Subsidy Control
(formerly known as “State Aid”)
The issue of subsidy control, also known as “state aid”, was one the major areas of contention between the United Kingdom and the European Union’s negotiations of the UK-EU Trade and Cooperation Agreement.
In general terms, a subsidy is a financial contribution using public funds which benefits the recipient. This could include, for example, a cash payment, a loan with interest below that could be obtained from the market, or a loan guarantee.
Subsidies are administered by all levels of government in the UK and a complex web of regulations, international treaty commitments, and record keeping requirements (in some cases, for up to 10 years) lie in wait for an unwary public authority.
Whilst the direct force of the European Union’s state aid regime is no longer applicable, public authorities wishing to grant subsidies for entirely legitimate public policy objectives are now obliged to respect the UK’s legal obligations deriving from:
The World Trade Organisation
Free Trade Agreements
UK-EU Trade and Cooperation Agreement
The Northern Ireland Protocol (Article 10)
Domestic UK subsidy control regime
and correctly apply, on a case by case basis, whether their proposed subsidy carries any “appreciable risk” of triggering any of the dispute mechanisms within the treaties and agreements above.
Arfon Consulting’s staff have a decade’s worth of practical experience advising public authorities in both the United Kingdom and the European Union on state aid and subsidy control measures. In particular, we are able to provide guidance and technical assistance in correctly applying the “Five Tests” of subsidy control:
Determining whether a measure is a subsidy and what international obligations may be relevant;
Evaluating whether the measure is a prohibited subsidy;
Determining whether a measure is within scope of the UK-EU Trade and Cooperation Agreement’s subsidy control principles;
Assess the likelihood of triggering a dispute under the WTO anti-subsidy rules and UK FTAs with other countries (Canada, Ukraine and Singapore to date); and,
How to correctly record the award of a subsidy.
We recognise that this is a complex area of public policy with guidance and practical application of subsidy control mechanisms constantly evolving. within a fast moving environment. We are therefore pleased to offer a free 30-minute discovery call to public authorities upon request.
