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1/10 my first thoughts on the subsidy chapter. With the very large exception of NI, UK has achieved a much higher degree of control and flexibility than under the EU State aid rules.
2/10 By effectively affirming (rather than replacing) Art 10 NIP, the UK has granted a foreign power the right to review and disallow many fiscal decisions in NI. A historic moment and an extraordinary loss of sovereignty for the UK.
3/10 For GB, State aid has gone. Subsidy under the TCA is a much narrower concept delimited by real effects on trade and investment (not competition outside airlines). This is a big deregulatory step. Very pleasing to see.
4/10 TCA incorporates the EU’s “reference framework” approach to tax specificity. This is a mistake. The concept is intellectually incoherent and creates uncertainty for tax payers especially in digital industries. Although this is a moving feast for the EU too, cf Apple case.
5/10 EU spending is effectively excluded from the TCA subsidy provisions. Not simply because it is EU spending as had been reported - but because COVID and non-economic crisis response is excluded. This is a gap in protection but is at least reciprocal.
6/10 The remedies approach is almost exactly as I proposed in my August paper for CBP (see Annex D and p 78 onwards) https://centreforbrexitpolicy.org.uk/wp-content/uploads/2020/07/REPLACING-THE-WITHDRAWAL-AGREEMENT-How-to-ensure-the-UK-takes-back-control-on-exiting-the-transition-period-12-July-20.pdf 1. standing in each other’s system; 2. Unilateral retaliation; 3. Arb panel to review proportionality of retaliation not underlying aid
7/10 GB does not need an ex ante review system. It should have one - but doesn’t need to have one! Domestic enforcement could be just via complaints in Courts. Big deregulatory step for GB. Most cases don’t generate complaints - esp not via court.
8/10 There is no carve out for economic infrastructure as there is under WTO SCM. This is also a mistake. Although most big such spending in GB will be by Act of Parliament and protected from aid recovery by Art 3.11(5).
9/10 Legality of subsidy is measured against “principles”. These are good subsidy policy ideas borrowed from EU State aid. More liberal than my CBP proposals in fact. The last principle allows balancing against internal objective of subsidy not common interest.
10/10 That’ll do for Boxing Day. Interesting to see the landing zone was such a long way from the EU Council mandate and personally happy to see so many similarities with my earlier proposals! Well done to both UK and EU teams.
