1/ The EU's demand for the UK to be bound in perpetuity by EU State Aid Rules is an absolutely huge, audacious ask.
It is a very extreme way (binding adoption of EU rules) of achieving a legitimate goal (preventing UK subsidies from exploiting EU market openness).
It is a very extreme way (binding adoption of EU rules) of achieving a legitimate goal (preventing UK subsidies from exploiting EU market openness).
2/ All FTAs include some restrictions on government, that's basically all FTAs are.
However, provisions like this would be different because they would bind the UK to follow rules that don't currently exist, and that would be made without their input or clearance.
Huge ask.
However, provisions like this would be different because they would bind the UK to follow rules that don't currently exist, and that would be made without their input or clearance.
Huge ask.
3/ The EU is making it because:
1. It's offering more access to its market than it offers any developed country, including Canada or Japan;
2. The UK is closer and a much larger trading partner;
3. Past UK behavior is no predictor of future policy on subsidies.
4. It can.
1. It's offering more access to its market than it offers any developed country, including Canada or Japan;
2. The UK is closer and a much larger trading partner;
3. Past UK behavior is no predictor of future policy on subsidies.
4. It can.
4/ A sensible UK position is to accept the goal as valid but pursue alternative methods of achieving it.
If that proves impossible, then either accept the EU demand, scale down the deal's ambition on market access (leave some tariffs in place), or scrap it entirely.
If that proves impossible, then either accept the EU demand, scale down the deal's ambition on market access (leave some tariffs in place), or scrap it entirely.
5/ Side note: Provisions that allow (as @SamuelMarcLowe and @Lorand_Bartels, among others have suggested) the parties to partially withdraw market access if the other side subsidizes unfairly have a role to play here.
It looks doubtful they'll be enough alone, however.
It looks doubtful they'll be enough alone, however.
6/ Side side note: The deterioration of the rules based trading system (the WTO) and the way everyone is getting super-gung-ho about protectionism, subsidies and trade wars may also be pushing the EU to get extra demandy here.
Just a theory.
/end
Just a theory.
/end
