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STATE AID CONTROL IN THE CONTEXT OF GLOBALISATION Blanca RODRIGUEZ GALINDO * Head of International Relations Unit EUROPEAN COMMISSION DG COMPETITION Trier, 12th November2015 * This presentation does not reflect the official opinion of the European Commission. Responsibility for the information and views expressed therein lies entirely with the Speaker Summary Context Short description of WTO rules State Aid Control in the context of the EU TRADE strategy EU-KOREA Free Trade Agreement (FTA) Transatlantic Trade and Investment Partnership Agreement (TTIP) Agreements with Candidate Countries and EU Neighbourhood Countries Conclusions and way forward Context Trade and investment liberalisation shouldn't be circumvented through anticompetitive behaviour by companies and governments Subsidies can nullify benefit of decrease in customs tariffs resulting from Trade liberalisation EU State Control system: General scope applicable to all sectors of the economy. General prohibition with exemptions Outside the EU, lack of a comprehensive and uniform system of control of State Aid/Subsidies WTO Rules WTO Agreement on Subsidies and Countervailing Measures (ASCM). Applies only to goods and not to services Prohibited subsidies: Export subsidies, Import substitution subsidies. Defined on the basis of their nature Actionable Subsidies that cause adverse effects on WTO members. Defined on the basis of their effects Non actionable subsidies, some examples: assistance to research activities, assistance to disadvantaged regions, assistance for adaptation to new environmental requirements Reporting obligations but non ex ante control GATS for services, provides only for consultation when a member country considers that is adversely affected by a subsidy of another member State Aid Control in the context of the EU Trade strategy A holistic Trade strategy tackling beyond the barriers obstacles like public procurement and competition including subsidies Systematic inclusion of State Aid Provisions in Free Trade Agreements (FTA) negotiated since 2006 (around 36 FTAs) Going beyond WTO provisions (WTO +): Broaden the scope to include services Increased transparency obligations Prohibition of most distortive forms of aid Illustration through concrete examples: EU-Korea FTA, TTIP and EU-Ukraine Association Agreement EU – Korea Free Trade Agreement Entered into force in 2011. Chapter 11 on competition and subsidies Best endeavours clause to remedy or remove distortions of competition caused by subsidies Scope, only goods but best endeavours to develop rules applicable to subsidies to services Transparency, reporting should contain information concerning the objective, form, the amount or budget and where possible the recipient of the subsidy Prohibition of unlimited guarantees and subsidies to companies in difficulties without a credible restructuring plan Transatlantic Trade and Investment Partnership Agreement (TTIP) Negotiations ongoing. 11th round took place in October 2015 Scope, both goods and services Transparency obligations more granular including legal basis, form, amount and where possible recipient of subsidies Structured consultation mechanism on subsidies potentially affecting one of the parties interest focused on objective, incentive effect, proportionality (EU common principles) Discussion on potential disciplines for most distortive types of subsidies Agreements with Candidate Countries and EU Neighbourhood Countries Deep and Comprehensive Free Trade Agreement (DCFTA) with Ukraine. Enter into force January 2016. Chapter 10 on competition and subsidies Scope both goods and services General prohibition of state aid which may affect trade between the two parties and exemptions clearly inspired in article 107 of the TFEU Obligation for Ukraine to establish a domestic State Aid control system and operational independent authority to manage it Alignment with the EU acquis Conclusions and way forward Pursuing holistic trade strategy with state aid as an essential element of the negotiations in FTA Negotiations with other important trade partners recently concluded or ongoing like Canada, Singapore, Vietnam and Japan Negotiations to be started with other important trade partners like Mexico or Australia-New Zeeland Monitoring implementation of the subsidies provision in FTA Thank you for your attention http://ec.europa.eu/competition/international/bilateral/korean_fta.pdf http://trade.ec.europa.eu/doclib/docs/2015/january/tradoc_153019.6%20Competition%20SoE%20S ubsidies%20merged.pdf http://trade.ec.europa.eu/doclib/docs/2015/january/tradoc_153031.pdf http://eeas.europa.eu/ukraine/docs/association_agreement_ukraine_2014_en.pdf (only from pages 110 to 115) http://trade.ec.europa.eu/doclib/docs/2015/october/tradoc_153846.pdf