Download Luca Rubini - University of Birmingham

Subsidies and PTAs
Luca Rubini
University of Birmingham, Law School
24th February 2017
Roadmap
• Speculating on subsidy control
• Overview (general and EU PTAs)
• Teachings for the future UK-EU trade relationship
Speculating on subsidy control
• Subsidies and their spillovers: ambiguity is the word
• Subsidies and trade: economics 101 tells us that subsidies may act as obstacles to trade >
hence need to regulate them and arbitrate their effects
• Type of control: ‘disciplines’ (can/cannot do) and ‘unilateral remedies’ (defense)
• Degree of control
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Loose: transparency and/or consultation
Deeper: prohibitions and unilateral remedies
Even more: Independent control with prior authorization
Ultimate level: Direct effect: domestic law!
• What is best locus of governance? Multilateral or plurilateral or bilateral?
• ‘Real’ subsidy ‘disciplines’ make sense only with big pool of parties
• The smaller is the pool, the looser are disciplines (and unilateral remedies become center-piece)
Overview
• Subsidy rules are relatively common (see economics 101)
• WTO rules? Mixed feelings
• Multilateral rules and procedures are not very effective: essentially you can
subsidize, and, if not, remedies are weak and late
• Transparency does not really work
• Trade remedies as only meaningful discipline (but risk of trade wars)
• Increasingly PTAs (especially EU ones) include subsidy or State aid
disciplines, also going beyond WTO law (i.e. ‘WTO +’)
Overview: the EU
• EU State aid control – key and unique feature of EU integration; strictly linked to
Internal market
• EU-style State aid provisions present in broad network of PTAs with ‘non-EU
European’ countries
• Europe Agreements and Accession Treaties
• Stabilization and Association Agreements (e.g. Macedonia, Croatia, Albania, Montenegro,
Serbia, Bosnia & Herzegovina, Kosovo)
• European Neighborhood Policy (e.g. Ukraine; Morocco; Jordan; but see Georgia)
• EFTA and EEA (EFTA Surveillance Authority)
• Switzerland – pressure and de facto alignment?
• (Looser) State aid disciplines are present also in PTAs with non-European
countries
• See, e.g., EU – South Africa (EU-law based)
• EU- South Korea (WTO-law based)
Teachings for EU-UK negotiations
• Highly likely
• EU will consider State aid control as inherently linked to the internal market
• EU will demand WTO + commitments
• What’s the problem?
• UK traditionally not a big subsidizer
• Increasingly EU State aid policy is about ‘good public spending governance’ (pursuing
horizontal objectives and fiscal discipline)
• But public support is ambivalent and can raise frictions (note de facto close integration of UK
and EU markets)
• WTO-only-scenario (unlikely)?
• Multilateral disciplines and procedures don’t bite
• But resurrection of trade remedies: might hurt!
• Note a ‘paradox’
• Stronger disciplines are usually accompanied with lessening of unilateral ones
• What’s best?
• Towards a domestic (subsidy/trade remedy) authority? Extending powers of
Commission and Markets Authority?
More soon
• In progress … mapping of 281 PTAs on subsidies and State-Owned
Enterprises (SOEs) …