Determining if a subsidy
In general terms, and for the purposes of our international commitments, a subsidy is a measure which:
- is given by a public authority at any level – central, devolved, local government or a public body
- makes a contribution (this could be a financial or an in-kind contribution) to an enterprise, conferring an economic advantage that is not available on market terms (examples of a contribution are grants, loans at below market rate, or a loan guarantee at below market rate or allowing a company to use publicly owned office space rent free)
- affects international trade (this can be trade with any World Trade Organisation (WTO) member or, more specifically, between the UK and a country with whom it has a Free Trade Agreement. Please note that you are not being asked whether the subsidy could harm trade but merely whether there could be some sort of effect)
If the measure meets the definition of a subsidy:
- consider which international obligations need to be met
- Is the subsidy supporting production of goods or services
- subsidies for services are outside the scope of the WTO Agreement on Subsidies and Countervailing Measures (ASCM)
The WTO ASCM applies to subsidies in the fish and aquaculture sectors and the WTO Agreement on Agriculture (AoA) applies to subsidies in the primary agriculture sector. If looking to make an award to these sectors, the following sections on TCA requirements do not apply - please refer to the chapter 'World Trade Organisation rules on agriculture and fisheries'.
- the WTO ASCM is most likely to be of relevance to subsidies in sensitive sectors such as aerospace, steel or automotive
- consider any relevant Free Trade Agreements (FTAs) the UK has agreed (including the TCA)
- granting authorities also need to consider the implications of Article 10 of the Northern Ireland Protocol. The Protocol sets out that the EU state aid rules will apply in certain, limited cases where this is relevant to trade between Northern Ireland and the EU
It is extremely important to establish, at the earliest possible stage, whether your project or policy proposal constitutes a subsidy.
If it does, we must ensure it is taken forward in compliance with the UK Subsidy Control rules and requirements laid out in the TCA, WTO and any other FTA. They may require notification, or they may fit with an existing approved scheme or block exemption.
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