State aid is a delicate issue in the current EU-UK trade negotiations. Whilst the EU is seeking dynamic alignment of any set of future UK State aid rules with the EU rules to maintain a ‘Level Playing Field’ (LPF) in areas relating to access to the Internal Market, the UK takes the stance that it would introduce its own regime of subsidy control. The UK prefers to adopt a more relaxed process for international trade based upon the rules in the WTO’s Agreement on Subsidies and Countervailing Measures (ASCM) but relying on WTO rules would not create a robust domestic system of state aid control. To maintain a close trade relationship with the EU, the UK must manoeuvre into a position where it gives effect to a State aid regime equivalent to that maintained by the EU, with an effective and robust independent enforcement process, but the UK has taken a different view. The reaction of the UK Government to the COVID-19 crisis has revealed the need for transparency in the granting of subsidies as well as accountability in procurement and yet the current situation is very opaque.

Read Briefing Paper 42: STATE AID: NOT ONLY ABOUT TRADE