We will remain bound by EU rules for the duration of the crisis and beyond. What assistance measures will the commission permit?by George Peretz / April 30, 2020 / Leave a comment
Almost everyone agrees that the Covid-19 crisis requires huge payouts by governments to support business. That poses challenges for any regime that seeks—as the EU does—to regulate public subsidies in the general interest of making sure that, in a market without borders, industries in one country are not hit by unfairly subsidised exports coming from another.
The way in which the EU state aid regime deals with those challenges remains a matter of direct concern for the United Kingdom, even after Brexit. That is for two reasons.
Most immediately, under the Withdrawal Agreement negotiated by the Johnson government in October 2019 (the WA), the UK will spend (at least) the rest of 2020 in the transition period established by Article 127 of the WA. In that period, almost all EU law—including all EU state aid law—continues to apply in the UK: the UK remains in the EU state aid regime.
But even after the end of the transition period—which the government is still protesting will not be extended—little will change as far as Covid-19 subsidies are concerned. That is because EU state aid law will, under Article 10 of the Ireland/Northern Ireland Protocol to the WA, continue in perpetuity to have substantial application in the UK. Article 10 provides that, even after transition, any UK measure that potentially affects trade in goods between Northern Ireland and the EU will still be caught by EU state aid rules and (as Article 12 makes clear) will still be subject to regulation by the European Commission and the jurisdiction of the European Court of Justice.
Given the scale of the Covid-19 measures and their potential impact on all aspects of trade, any similar measures implemented beyond the end of transition will almost certainly also be subject to the EU state aid rules. They will therefore be unlawful unless and until they are approved by the commission—a rule that all UK courts will have to enforce as if it were part of domestic law as a result of Article 4 of the WA. (For some mysterious reason, the government has been unwilling to discuss these provisions in the agreement that it concluded in October, leading the House of Lords EU Select Committee to comment in its…