Annex 1: Examples of continuity and other Free Trade Agreement commitments
Updated 24 June 2021
Some of our free trade agreements contain provisions on subsidies, which seek to prevent any harm caused by subsidies to the trade between the Parties to the agreement. In the table below you will find an outline of these provisions, including whether an FTA prohibits certain types of subsidy which are not already prohibited by the WTO ASCM rules. When considering whether a proposed subsidy is captured by the commitments in an FTA, it is important to begin by recognising that both Parties should avoid granting subsidies that distort trade between the two Parties.
Subsidies provisions in FTAs often include commitments on transparency, including the regular notification of subsidies. If a Party feels that bilateral trade has been harmed by a subsidy, they can seek to enter into consultations with the other Party to address their concerns. In some FTAs, the outcomes of consultations are subject to the dispute settlement mechanism of the FTA.
You can view all existing UK trade agreements.
If you have further questions about how a proposed subsidy interacts with the subsidy commitments in an FTA, please contact the Department for International Trade.
Canada
Coverage of the subsidy chapter
Goods
Additional prohibitions
None
What sectors or issues are excluded from being covered in part or in whole by the subsidies provisions?
- agriculture and fisheries
- audio-visual services
Does the chapter contain commitments on consultations and/or transparency?
Yes
Japan
Coverage of the subsidy chapter
Goods and services.
Additional prohibitions
- unlimited loan guarantees are prohibited
- subsidies to ailing firms without a restructuring plan are prohibited
What sectors or issues are excluded from being covered in part or in whole by the subsidies provisions?
- Subsidies granted to enterprises entrusted by the government with the provision of services to the general public for public policy objectives
- natural disasters & exceptional occurrences
- agriculture and fisheries subsidies
- national or global economic emergencies
- audio-visual services
- subsidies granted by sub-central authorities.
Does the chapter contain commitments on consultations and/or transparency?
Yes
South Korea
Coverage of the subsidy chapter
Goods
Additional prohibitions
- unlimited loan guarantees are prohibited
- subsidies to ailing firms without a restructuring plan are prohibited
What sectors or issues are excluded from being covered in part or in whole by the subsidies provisions?
- agriculture and fisheries subsidies
- subsidies to SMEs if they are subject to criteria or conditions which are neutral, which do not favour certain enterprises over others, and which are economic in nature and horizontal in application, such as number of employees or size of enterprise
Does the chapter contain commitments on consultations and/or transparency?
Yes.
Israel
Coverage of the subsidy chapter
Goods and services
Additional prohibitions
N/A
What sectors or issues are excluded from being covered in part or in whole by the subsidies provisions?
- agriculture and fisheries subsidies
Does the chapter contain commitments on consultations and/or transparency?
Yes
Jordan
Coverage of the subsidy chapter
Goods and services.
Additional prohibitions
N/A
What sectors or issues are excluded from being covered in part or in whole by the subsidies provisions?
- agriculture and fisheries subsidies
Does the chapter contain commitments on consultations and/or transparency?
Yes
Kosovo
Coverage of the subsidy chapter
Goods and services.
Additional prohibitions
N/A.
What sectors or issues are excluded from being covered in part or in whole by the subsidies provisions?
- agriculture and fisheries subsidies
Does the chapter contain commitments on consultations and/or transparency?
Yes.
Morocco
Coverage of the subsidy chapter
Goods and services.
Additional prohibitions
N/A
What sectors or issues are excluded from being covered in part or in whole by the subsidies provisions?
- agriculture and fisheries subsidies
Does the chapter contain commitments on consultations and/or transparency?
Yes.
Palestine
Coverage of the subsidy chapter
Goods and services.
Additional prohibitions
N/A
What sectors or issues are excluded from being covered in part or in whole by the subsidies provisions?
- agriculture and fisheries subsidies
Does the chapter contain commitments on consultations and/or transparency?
Yes.
Tunisia
Coverage of the subsidy chapter
Goods and services.
Additional prohibitions
N/A.
What sectors or issues are excluded from being covered in part or in whole by the subsidies provisions?
- agriculture and fisheries subsidies
Does the chapter contain commitments on consultations and/or transparency?
Yes
Ukraine
Coverage of the subsidy chapter
Goods and services.
Additional prohibitions
N/A.
What sectors or issues are excluded from being covered in part or in whole by the subsidies provisions?
- agriculture and fisheries subsidies
Does the chapter contain commitments on consultations and/or transparency?
Yes
Georgia
Coverage of the subsidy chapter
Goods and services.
Additional prohibitions
N/A.
What sectors or issues are excluded from being covered in part or in whole by the subsidies provisions?
N/A.
Does the chapter contain commitments on consultations and/or transparency?
Yes.
Annex 2: Public authorities’ assessment of how individual subsidies comply with UK-EU Trade and Cooperation Agreement principles
Updated 24 June 2021
For subsidies in scope of the UK-EU Trade and Cooperation Agreement principles (within the subsidies chapter), public authorities should complete the table below and retain for their records. The information should record how the public authority has complied with the principles in designing their subsidy. The notes in the second column are suggestive and not exhaustive but aim to provide a general guide to complete the form.
Principles | How does the subsidy comply with the principle? |
---|---|
The subsidy pursues a specific public policy objective to remedy an identified market failure or to address an equity rationale such as social difficulties or distributional concerns (“the objective”). | What is the public policy objective?What is the rationale for the intervention?
What are the desired outcomes of the intervention? |
The subsidy is proportionate and limited to what is necessary to achieve the objective. | How is the subsidy or scheme proportionate to achieve the policy objective?Demonstrated that the subsidy is limited to what is necessary to achieve the policy objective.
How is this specific level of intervention necessary? Detail the impact of the subsidy on any areas outside the area of focus will be negligible. |
The subsidy is designed to bring about a change of economic behaviour of the beneficiary that is conducive to achieving the objective and that would not be achieved in the absence of the subsidy being provided. | What change of economic behaviour of the beneficiary does the subsidy bring about?Demonstrate how this behaviour would not be achieved in the absence of the subsidy? |
The subsidy should not normally compensate for the costs the beneficiary would have funded in the absence of any subsidy. | What are the types of costs the subsidy is to be used to support?Summarise the evidence gathered to support the costs that will be provided. |
The subsidy is an appropriate policy instrument to achieve a public policy objective and that objective cannot be achieved through other less distortive means. | Why is the subsidy an appropriate policy instrument to achieve the public policy objective compared with other available instruments – e.g., a grant or loan/ loan guarantee compared with, for example, a tax rebate or tax credit market loan or guarantee.Detail other interventions which have been considered, demonstrating and that the policy objective cannot be achieved through less distortive means. |
The subsidies’ positive contributions to achieving the objective outweigh any negative effects, in particular the material effect on trade or investment between the Parties. | Demonstrate how the subsidy could have an effect on trade or investment between the UK and the EU, but the positive contribution of the subsidy outweighs any negative effect of impact on trade or investment with the EU.To evidence this, set out below the positive contributions of the subsidy and anticipated negative effects below, with comments as to why negative effects are outweighed. |
Where relevant, record consideration against Article 3.5 [Prohibited subsidies and subsidies subject to conditions], including consideration of whether that subsidy has or could have a material effect on trade or investment between the Parties. | Have you checked whether the beneficiary in an ailing or insolvent business?Is the subsidiary an unlimited guarantee?
Is the beneficiary a bank, credit institutions or insurance company? |