The House of Lords EU internal market sub-committee has suggested in its report, Brexit: competition and State aid, that the UK will need a domestic state aid framework after leaving the EU in order to meet WTO obligations and avoid intra-UK subsidy ‘races’ between devolved administrations.
The report notes that the EU (Withdrawal) Bill seeks to preserve the general prohibition on unapproved state aid, but does not specify an approval mechanism. The committee urges the government ‘to clarify this omission, and its position on the shape of the future UK State aid regime’.
The EU usually insists on trade agreements with third countries including some form of controls on state aid and it is highly likely, the report suggests, that any ‘deep and comprehensive UK-EU free trade agreement’ will include state aid provisions. There is also likely to be a link between the level of access to the single market the UK hopes to secure and the degree of coherence with the EU state aid regime the UK is required to maintain.
Even under WTO rules, the UK will still be bound by its obligations under the WTO ‘agreement on subsidies and countervailing measures’. The report comments that: ‘should the government significantly increase state aid to UK businesses, this could undermine the UK’s ambition to become an open, global trading nation after Brexit’. The committee therefore welcomes the assurance given by the prime minister that the government, ‘will not attempt to “beat” other countries’ industries by unfairly subsidising our own’.
The House of Lords EU internal market sub-committee has suggested in its report, Brexit: competition and State aid, that the UK will need a domestic state aid framework after leaving the EU in order to meet WTO obligations and avoid intra-UK subsidy ‘races’ between devolved administrations.
The report notes that the EU (Withdrawal) Bill seeks to preserve the general prohibition on unapproved state aid, but does not specify an approval mechanism. The committee urges the government ‘to clarify this omission, and its position on the shape of the future UK State aid regime’.
The EU usually insists on trade agreements with third countries including some form of controls on state aid and it is highly likely, the report suggests, that any ‘deep and comprehensive UK-EU free trade agreement’ will include state aid provisions. There is also likely to be a link between the level of access to the single market the UK hopes to secure and the degree of coherence with the EU state aid regime the UK is required to maintain.
Even under WTO rules, the UK will still be bound by its obligations under the WTO ‘agreement on subsidies and countervailing measures’. The report comments that: ‘should the government significantly increase state aid to UK businesses, this could undermine the UK’s ambition to become an open, global trading nation after Brexit’. The committee therefore welcomes the assurance given by the prime minister that the government, ‘will not attempt to “beat” other countries’ industries by unfairly subsidising our own’.
