Deepening international systems of subsidy control: the (different) legal regimes of subsidies in the EU bilateral PTAs.


An increasingly important aspect of EU external action and trade policy since the lifting of its self-imposed moratorium on PTAs has been the inclusion of WTO+ provisions on nonagricultural subsidies in bilateral agreements negotiated with a number of countries. These provisions are generally designed to achieve a range of objectives, related to developing trade between the contracting parties and to economic and legal/regulatory development within the partner State. However, the resulting legal framework is rather fragmented, especially after the conclusion of recent PTAs like the CETA and the EU-Singapore PTA. The present article aims at producing a comprehensive discussion of the different subsidies disciplines embodied in the EU bilateral agreements. Part I identifies four main groups of EU bilateral agreements – agreements with candidates and potential candidates; agreements with former Soviet Union States and Euro-Mediterranean agreements; early agreements with selected trade partners; ‘second generation’ trade agreements – and examines how such agreements have increasingly been used as an avenue to strengthen subsidies disciplines as substitutes for trade remedy measures, while investigating the determinants that conducted the EU and its several partners to intensify in a selective manner (i.e. not in all the relevant PTAs), the scope of the WTO SCM agreement. Part II of the article first investigates the normative rationales of the discipline in question and its influence on the operation of the relevant rules. It then turns to assess the main problems concerning the possibility of designing a rigorous system of subsidy control in the context of EU bilateral trade relations and the interpretation of the key notions of such regimes. Finally, it analyses the enforcement mechanisms and the trade remedial measures established by the different classes of PTAs. Against such analytical backdrop the article formulates a number of conclusions on the substance and procedure of the EU PTAs’ regimes on public aid. Most notably, it argues that only the discipline established by some of the such agreements substantially improves the multilateral framework and reflects the constitutional settlement that should feature any well-balanced system of subsidy control, that is to say the prohibition of measures impairing market access and the functioning of competition combined with the recognition of the legitimacy of those subsidies pursuing social and other (economic and non-economic) public goals. In practice, this means that such agreements recover a fundamental ‘policy space’, which is currently absent in the WTO SCM. On the procedural side, the article maintains that the enforcement mechanisms and the remedial measures vary considerably with the different PTAs; this, of course, influences also the actual enforceability of the same rules.