Research Handbook on European State Aid Law
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Research Handbook on European State Aid Law

Edited by Erika Szyszczak

This timely new Handbook reflects on current issues that confront State aid law and policy in the EU.
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Chapter 18: State Aid (Subsidies) in International Trade Law

Rike Krämer and Markus Krajewski


Rike Krämer and Markus Krajewski No question in international trade law is as contentious, and as complicated, as the question of subsidies. Andreas F. Lowenfeld1 I. INTRODUCTION European Union law on State aid cannot be seen in clinical isolation from other transnational regimes applicable to governmental support for domestic economic actors. In particular, as a Member of the World Trade Organization (WTO), the EU must adhere to the rules of the multilateral trading system which apply to subsidies, the term of art for State aid in the WTO context. State aid in the European context is embedded in a multilevel system of disciplines and exceptions determining the legality of governmental support measures and the reactions of States, international institutions and economic actors to these measures. This has three important practical consequences. First, support measures of EU Member States must not only adhere to EU State aid law, but are also subject to the WTO provisions on subsidies. WTO law is an integral part of EU law and therefore binding on the Member States of the EU (Article 216(2) TFEU). It has the same legal supremacy over domestic law as primary and secondary EU law. Furthermore, all EU Member States are also Members of the WTO and are therefore bound by these rules also in their own right. As a consequence, the legality of a support measure or the possible consequences of that measure may not only depend on EU law but also on WTO rules. Second, support measures...

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