State interference in the market -State aid, EC and the WTO an explorative study
(2005)Department of Law
- Abstract
- This essay explores the possible influence from WTO law into Community law in the area of State aid. In order to do so one needs to examine questions relating to material law as well as EC enforcement and procedure. Special attention is paid to State aid as regulated in Article 87.1 ECT. When an EC Member State thinks that another Member State is violating Article 87 ECT by administering illegal aid it may, under Article 88.2, bring the matter before the Commission and ultimately before the ECJ. Individuals have no equivalent possibility to initiate proceedings before the ECJ. An undertaking can thus not do the same if it sees that a competitor is receiving aid. An individual may however report the aid to the commission. The Commission may... (More)
- This essay explores the possible influence from WTO law into Community law in the area of State aid. In order to do so one needs to examine questions relating to material law as well as EC enforcement and procedure. Special attention is paid to State aid as regulated in Article 87.1 ECT. When an EC Member State thinks that another Member State is violating Article 87 ECT by administering illegal aid it may, under Article 88.2, bring the matter before the Commission and ultimately before the ECJ. Individuals have no equivalent possibility to initiate proceedings before the ECJ. An undertaking can thus not do the same if it sees that a competitor is receiving aid. An individual may however report the aid to the commission. The Commission may review the question under Article 230.2 ECT. The Commission may thereafter choose to take action or not. If the individual is not happy with the action taken by the Commission another complaint can be maid to the CFI that then reviews the Commissions decision. The CFI's review includes the conduct of the Commission ant what considerations must be taken into account by the Commission. Under Community law the WTO Agreement is considered a mixed agreement. Some parts of it thus fall under the treaty making power of the Community&semic others parts fall under the treaty making power of the Member States. The ECJ has determined that there has to be uniform application in of the International Agreements to which the Community is a party. State aid is concerned one of the areas that fall under the Community's competence. In ECJ case law it has been found that international agreements can be used to review Community acts and secondary legislation. However, the Court has so far denied GATT direct effect. Earlier ECJ case law concerned the old GATT from 1947 which since has been has been replaced by GATT from 1994. The new GATT is far more legal and less political than its predecessor when it comes to questions of conflict resolution. The ECJ's reason for denying direct effect has since changed from that the spirit, general scheme and terms of GATT along with its great flexibility and emphasis on negotiation was intended to get political solutions rather than to be applied within a legal system as the one of the Community to that the WTO Agreement itself does not indicate that it is meant to be directly enforced nor can it be established that that was the intention of the Community institution when concluding the Agreement. Indirect effect of international agreements has not been ruled out, not even when it comes to GATT. The agreement in question has to be implemented into Community law by an implementing regulation. Not only does there has to be a regulation there must also be some indication of what parts of the international agreement are meant to be implemented and in what way. What was intended in the implementing regulation is what determines the indirect effect not the international agreement The core of the EC State aid regime is found in Article 87 ECT in WTO law rules on relating to those matters are found in the SCM Agreement, which is an Agreement under GATT, as well as in GATT Article VI and XVI. The anti State aid and anti subsidy regimes found in Article 87 ECT and the SCM Agreement are similar in that they target positive as well as negative measures. That is positive in the sense that a recipient is given something, and negative in that no additional burden is placed upon the recipient. Another similarity is that they both cover such measures if they are granted in law or in fact. What the SCM Agreement does not and Article 87 does is include measures to favour production of services as well as goods which they both include under their scope. The material considerations in Article 87.1 and the SCM Agreement are of a similar nature. Basic concepts used in both WTO law to determine subsidies and EC law to determine State aid are that the measure is granted by the government, is a form of benefit, is specific to one or certain industries. In EC law there is the additional criteria of distortion of intra Community trade. WTO law uses the criterion of injury to another WTO Member. The ECJ has in its case law found it necessary that a measure is not only granted by government but also that there is a burden on State funds as a result of it. Even if there is less to go on when looking at WTO law there is nothing to indicate a similar criterion. WTO law looks to whether a benefit is conferred to determine measure is a subsidy. The ECJ has established the market investor principle&semic a government can grant loans and public undertakings can use preferential tariffs for certain business partners but only when it can be economically motivated in a way a private investor would. In WTO law a benefit is to be understood as an advantage in relation to others acting on the same market. Specificity as a concept is used by WTO as well as EC law. In WTO law certain subsidies are automatically considered specific&semic those are the ones promoting use of domestic goods over imported and subsidies to increase export. In WTO Law a subsidy can also be specific if it is limited in law or fact to certain enterprises and not granted following objective criteria and in a non discretionary manor. Specificity in EC law is when an aid is only available to certain industries of branch of industry. If the aid is available to other industries and would in fact be granted to those industries the aid is non specific. Access cannot be limited by that the provision is written in such a way that just one or a few industries are possible recipients. In EC law a distortion of trade between the Member States can be assumed unless there is reason to think otherwise. The WTO law demands that an evaluation of another Members injury is based upon positive evidence. The conclusion of this presentation is, that after examining the possible ways of influence from WTO law into EC law, that effects should only possible where that was intended by a political Community institution when concluding or incorporation an international agreement such as GATT. Some of the considerations in WTO subsidy law and EC State aid law are materially similar which may open up for some fruitful exchange of thought, an influence by the power of the argumentation used in relation to Community law. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/1559044
- author
- Karlsson, Anders
- supervisor
- organization
- year
- 2005
- type
- H3 - Professional qualifications (4 Years - )
- subject
- keywords
- EG-rätt
- language
- English
- id
- 1559044
- date added to LUP
- 2010-03-08 15:55:23
- date last changed
- 2010-03-08 15:55:23
@misc{1559044,
abstract = {{This essay explores the possible influence from WTO law into Community law in the area of State aid. In order to do so one needs to examine questions relating to material law as well as EC enforcement and procedure. Special attention is paid to State aid as regulated in Article 87.1 ECT. When an EC Member State thinks that another Member State is violating Article 87 ECT by administering illegal aid it may, under Article 88.2, bring the matter before the Commission and ultimately before the ECJ. Individuals have no equivalent possibility to initiate proceedings before the ECJ. An undertaking can thus not do the same if it sees that a competitor is receiving aid. An individual may however report the aid to the commission. The Commission may review the question under Article 230.2 ECT. The Commission may thereafter choose to take action or not. If the individual is not happy with the action taken by the Commission another complaint can be maid to the CFI that then reviews the Commissions decision. The CFI's review includes the conduct of the Commission ant what considerations must be taken into account by the Commission. Under Community law the WTO Agreement is considered a mixed agreement. Some parts of it thus fall under the treaty making power of the Community&semic others parts fall under the treaty making power of the Member States. The ECJ has determined that there has to be uniform application in of the International Agreements to which the Community is a party. State aid is concerned one of the areas that fall under the Community's competence. In ECJ case law it has been found that international agreements can be used to review Community acts and secondary legislation. However, the Court has so far denied GATT direct effect. Earlier ECJ case law concerned the old GATT from 1947 which since has been has been replaced by GATT from 1994. The new GATT is far more legal and less political than its predecessor when it comes to questions of conflict resolution. The ECJ's reason for denying direct effect has since changed from that the spirit, general scheme and terms of GATT along with its great flexibility and emphasis on negotiation was intended to get political solutions rather than to be applied within a legal system as the one of the Community to that the WTO Agreement itself does not indicate that it is meant to be directly enforced nor can it be established that that was the intention of the Community institution when concluding the Agreement. Indirect effect of international agreements has not been ruled out, not even when it comes to GATT. The agreement in question has to be implemented into Community law by an implementing regulation. Not only does there has to be a regulation there must also be some indication of what parts of the international agreement are meant to be implemented and in what way. What was intended in the implementing regulation is what determines the indirect effect not the international agreement The core of the EC State aid regime is found in Article 87 ECT in WTO law rules on relating to those matters are found in the SCM Agreement, which is an Agreement under GATT, as well as in GATT Article VI and XVI. The anti State aid and anti subsidy regimes found in Article 87 ECT and the SCM Agreement are similar in that they target positive as well as negative measures. That is positive in the sense that a recipient is given something, and negative in that no additional burden is placed upon the recipient. Another similarity is that they both cover such measures if they are granted in law or in fact. What the SCM Agreement does not and Article 87 does is include measures to favour production of services as well as goods which they both include under their scope. The material considerations in Article 87.1 and the SCM Agreement are of a similar nature. Basic concepts used in both WTO law to determine subsidies and EC law to determine State aid are that the measure is granted by the government, is a form of benefit, is specific to one or certain industries. In EC law there is the additional criteria of distortion of intra Community trade. WTO law uses the criterion of injury to another WTO Member. The ECJ has in its case law found it necessary that a measure is not only granted by government but also that there is a burden on State funds as a result of it. Even if there is less to go on when looking at WTO law there is nothing to indicate a similar criterion. WTO law looks to whether a benefit is conferred to determine measure is a subsidy. The ECJ has established the market investor principle&semic a government can grant loans and public undertakings can use preferential tariffs for certain business partners but only when it can be economically motivated in a way a private investor would. In WTO law a benefit is to be understood as an advantage in relation to others acting on the same market. Specificity as a concept is used by WTO as well as EC law. In WTO law certain subsidies are automatically considered specific&semic those are the ones promoting use of domestic goods over imported and subsidies to increase export. In WTO Law a subsidy can also be specific if it is limited in law or fact to certain enterprises and not granted following objective criteria and in a non discretionary manor. Specificity in EC law is when an aid is only available to certain industries of branch of industry. If the aid is available to other industries and would in fact be granted to those industries the aid is non specific. Access cannot be limited by that the provision is written in such a way that just one or a few industries are possible recipients. In EC law a distortion of trade between the Member States can be assumed unless there is reason to think otherwise. The WTO law demands that an evaluation of another Members injury is based upon positive evidence. The conclusion of this presentation is, that after examining the possible ways of influence from WTO law into EC law, that effects should only possible where that was intended by a political Community institution when concluding or incorporation an international agreement such as GATT. Some of the considerations in WTO subsidy law and EC State aid law are materially similar which may open up for some fruitful exchange of thought, an influence by the power of the argumentation used in relation to Community law.}},
author = {{Karlsson, Anders}},
language = {{eng}},
note = {{Student Paper}},
title = {{State interference in the market -State aid, EC and the WTO an explorative study}},
year = {{2005}},
}