State Aid and Subsidy Control in EU’s PTAs: Variable Geometry and Intensity of Commitments

The European Union (EU) has emerged as a leading force in the realm of Preferential Trade Agreements (PTAs). An examination of the subsidy control provisions within these agreements reveals that the EU consistently employs a progressive and intensifying approach to regulatory harmonization in alignment with EU state aid law. The level of harmonization varies, contingent upon the geographical proximity and extent of economic integration among the participating parties. This harmonization strategy encompasses procedural, institutional, and substantive elements, all aimed at preventing regulatory divergence that might otherwise facilitate distortive practices in both subsidy provision and control. In contrast, other prominent global trade powers do not pursue such an ambitious path, as their subsidy control provisions closely resemble the multilateral rules established by the World Trade Organization (WTO). This chapter elucidates the manner in which these provisions evolve among PTA partners and assesses the practical implications of this divergent approach. In essence, the EU’s ambitious agenda has effectively disseminated its state aid laws to its PTA counterparts, while contemporaneously, innovative legal paradigms in the domain of subsidy control are gaining momentum within the multilateral sphere.