State aid rules are one of many issues which have contributed to the stalemate in Brexit trade talks as a no deal scenario looks ever more likely. Since the treaty of Rome in 1957, member states have been banned from giving companies or industries special help that would distort competition. Governments cannot hand out subsidies, tax rebates or take stakes in companies “unless it is justified by reasons of general economic development”. The EU’s chief negotiator, Michel Barnier, has told the UK he will only grant tariff-free access to the single market if the UK respects European standards on environmental protection, workers’ rights and state aid.
This is known as “the level playing field”, but Brexiteers have fumed at this idea as Leave voters have hoped to evade regulation from Brussels.
Prime Minister Boris Johnson is also looking to override the withdrawal agreement because he is unhappy with the EU on state aid under the Northern Ireland Protocol.
He will tell the bloc that an agreement must be reached by October 15 or the UK will walk away.
Northern Ireland Secretary Brandon Lewis conceded yesterday that a new bill to amend the UK’s Brexit deal with the EU will “break international law”.
As state aid rules hold up talks, RTE’s deputy foreign editor – Colm O Mongain – offered his view on what could be motivating the EU.
He said Brussels is concerned that the UK may develop new technology that surpasses the EU.
He said on the Brexit Republic podcast: “There is a growing concern on the EU side that the UK may be looking to loosen any kind of constraints on state aid in order to invest in new technology.
“We know that Dominic Cummings is a fan of new technologies, but, a lot of senior civil servants, especially around the Treasury, would rather like to have a British state aid regime.
“Even if the intention is to invest in new technologies to shift the UK economy into a new wave of dynamism…some have written that there is opportunity here for the UK by slipping out of the EU’s often quite restrictive ideas around developing new technology.
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European Commission President Ursula von der Leyen cautioned that implementation in full of the agreement which Mr Johnson signed up to last year was a legal obligation and a condition for any future trade deal with the EU.
Business groups urged the Prime Minister to refocus his attention on avoiding an “unwelcome and dangerous” disorderly exit from the EU.
Logistics UK, the trade body for the freight sector, warned that his latest move “could jeopardise British business’s ability to keep Britain trading”.