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The EU will not offer an FTA without comprehensive state aid provisions. It has asked the UK to set out a regime it can recognise - which is an offer of negotiated equivalence, but if the UK won't even offer up a proposal it has no choice but to stick to its original demands.
It is in the national interest to have comprehensive rules of conduct for state aid in common with the EU. It creates certainty and transparency for both and gives the UK the means to address distortions and imbalances. The rules apply to both. We need it as much as they do.
The Tories imagine they can fall back on WTO state aid rules, but the WTO rules don't go far enough for either side. https://www.turbulenttimes.co.uk/news/brexit/brexit-balanced-and-fairer-trade/
The whole point of an FTA is to have a governance framework for the relationship so that we can deal with issues directly as they occur, instead of relying on the WTO is which not equipped for those purposes. https://www.turbulenttimes.co.uk/news/trade/we-missed-the-boat-on-a-good-deal-but-we-still-need-a-deal/
If the UK refuses to commit to a governance framework, every complaint it might have about EU state aid goes to the back of the queue. If we don't agree to a code of conduct for state aid we have no right to complain about anything the EU does.
There is nothing in EU FTA state aid provisions that outlaws state aid. All it does is set out the legitimate circumstances where it may be used in order to avoid distortions and disputes. If there is an agreed regime we can be trusted to enforce, it has no need to monitor.
If the UK thinks it can simply unplug from regional and global norms and begin subsidising wherever it pleases, it cannot reasonably expect other countries to open their markets to our goods. Not the EU, not anyone else. Why should they?
As much as anything the UK will handle state aid about as well as it has Covid. Government always picks losers, propping up ailing and useless industries soaking up money that would be better applied elsewhere. No self-respecting conservative wants unfettered state aid.
Moreover, the UK wants to be a global leader in trade forums such as the WTO - which works towards the elimination of subsidies and state aid - to bring about a global "level playing field". UK words will be measured against our actions.
The world is watching. Liam Fox makes speech after speech to the WTO about promoting the global "rules based order". How can the UK speak with any authority when it is abandoning the principles of free and fair trade, and breaking the rules when it suits?
