On the basis of the latter proposal, a possible compromise could consist of the adoption by the United Kingdom of a national framework for state aid, with effective application and dispute resolution, which is not subject to EU law but to international law in the form of the World Trade Organisation subsidy code. The Think tank Institute For Government has put forward detailed proposals on how this might work. Firstly, there is a general reduction in all UK agricultural aid, within a ceiling, which must be set by the agreement of the Joint Committee between the EU and the United Kingdom – Article 7, paragraphs 2 and 8. Otherwise, appearance must be suspended (Article 8, last paragraph), which seems to put the UK in a less powerful negotiating position. The UK government has put forward legislative proposals to repeal EU state aid legislation in the UK at the end of the transitional period for Brexit. On both the British and EU sides, it is argued that the other side negotiated the future trade agreement in bad faith. So what is the true picture of state aid? 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. The proposed new regulations would not affect the rights and obligations of violations of EU state aid rules that would have been implemented before the end of the Brexit transition period, which would still apply in national courts, or legal actions taken before the end of the transition period. However, Mr Kotsonis said that the bill set out the prospect that, at the end of the transition period, the UK might not take into account all the conditions associated with existing decisions on the Commission`s authorisation of state aid.
At the same time, the Commission and EU courts would retain certain powers over aid granted to the UK before the transition period expires as a result of the withdrawal agreement. Future relationships must ensure open and fair competition. The provisions that guarantee it should be state aid, competition, etc. and relevant tax issues that are based on the level playing field under the withdrawal agreement and meet the conditions of general economic relations. Parties should consider the exact nature of commitments in the relevant areas, taking into account the breadth and depth of future relationships. These obligations should combine EU standards with appropriate and relevant international standards, appropriate mechanisms to ensure effective domestic implementation, enforcement and resolution of disputes in future relations. 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.
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.