Beyond Apple: State Aid as a Model of a Robust Anti-Subsidy Rule

25 Pages Posted: 8 Feb 2017 Last revised: 14 Nov 2017

Date Written: February 7, 2017

Abstract

In 2016, the European Commission ordered Ireland to recover over € 13 billion in back taxes from Apple. This decision was met with outrage in the United States, where many lawmakers and academics were unfamiliar with the European Union’s prohibition on state aid. This prohibition, which has existed since the founding of the European Coal and Steel Community in the early 1950s, aims to uphold competition within the European Union by preventing EU Member States from providing subsidies to specific undertakings.

This Article uses Apple and other recent state aid investigations to illustrate the broad scope and strong enforcement provisions of the EU prohibition on state aid. In response to calls for a more robust anti-subsidy regime at the WTO level, this Article sets out state aid as a model of one such regime. This Article does not argue that the WTO needs a more robust anti-subsidy regime but instead points to the EU’s state aid prohibition as an example of such a regime for reformers who have themselves called for greater international prohibitions on subsidies.

This Article also argues that, for reformers who want stronger anti-subsidy rules, the WTO is in many ways a more appropriate space for anti-subsidy rules than the European Union. Imposing the state aid prohibition at the WTO level could remove many of the legitimacy concerns that are at the root of the recent criticisms of the state aid prohibition. Because the European Union and its Member States are WTO members, this could also obviate the need for a state aid prohibition at the EU level. These conclusions do not mean that the prohibition on state aid is without its weaknesses, and this Article does not suggest that all elements of the prohibition should be adopted by other jurisdictions. But the European Union takes a very different approach to policing subsidies than does the WTO, and the differences between the state aid prohibition and the WTO’s anti-subsidy rules illustrate how the latter could be strengthened by choosing some elements of state aid doctrine and leaving the rest.

Keywords: European Union, state aid, subsidies, World Trade Organization

JEL Classification: F10, F53, H20, H25

Suggested Citation

Faulhaber, Lilian V., Beyond Apple: State Aid as a Model of a Robust Anti-Subsidy Rule (February 7, 2017). Georgetown Journal of International Law, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2913129

Lilian V. Faulhaber (Contact Author)

Georgetown University Law Center ( email )

600 New Jersey Avenue, NW
Washington, DC 20001
United States

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