Each side gives examples of what has been agreed by the EU in the past: the UK`s position is similar to what the EU has agreed with Canada, for example. But then Japan and the EU agreed on new subsidy restrictions, as did the possible compromise proposed above; and the United Kingdom has accepted these restrictions in its own free trade agreement with Japan. On both the British and EU sides, it is argued that the other side negotiated the future trade agreement in bad faith. So what is the true picture of state aid? But the UK and the EU have totally different proposals on what this means for a future free trade agreement. The free trade agreement proposed by the United Kingdom only concerns (in Chapter 21) consultations on subsidies, without reference to how the rules could be applied domestically, and a ban only on export subsidies for agricultural products. It excludes these consultations from dispute resolution. This goes against the political statement, which explicitly mentions a framework, as well as the application and resolution of disputes. On the basis of the latter proposal, a possible compromise could consist of the adoption by the United Kingdom of a national framework for state aid, with effective application and dispute resolution, which is not subject to EU law but to international law in the form of the World Trade Organisation subsidy code. The Think tank Institute For Government has put forward detailed proposals on how this might work. There are many exceptions, such as „social aid to individual consumers,“ aid for natural disasters, and aid to promote economic development in places where living standards are very low. But in general, the rules are designed to prevent Member States from using public funds to give companies an unfair advantage over their rivals in other Member States.

UK and EU officials are meeting on a sensitive issue in negotiations for a future free trade agreement. A number of issues could fail in the discussions, but perhaps the most important is state aid. So what is in this quarrel and can it be resolved? Firstly, there is a general reduction in all UK agricultural aid, within a ceiling, which must be set by the agreement of the Joint Committee between the EU and the United Kingdom – Article 7, paragraphs 2 and 8. Otherwise, appearance must be suspended (Article 8, last paragraph), which seems to put the UK in a less powerful negotiating position. Future relationships must ensure open and fair competition. The provisions that guarantee it should be state aid, competition, etc. and relevant tax issues that are based on the level playing field under the withdrawal agreement and meet the conditions of general economic relations. Parties should consider the exact nature of commitments in the relevant areas, taking into account the breadth and depth of future relationships. These obligations should combine EU standards with appropriate and relevant international standards, appropriate mechanisms to ensure effective domestic implementation, enforcement and resolution of disputes in future relations.

The state aid expert, Dr. Totis Kotsonis of Pinsent Masons, the law firm behind Out-Law, said: „With regard to the revocation of the general ban on state aid and the requirement for advance notification as well as other related provisions in the Treaty on the Functioning of the EU, it is particularly interesting to decide to repeal the existing decisions of the European Commission on state aid , so that they have no legal effect in the United Kingdom at the end of the transition period.