For its part, the EU proposal provides that EU state aid rules will continue to apply the content of EU state aid legislation in the UK. While the rules are now applied by a British authority and not by the Commission, British courts could nevertheless ask the EU Court of Justice to interpret them in accordance with the proposal. There`s another agreement. The EU has shown a willingness to compromise, but number 10 leaves Brussels perplexed as to its true intentions in terms of state aid. There are many exceptions, such as “social aid to individual consumers,” aid for natural disasters, and aid to promote economic development in places where living standards are very low. But in general, the rules are designed to prevent Member States from using public funds to give companies an unfair advantage over their rivals in other Member States. The rules are enforced by the European Commission and the Commission and Member States have adopted a mass of laws on secondary state aid on issues such as regional development. In practice, many issues relating to state aid are dealt with in the courts, either directly before the EU Court of Justice or through national courts, which ask questions about the law in the EU court. Nevertheless, both sides must compromise: some of them, according to reports, are in the British government who want to avoid any major commitment to subsidies or state aid – and it is hard to imagine the EU agreeing to it. In the past, the UK has not used many subsidies compared to other EU Member States and has spent only 0.4% of GDP on state aid in 2018. In comparison, on average 0.8% in the EU, ten Member States, including Germany, spent more than one per cent of GDP on subsidies. To avoid a hard border on the island of Ireland, Northern Ireland will continue to comply with a number of EU rules, including state aid (the EU`s specific state aid rules are set on seven pages of the protocol). The EU proposal is about compliance with EU standards, while the UK refers to international standards – yet the political declaration is about both.
Each party therefore has reason to assert that this aspect of its proposals is consistent with the declaration. But that does not bring us closer to the agreement. The draft Regulation on State Aid (Revocations and Amendments) (EU Withdrawal Decrees in 2020) would repeal, from 1 January 2021, state aid laws that would otherwise have been retained under the UK`s national law under the EU (Withdrawal Act) 2018. As an EU member state, the UK government has enjoyed little flexibility: in 2018, the UK reserved 0.38% of GDP for state aid, compared with 0.79% in France, 1.45% in Germany and 1.55% in Denmark. Boris Johnson`s government says that the level playing field defeats the entire Brexit objective by binding the UK to EU rules in a sustainable manner. On the eve of this week`s final round of talks, the UK`s chief negotiator, David Frost, said his position was “the basis for being a sovereign state.” UK and EU officials are meeting on a sensitive issue in negotiations for a future free trade agreement. A number of issues could fail in the discussions, but perhaps the most important is state aid. So what is in this quarrel and can it be resolved? It is thought that the government wants carte blanche to support companies, especially technology start-ups. This vision is supported by the Prime Minister`s Chief Adviser Dominic Cummings, who opposes the UK Competition and Market Authority becoming a regulatory authority for state aid, similar to the European Commission`s role in Britain`s Brexit.
This means that the government must inform Brussels of all state aid that affects businesses in Northern Ireland, i.e., possibly any business