The controversy over the fate of the Port Talbot steel works has meant that the EU’s State aid rules have become a focus of the campaign on the EU referendum, with the Out campaign arguing that the EU’s State aid rules would prevent the UK or Welsh Governments from granting money to support the continued operation of the works.
It is though important to note that – as Kelyn Bacon QC and I point out in a letter published today in the Daily Telegraph – exit from the EU would not mean escape from constraints on the ability of Government to subsidise industries such as steel at will. The EEA Agreement and Swiss Agreements contain equivalent prohibitions on State aid: and in our view it is inconceivable that the EU would give the UK anything like access to the single market without requiring compliance with State aid rules. Indeed, the WTO has provisions prohibiting subsidies (for details of all these, see chapter 4 of Kelyn’s book on EU State Aid Law).
But quite apart from the point that escape from the State aid rules is more or less impossible, it would also be undesirable. In UKSALA’s contribution to the Coalition Government’s Review of the Balance of Competences (see here) we highlighted a number of concerns about the State aid rules but came to the firm conclusion that those rules and the current balance of competence between the EU and the UK and other Member States serves the UK national interest well. As a country that has tended to give rather less State aid than other Member States, UK business is in general well-served by a regime that controls unfair subsidies to competitors in other Member States and which offers business a variety of remedies when infringements occur. That conclusion was supported by the Review itself: see here.
Members of UKSALA who would like to add any further thoughts on the State aid aspects of the Brexit debate are of course encouraged to blog on this site!
GEORGE PERETZ QC