk of substantial and irreparable damage to competition on the internal market. ### (2) there is a serious risk of substantial damage to competition on the internal market.


### (1) the commission may conduct the necessary inspections of undertakings. ### (1) for the purpose of the application of this regulation and only in duly justified cases , the commission may conduct the necessary inspections of undertakings.


### in a concentration , the assessment whether there is a distortion on the internal market within the meaning of articles 3 or 4 shall be limited to the concentration at stake. only foreign subsidies granted in the three calendar years prior to the conclusion of the agreement , the announcement of the public bid , or the acquisition of a controlling interest shall be considered in the assessment. ### in a concentration , the assessment whether there is a distortion on the internal market within the meaning of articles 3 or 4 shall be limited to the concentration at stake. only foreign subsidies granted in the five calendar years prior to the conclusion of the agreement , the announcement of the public bid , or the acquisition of a controlling interest shall be considered in the assessment.


### the acquired undertaking or at least one of the merging undertakings is established in the union and generates an aggregate turnover in the union of at least eur 500 million; and ### the acquired undertaking or at least one of the merging undertakings is established in the union and generates an aggregate turnover in the union of at least eur 250 million; and


### (1) when submitting a tender or a request to participate in a public procurement procedure , undertakings shall either notify to the contracting authority or the contracting entity all foreign financial contributions received in the three years preceding that notification or confirm in a declaration that they did not receive any foreign financial contributions in the last three years. undertakings which do not submit such information or declaration shall not be awarded the contract. ### (1) when submitting a tender or a request to participate in a public procurement procedure , undertakings shall either notify to the contracting authority or the contracting entity all foreign financial contributions received by the undertaking or its parent company in the five years preceding that notification or confirm in a declaration that they did not receive any foreign financial contributions in the last three years. undertakings which do not submit such information or declaration shall not be awarded the contract.


### (4) the commission may adopt a decision closing the in-depth investigation no later than 200 days after it received the notification. in exceptional circumstances , this time limit may be extended after consultation with the concerned contracting authority or contracting entity. ### (4) the commission may adopt a decision closing the in-depth investigation no later than 90 days after it received the notification. in exceptional circumstances , this time limit may be extended after consultation with the concerned contracting authority or contracting entity.


### (2) the powers of the commission to impose fines and periodic penalty payments under articles 15 , 25 and 32 shall be subject to a limitation period of three years , starting on the day on which the infringement referred to in articles 15 , 25 or 32 took place. in the case of continuing or repeated infringements , the limitation period shall start on the day on which the infringement ceases. any action taken by the commission with respect to an infringement referred to in articles 15 , 25 or 32 shall interrupt the limitation period for the imposition of fines or periodic penalty payments. after each interruption , the limitation period shall start to run afresh. ### (2) the powers of the commission to impose fines and periodic penalty payments under articles 15 , 25 and 32 shall be subject to a limitation period of five years , starting on the day on which the infringement referred to in articles 15 , 25 or 32 took place. in the case of continuing or repeated infringements , the limitation period shall start on the day on which the infringement ceases. any action taken by the commission with respect to an infringement referred to in articles 15 , 25 or 32 shall interrupt the limitation period for the imposition of fines or periodic penalty payments. after each interruption , the limitation period shall start to run afresh.


### within five years after the entry into force of this regulation at the latest , the commission shall present a report to the european parliament and the council on the application of this regulation , accompanied , where the commission considers it appropriate , by relevant legislative proposals. ### by ... [three years from the entry into force of this regulation] , and every two years thereafter , the commission shall review the functioning and effectiveness of this regulation and present a report to the european parliament and the council on its application.


### within five years after the entry into force of this regulation at the latest , the commission shall present a report to the european parliament and the council on the application of this regulation , accompanied , where the commission considers it appropriate , by relevant legislative proposals. ### by … [three years after the entry into force of this regulation] , the commission shall present a report to the european parliament and the council on the application of this regulation , accompanied , where the commission considers it appropriate , by relevant legislative proposals. in its report , the commission shall in particular analyse the appropriateness of the thresholds for concentrations laid down in article 18.


### (3) this regulation shall not apply to concentrations for which the agreement was concluded , the public bid was announced , or a controlling interest was acquired before the date of application of the regulation. ### (3) notwithstanding paragraph 1 , this regulation shall not apply to concentrations for which the agreement was concluded , the public bid was announced , or a controlling interest was acquired before the date of application of the regulation.


### proposal for a regulation of the european parliament and of the council establishing a carbon border adjustment mechanism (text with eea relevance) ### deleted


### (1) the commission has , in its communication on the european green deal31 , set out a new growth strategy that aims to transform the union into a fair and prosperous society , with a modern , resource-efficient and competitive economy , where there are no net emissions (emissions after deduction of removals) of greenhouse gases (‘ghg emissions’) in 2050 and where economic growth is decoupled from resource use. the european green deal also aims to protect , conserve and enhance the eu’s natural capital , and protect the health and well-being of citizens from environment-related risks and impacts. at the same time , that transformation must be just and inclusive , leaving no one behind. the commission also announced in its eu action plan: towards zero pollution for air , water and soil32 the promotion of relevant instruments and incentives to better implement the polluter pays principle as set out in article 191(2) of the treaty on the functioning of the european union (‘tfeu’) and thus complete the phasing out of ‘pollution for free’ with a view to maximising synergies between decarbonisation and the zero pollution ambition. ### (1) the commission has , in its communication on the european green deal31 , set out a new growth strategy that aims to transform the union into a fair and prosperous society , with a modern , resource-efficient , open and competitive economy , where there are no net emissions (emissions after deduction of removals) of greenhouse gases (‘ghg emissions’) in 2050 and where economic growth is decoupled from resource use. the european green deal also aims to protect , conserve and enhance the eu’s natural capital , and protect the health and well-being of citizens from environment-related risks and impacts. at the same time , that transformation must be just and inclusive , leaving no one behind. the commission also announced in its eu action plan: towards zero pollution for air , water and soil32 the promotion of relevant instruments and incentives to better implement the polluter pays principle as set out in article 191(2) of the treaty on the functioning of the european union (‘tfeu’) and thus complete the phasing out of ‘pollution for free’ with a view to maximising synergies between decarbonisation and the zero pollution ambition.


### (1) the commission has , in its communication on the european green deal31 , set out a new growth strategy that aims to transform the union into a fair and prosperous society , with a modern , resource-efficient and competitive economy , where there are no net emissions (emissions after deduction of removals) of greenhouse gases (‘ghg emissions’) in 2050 and where economic growth is decoupled from resource use. the european green deal also aims to protect , conserve and enhance the eu’s natural capital , and protect the health and well-being of citizens from environment-related risks and impacts. at the same time , that transformation must be just and inclusive , leaving no one behind. the commission also announced in its eu action plan: towards zero pollution for air , water and soil32the promotion of relevant instruments and incentives to better implement the polluter pays principle as set out in article 191(2) of the treaty on the functioning of the european union (‘tfeu’) and thus complete the phasing out of ‘pollution for free’ with a view to maximising synergies between decarbonisation and the zero pollution ambition. ### (1) the commission has , in its communication on the european green deal , set out a new growth strategy that aims to transform the union into a fair , prosperous and durable society , with a modern , competitive , sustainable and resource-efficient economy , where there are no net emissions (emissions after deduction of removals) of greenhouse gases (‘ghg emissions’) in 2050 and where economic growth is decoupled from resource use. the european green deal also aims to protect , conserve and enhance the eu's natural capital , combat the decline of biodiversity and protect the health and well-being of citizens from environment-related risks and impacts. at the same time , that transformation must be balanced , just and inclusive , leaving no one behind. the commission also announced in its eu action plan: 'towards zero pollution for air , water and soil' the promotion of relevant instruments and incentives to better implement the polluter pays principle as set out in article 191(2) of the treaty on the functioning of the european union (‘tfeu’) and thus complete the phasing out of ‘pollution for free’ with a view to maximising synergies between decarbonisation and the zero pollution ambition.


### (8) as long as a significant number of the union’s international partners have policy approaches that do not result in the same level of climate ambition , there is a risk of carbon leakage. carbon leakage occurs if , for reasons of costs related to climate policies , businesses in certain industry sectors or subsectors were to transfer production to other countries or imports from those countries would replace equivalent but less ghg emissions intensive products. that could lead to an increase in their total emissions globally , thus jeopardising the reduction of ghg emissions that is urgently needed if the world is to keep the global average temperature to well below 2 °c above pre-industrial levels. ### (8) as long as a significant number of the union’s international partners do not achieve the same level of climate ambition , there is a risk of carbon leakage , which would undermine the union’s competitiveness on global markets. carbon leakage occurs if , for reasons of costs related to climate policies , businesses in certain industry sectors or subsectors were to transfer production to other countries or imports from those countries would replace equivalent but less ghg emission-intensive products on the internal market , as well as export markets , or investment into such sectors and subsectors would predominantly flow to such countries and not the union. that would lead to an increase in their total emissions globally , thus jeopardising the reduction of ghg emissions that is urgently needed if the world is to keep the global average temperature to well below 2°c above pre-industrial levels.


### (8) as long as a significant number of the union’s international partners have policy approaches that do not result in the same level of climate ambition , there is a risk of carbon leakage. carbon leakage occurs if , for reasons of costs related to climate policies , businesses in certain industry sectors or subsectors were to transfer production to other countries or imports from those countries would replace equivalent but less ghg emissions intensive products. that could lead to an increase in their total emissions globally , thus jeopardising the reduction of ghg emissions that is urgently needed if the world is to keep the global average temperature to well below 2 °c above pre-industrial levels. ### (8) as long as a significant number of the union's international partners have widely differing policy approaches that do not result in the same level of climate ambition as the european union and differences in the price applied to ghg emissions remain , there is a risk of carbon leakage. carbon leakage occurs if , for reasons of different levels of ambition regarding climate policies and costs related thereto , businesses in certain industry sectors or subsectors were to transfer production to other countries or imports from those countries would replace equivalent but less ghg emissions intensive products. that could lead to an increase in their total emissions globally , while undermining the effectiveness of eu emission reduction policies , thus jeopardising the reduction of ghg emissions that is urgently needed if the world is to keep the global average temperature to well below 2 °c above pre-industrial levels.


### (8) as long as a significant number of the union’s international partners have policy approaches that do not result in the same level of climate ambition , there is a risk of carbon leakage. carbon leakage occurs if , for reasons of costs related to climate policies , businesses in certain industry sectors or subsectors were to transfer production to other countries or imports from those countries would replace equivalent but less ghg emissions intensive products. that could lead to an increase in their total emissions globally , thus jeopardising the reduction of ghg emissions that is urgently needed if the world is to keep the global average temperature to well below 2 °c above pre-industrial levels. ### (8) as long as a significant number of the union’s international partners have policy approaches that do not result in the same level of climate ambition , there is a risk of carbon leakage. the risk of carbon leakage exists not only for industrial goods , but also for agricultural products in particular. carbon leakage occurs if , for reasons of costs related to climate policies , businesses in certain industry or trade sectors or subsectors were to transfer production to other countries or imports from those countries would replace equivalent but less ghg emissions intensive products. that could lead to an increase in their total emissions globally , thus jeopardising the reduction of ghg emissions that is urgently needed if the world is to keep the global average temperature to well below 2 °c above pre-industrial levels.


### (9) the initiative for a carbon border adjustment mechanism (‘cbam’) is a part of the ‘fit for 55 package’. that mechanism is to serve as an essential element of the eu toolbox to meet the objective of a climate-neutral union by 2050 in line with the paris agreement by addressing risks of carbon leakage resulting from the increased union climate ambition. ### (9) the initiative for a carbon border adjustment mechanism (‘cbam’) is a part of the ‘fit for 55 package’. that mechanism is to serve as an essential element of the eu toolbox to meet the objective of a climate-neutral union by 2050 in line with the paris agreement by addressing risks of carbon leakage resulting from the increased union climate ambition , while preserving the economic and industrial competitiveness of the union and ensuring a level playing field within the single market , as laid down by article 3(3) of the treaty on european union.


### (9) the initiative for a carbon border adjustment mechanism (‘cbam’) is a part of the ‘fit for 55 package’. that mechanism is to serve as an essential element of the eu toolbox to meet the objective of a climate-neutral union by 2050 in line with the paris agreement by addressing risks of carbon leakage resulting from the increased union climate ambition. ### (9) the initiative for a carbon border adjustment mechanism (‘cbam’) is a part of the ‘fit for 55 package’. that mechanism is to serve as an essential element of the eu toolbox to meet the objective of a climate-neutral union by 2050 fully in line with the paris agreement and wto rules by addressing risks of carbon leakage resulting from the increased union climate ambition. in the longer term , the cbam could lay the ground for a global , highly ambitious system in carbon-pricing.


### (9) the initiative for a carbon border adjustment mechanism (‘cbam’) is a part of the ‘fit for 55 package’. that mechanism is to serve as an essential element of the eu toolbox to meet the objective of a climate-neutral union by 2050 in line with the paris agreement by addressing risks of carbon leakage resulting from the increased union climate ambition. ### (9) the initiative for a carbon border adjustment mechanism (‘cbam’) is a part of the ‘fit for 55 package’. that mechanism is to serve as an essential element of the eu toolbox to meet the objective of a climate-neutral union by 2050 in line with the paris agreement by addressing risks of carbon leakage resulting from the increased union climate ambition. the cbam is also consistent with the eu's objective of open strategic autonomy.


### (9) the initiative for a carbon border adjustment mechanism (‘cbam’) is a part of the ‘fit for 55 package’. that mechanism is to serve as an essential element of the eu toolbox to meet the objective of a climate-neutral union by 2050 in line with the paris agreement by addressing risks of carbon leakage resulting from the increased union climate ambition. ### (9) the initiative for a carbon border adjustment mechanism (‘cbam’) is a part of the ‘fit for 55 package’. that mechanism is to serve as an essential element of the eu toolbox to meet the objective of a climate-neutral union by 2050 in line with the paris agreement by preventing carbon leakage resulting from the increased union climate ambition.


### (9) the initiative for a carbon border adjustment mechanism (‘cbam’) is a part of the ‘fit for 55 package’. that mechanism is to serve as an essential element of the eu toolbox to meet the objective of a climate-neutral union by 2050 in line with the paris agreement by addressing risks of carbon leakage resulting from the increased union climate ambition. ### (9) the initiative for a carbon border adjustment mechanism (‘cbam’)is an integral part of the 'fit for 55 package. that mechanism is to serve as an essential element of the eu toolbox to meet the objective of a climate-neutral union by 2050 in line with the paris agreement by addressing risks of carbon leakage resulting from the increased union climate ambition and the enhanced eu ets certification system.


### (10) existing mechanisms to address the risk of carbon leakage in sectors or sub-sectors at risk of carbon leakage are the transitional free allocation of eu ets allowances and financial measures to compensate for indirect emission costs incurred from ghg emission costs passed on in electricity prices respectively laid down in articles 10a(6) and 10b of directive 2003/87/ec. however , free allocation under the eu ets weakens the price signal that the system provides for the installations receiving it compared to full auctioning and thus affects the incentives for investment into further abatement of emissions. ### (10) existing mechanisms to address the risk of carbon leakage in sectors or sub-sectors at risk of carbon leakage are the transitional free allocation of eu ets allowances and financial measures to compensate for indirect emission costs incurred from ghg emission costs passed on in electricity prices respectively laid down in articles 10a(6) and 10b of directive 2003/87/ec. existing carbon leakage measures are based on strict benchmarks established by the best-performing installations. these measures also represents an incentive to reduce emissions under the ets while also providing a carbon price signal for emissions above the benchmark level; they have proven so far to be effective in reducing the risk of carbon leakage , although in the context of lower carbon prices than those experienced recently and those forecasted by 2030.


### (10) existing mechanisms to address the risk of carbon leakage in sectors or sub-sectors at risk of carbon leakage are the transitional free allocation of eu ets allowances and financial measures to compensate for indirect emission costs incurred from ghg emission costs passed on in electricity prices respectively laid down in articles 10a(6) and 10b of directive 2003/87/ec. however , free allocation under the eu ets weakens the price signal that the system provides for the installations receiving it compared to full auctioning and thus affects the incentives for investment into further abatement of emissions. ### (10) existing mechanisms to address the risk of carbon leakage in sectors or sub-sectors at risk of carbon leakage are the transitional free allocation of eu ets allowances and financial measures to compensate for indirect emission costs incurred from ghg emission costs passed on in electricity prices respectively laid down in articles 10a(6) and 10b of directive 2003/87/ec. these measures have contributed to reducing the risk of carbon leakage but additional efforts are required to decarbonise the sectors concerned.


### (10) existing mechanisms to address the risk of carbon leakage in sectors or sub-sectors at risk of carbon leakage are the transitional free allocation of eu ets allowances and financial measures to compensate for indirect emission costs incurred from ghg emission costs passed on in electricity prices respectively laid down in articles 10a(6) and 10b of directive 2003/87/ec. however , free allocation under the eu ets weakens the price signal that the system provides for the installations receiving it compared to full auctioning and thus affects the incentives for investment into further abatement of emissions. ### (10) existing mechanisms to address the risk of carbon leakage in sectors or sub-sectors at risk of carbon leakage are the transitional free allocation of eu ets allowances and financial measures to compensate for indirect emission costs incurred from ghg emission costs passed on in electricity prices respectively laid down in articles 10a(6) and 10b of directive 2003/87/ec.


### (10) existing mechanisms to address the risk of carbon leakage in sectors or sub-sectors at risk of carbon leakage are the transitional free allocation of eu ets allowances and financial measures to compensate for indirect emission costs incurred from ghg emission costs passed on in electricity prices respectively laid down in articles 10a(6) and 10b of directive 2003/87/ec. however , free allocation under the eu ets weakens the price signal that the system provides for the installations receiving it compared to full auctioning and thus affects the incentives for investment into further abatement of emissions. ### (10) existing mechanisms to address the risk of carbon leakage in sectors or sub-sectors at risk of carbon leakage are the transitional free allocation of eu ets allowances and financial measures to compensate for indirect emission costs incurred from ghg emission costs passed on in electricity prices respectively laid down in articles 10a(6) and 10b of directive 2003/87/ec. however , free allocation under the eu ets weakens the price signal that the system provides for the installations receiving it compared to full auctioning and thus affects the incentives for investment into further abatement of emissions. free allocation at the level of best performers has been an adequate policy instrument for certain industrial sectors to address the risk of carbon leakage in the absence of a fair level playing field.


### (10) existing mechanisms to address the risk of carbon leakage in sectors or sub-sectors at risk of carbon leakage are the transitional free allocation of eu ets allowances and financial measures to compensate for indirect emission costs incurred from ghg emission costs passed on in electricity prices respectively laid down in articles 10a(6) and 10b of directive 2003/87/ec. however , free allocation under the eu ets weakens the price signal that the system provides for the installations receiving it compared to full auctioning and thus affects the incentives for investment into further abatement of emissions. ### (10) existing mechanisms to address the risk of carbon leakage in sectors or sub-sectors at risk of carbon leakage are the transitional free allocation of eu ets allowances and financial measures to compensate for indirect emission costs incurred from ghg emission costs passed on in electricity prices respectively laid down in articles 10a(6) and 10b of directive 2003/87/ec. the system of meeting benchmarks as precondition for receiving free allocation under the eu ets ensures an additional price signal that the system provides for the installations receiving them compared to full auctioning and thus affects positively the incentives for investment into further abatement of emissions and remains an important tool to reduce the risk of carbon leakage as long as there is no global co2 emission pricing system.


### (11) the cbam seeks to replace these existing mechanisms by addressing the risk of carbon leakage in a different way , namely by ensuring equivalent carbon pricing for imports and domestic products. to ensure a gradual transition from the current system of free allowances to the cbam , the cbam should be progressively phased in while free allowances in sectors covered by the cbam are phased out. the combined and transitional application of eu ets allowances allocated free of charge and of the cbam should in no case result in more favourable treatment for union goods compared to goods imported into the customs territory of the union. ### (11) the cbam seeks to strengthen carbon leakage protection in view of higher eu climate ambitions by 2030 and thereafter progressively replace these existing mechanisms by addressing the risk of carbon leakage in a different way , namely by ensuring equivalent carbon pricing for imports and domestic products and by ensuring that eu products exported in the global market are not replaced by more carbon intensive products , which would undermine the objective of reducing global emissions. to ensure a gradual transition from the current system of free allowances to the cbam , the free allowances should only be phased out once the cbam regulation has proved its effectiveness in terms of protecting against the risk of carbon leakage. the combined and transitional application of eu ets allowances allocated free of charge and of the cbam should in no case result in more favourable treatment for union goods compared to goods imported into the customs territory of the union.


### (11) the cbam seeks to replace these existing mechanisms by addressing the risk of carbon leakage in a different way , namely by ensuring equivalent carbon pricing for imports and domestic products. to ensure a gradual transition from the current system of free allowances to the cbam , the cbam should be progressively phased in while free allowances in sectors covered by the cbam are phased out. the combined and transitional application of eu ets allowances allocated free of charge and of the cbam should in no case result in more favourable treatment for union goods compared to goods imported into the customs territory of the union. ### (11) the cbam seeks to replace these existing mechanisms by addressing the risk of carbon leakage in a different way , namely by ensuring equivalent carbon pricing for imports and domestic products. to ensure a gradual transition from the current system of free allowances to the cbam , the cbam should be progressively phased in while free allowances in sectors covered by the cbam are abandoned fully. the combined and transitional application of eu ets allowances allocated free of charge and of the cbam should in no case result in more favourable treatment for union goods compared to goods imported into the customs territory of the union.


### (11) the cbam seeks to replace these existing mechanisms by addressing the risk of carbon leakage in a different way , namely by ensuring equivalent carbon pricing for imports and domestic products. to ensure a gradual transition from the current system of free allowances to the cbam , the cbam should be progressively phased in while free allowances in sectors covered by the cbam are phased out. the combined and transitional application of eu ets allowances allocated free of charge and of the cbam should in no case result in more favourable treatment for union goods compared to goods imported into the customs territory of the union. ### (11) the cbam seeks to mitigate the risk of carbon leakage in order to achieve the eu climate ambitions by 2030 and thereafter. therefore , the cbam seeks to replace progressively these existing mechanisms by addressing the risk of carbon leakage in a different way , namely by ensuring equivalent carbon pricing for imports and domestic products. to ensure a gradual transition from the current system of free allowances to the cbam , the cbam should be progressively phased in while free allowances in sectors covered by the cbam are phased out as of 2030 after a test phase and an assessment by the commission has demonstrated the effectiveness of the cbam regulation in terms of protection from the risk of carbon leakage both for imports and exports. the combined and transitional application of eu ets allowances allocated free of charge and of the cbam should in no case result in more favourable treatment for union goods compared to goods imported into the customs territory of the union.


### (11) the cbam seeks to replace these existing mechanisms by addressing the risk of carbon leakage in a different way , namely by ensuring equivalent carbon pricing for imports and domestic products. to ensure a gradual transition from the current system of free allowances to the cbam , the cbam should be progressively phased in while free allowances in sectors covered by the cbam are phased out. the combined and transitional application of eu ets allowances allocated free of charge and of the cbam should in no case result in more favourable treatment for union goods compared to goods imported into the customs territory of the union. ### (11) the cbam intends to complement and progressively replace these existing mechanisms by addressing the risk of carbon leakage in a different way , namely by ensuring equivalent carbon pricing for imports and domestic products. to ensure a gradual transition from the current system of free allowances to the cbam , the cbam should be phased in while free allowances should be phased out only after a comprehensive transitional period between 2026 and 2030 and once the cbam has proven to be efficient , fit for purpose , operational and tested to mitigate the risk of carbon leakage. the combined application of eu ets allowances allocated free of charge and of the cbam is needed to allow producers , importers and traders to adjust to the new regime and to assess the effective implementation of the cbam but should in no case result in more favourable treatment for union goods compared to goods imported into the customs territory of the union as continuous trade with third countries are essential for the union and its diversified supply chains.


### (11) the cbam seeks to replace these existing mechanisms by addressing the risk of carbon leakage in a different way , namely by ensuring equivalent carbon pricing for imports and domestic products. to ensure a gradual transition from the current system of free allowances to the cbam , the cbam should be progressively phased in while free allowances in sectors covered by the cbam are phased out. the combined and transitional application of eu ets allowances allocated free of charge and of the cbam should in no case result in more favourable treatment for union goods compared to goods imported into the customs territory of the union. ### (11) the cbam needs to complement these existing mechanisms by addressing the risk of carbon leakage in a better way , namely by ensuring equivalent carbon pricing for imports and domestic products while ensuring that the carbon pricing reflects the total embedded emissions of goods sold within the union. to ensure a gradual yet rapid transition from the current system of free allowances to the pricing of all embedded emissions of good sold within the union and subject to the cbam , the number of cbam certificates to be surrendered will gradually be raised following introduction of the cbam. also operators of installations subject to eu ets will have to submit cbam certificates for the emissions of goods sold domestically and not priced due to the granting of free allowances. the combined application of eu ets allowances allocated free of charge and of the cbam should in no case result in more favourable treatment for union goods compared to goods imported into the customs territory of the union.


### (11) the cbam seeks to replace these existing mechanisms by addressing the risk of carbon leakage in a different way , namely by ensuring equivalent carbon pricing for imports and domestic products. to ensure a gradual transition from the current system of free allowances to the cbam , the cbam should be progressively phased in while free allowances in sectors covered by the cbam are phased out. the combined and transitional application of eu ets allowances allocated free of charge and of the cbam should in no case result in more favourable treatment for union goods compared to goods imported into the customs territory of the union. ### (11) the cbam seeks to complement these existing mechanisms by addressing the risk of carbon leakage in an additional way , namely by ensuring equivalent carbon pricing for imports and domestic products. to ensure the compliance with wto rules , the combined application of eu ets allowances allocated free of charge and of the cbam should in no case result in more favourable treatment for union goods compared to goods imported into the customs territory of the union.


### (12) while the objective of the cbam is to prevent the risk of carbon leakage , this regulation would also encourage the use of more ghg emissions-efficient technologies by producers from third countries , so that less emissions per unit of output are generated. ### (12) while the objective of the cbam is to prevent the risk of carbon leakage , this regulation would also encourage the use of more ghg emissions-efficient technologies by producers from third countries , so that less emissions per unit of output are generated. it will therefore be relevant to export more sustainable products manufactured in the eu and avoid substitutes at a global level with higher carbon footprints.


### (12) while the objective of the cbam is to prevent the risk of carbon leakage , this regulation would also encourage the use of more ghg emissions-efficient technologies by producers from third countries , so that less emissions per unit of output are generated. ### (12) while the objective of the cbam is to prevent the risk of carbon leakage , this regulation would also encourage the use of more ghg emissions-efficient technologies by producers from third countries , so that less emissions per unit of output are generated. therefore , it will be relevant to export more sustainable products manufactured in the eu and avoid substitutes at a global level with higher carbon footprint.


### (12) while the objective of the cbam is to prevent the risk of carbon leakage , this regulation would also encourage the use of more ghg emissions-efficient technologies by producers from third countries , so that less emissions per unit of output are generated. ### (12) while the objective of the cbam is to prevent the risk of carbon leakage and to set a 2050 decarbonisation target and required transition plans for the eu industry , this regulation would also encourage the use of more ghg emissions-efficient technologies by producers from third countries , so that less emissions per unit of output are generated.


### (12) while the objective of the cbam is to prevent the risk of carbon leakage , this regulation would also encourage the use of more ghg emissions-efficient technologies by producers from third countries , so that less emissions per unit of output are generated. ### (12) while the objective of the cbam is to prevent the risk of carbon leakage , this regulation would also encourage the use of more ghg emissions-efficient technologies by producers from third countries , so that less emissions per unit of output are generated. the cbam hence might be an effective measure to lower emissions in third countries while ensuring european industry competitiveness. reducing emissions in the union as well as in third countries is an effective way to reduce the risk of carbon leakage. the cbam should be seen as a step towards global pricing on carbon emissions which would further reduce the risk of carbon leakage globally.