Weaponizing EU State Aid Law to Impact the Future of EU Investment Policy in the Global Context

Description

This book provides a comprehensive analysis of how EU state aid law is shaping the future of EU investment policy in a global context. It examines in detail how EU state aid policy and practice interact with the EU investment regime on the internal market and affect the external trade relations of the Member States and the EU alike. The debate this book engages in concerns competence, i.e., which body delineates the scope of state aid law and policy (now and in the future) when and where it intersects and collides with another distinct legal field: investment protection. Pursuing a doctrinal approach to the topic in the light of EU law and international law, the book analyses the interaction of the EU’s trade, state aid and investment policy. This is done by posing the following research question: How is EU state aid law shaping the future of EU investment policy in a global context? Further, the book puts forward three corresponding arguments. First, this influence can be seen in the EU’s incorporation of clauses promoting fair competition and state aid policy in international trade agreements. Second, EU state aid law and policy contributed to recent internal developments which led the Member States to terminate their bilateral agreements with each other (intra-EU BITs) by the end of 2019. Third, the EU has been working to replace the BITs between its Member States and third countries (extra-EU BITs) with its own trade agreements, which are aligned with EU legislation. This combined analysis of EU law and international law yields a number of interesting conclusions. The book addresses a highly topical and rapidly evolving area of EU law and international investment law. It is also the first book to provide a comprehensive approach to the interplay of state aid rules and EU investment policy internally and externally, i.e., within the EU and on a global scale. As such, it closes an important gap in the extant literature on international and EU law.  Foreword EU State Aid Law as a Policy Tool for Tame Investment Protection Foreword Preface Acknowledgements Contents Abbreviations List of Figures List of Table Chapter 1: Introduction 1.1 Structure 1.2 `For the EU: ISDS Is Dead´ 1.3 EU´s Rationale for Abolishing ISDS from a State Aid Law Perspective 1.4 The Current Situation of Intra-EU BITs and Extra-EU BITs 1.5 EU Investment Policy in a Global Context 1.5.1 Effect on the Future of EU Global Trade 1.5.2 Ending Intra-EU BITs 1.5.3 Replacing Extra-EU BITs with EU FTAs 1.6 Purpose, Contribution and Research Question (What This Monograph Contributes to the Research on the Subject) 1.7 The Method, Material and Delimitations Cases References Chapter 2: The Parallel Development of FDI and Competition Policy 2.1 Introduction 2.2 Three Theories on Free Trade and European Integration 2.2.1 Theories Behind Free Trade 2.2.2 European Integration Theories 2.2.3 European Governance 2.3 Subsidies and Foreign Investment Globally Since the 1940s 2.3.1 Subsidies: GATT and the WTO 2.3.2 International Investment, IIL and the Network of IIAs 2.3.3 Investment Incentives: The Elephant in the Room 2.4 Subsidies and Foreign Investment Development in the EU 2.4.1 The Era of the Market Economy: The Treaty of Paris 2.4.2 The Era of Integration: From the Treaty of Rome 2.4.3 The Era of Coordinating External Actions: The Treaty of Maastricht 2.4.4 The Era of Governance: From the Treaty of Amsterdam 2.4.5 The Era of Expansion of Competencies: From the Treaty of Lisbon 2.5 Summary and Conclusions Cases References Chapter 3: The EU State Aid Regime 3.1 Introduction 3.2 The Legal Framework 3.2.1 EU State Aid Legislation 3.2.2 The Four Cumulative Criteria Criterion 1: `Derived from State Resources´ Criterion 2: `Selective Advantage´ Criterion 3: `Potential to Distort Competition´ Criterion 4: Affecting Intra-Community Trade 3.2.3 State Aid Law: Complex and Immense 3.3 The Notion of State Aid 3.3.1 State Aid or Subsidies: Non-Identical Twins 3.4 Development of State Aid Law and Policy 3.4.1 Internal Dimension 3.4.2 Extraterritorial Dimension 3.5 State Aid Procedures in the EU: The Commission as the King of the Hill 3.5.1 Thou Shall Not Proceed Un-Notified 3.5.2 Unlawful or Incompatible Aid 3.5.3 Clawback Procedure 3.5.4 Member States Under a Magnifying Glass 3.5.5 State Aid Control and Enforcement: Third Countries 3.6 Summary and Conclusions Cases References Chapter 4: The Breaking Point: The Micula Award 4.1 Introduction 4.2 Overview 4.3 The Bad Beginnings 4.3.1 The Incompatibility Issues 4.3.2 Execution Proceedings in Romania 4.3.3 Micula Award Was Unlawful State Aid 4.3.4 Going on a Forum Shopping Spree 4.4 The Thorny Dilemma 4.4.1 The Treaty Conflicts 4.4.2 Legitimate Expectations Challenging the Validity of EU Law 4.4.3 In a Void, There Can Be a Conflict 4.5 The Shock and the Reverberations: Analysis and Conclusions Cases References Chapter 5: New Centre of Gravity 5.1 Introduction 5.2 Overview 5.3 The EU´s Legal Order and the Autonomy of EU Law 5.4 ISDS Is Not Compatible with EU Law 5.4.1 A Bit About BITs and TIPs 5.4.2 The EU Is Not Like Other IGOs 5.4.3 The Procedural Paradox 5.5 State Aid Regime vs ISDS (The Requirement for Legitimacy) 5.5.1 Investment Incitements Can Be Unlawful State Aid 5.5.2 Legitimate Expectations: State Aid vs FET 5.6 From Casual Collisions to Recurrent Clashes 5.6.1 When Two Imperatives Meet 5.6.2 Awards As State Aid 5.6.3 Imputability 5.7 Summary and Analysis Cases References Chapter 6: Proving the Point: The Point Proved 6.1 Overview 6.2 The EU´s Strategies to Employ State Aid Rules on Third Countries 6.2.1 Multilateral State Aid Control 6.3 Plurilateral Regional Agreements 6.3.1 The EEA Agreement and EFTA 6.3.2 The Curious Case of the Effect of State Aid in Switzerland 6.4 State Aid in the EU´s Bilateral Agreements 6.4.1 Candidate Countries and Potential Candidate Countries 6.4.2 Stabilisation and Association Agreements Countries and State Aid 6.4.3 European Neighbourhood Policy Southern Neighbourhood Countries A Short Case Study of an EaP Country with a DCFTA: State Aid in Ukraine State Aid in the United Kingdom After Brexit 6.4.4 Other Third Countries: State Aid, WTO or Something in Between? 6.5 State Aid Provisions As a Limit of Investment Protection 6.5.1 State Aid Provisions in Bilateral IIAs 6.5.2 State Aid Provisions in Multilateral IIAs Energy Charter Treaty 6.6 Summary and Conclusions Cases References Chapter 7: Extra-EU BITS: Adjusting to a New Reality or Being Phased Out 7.1 Overview 7.1.1 Within Long-Lasting Transition 7.2 No State Aid Provisions in Extra EU BITs = Repeating Intra-EU BIT Issues 7.2.1 Lack of State Aid Provisions Leading to ISDS (Which Is Against EU Law) 7.2.2 ISDS in Extra-EU BITs: Infringing the Autonomy of EU Law? 7.2.3 Which Tribunal/Court to Turn to for Extra-EU BIT Claims 7.3 Can the Extra-EU BITS Be Redeemed? 7.4 Modernisation of Dutch Extra-EU BITs: Avoiding Future Collisions 7.5 Summary and Conclusions Cases References Chapter 8: Summary, Analysis and Conclusions: The Effect of EU State Aid Law on EU Investment Policy 8.1 Overview 8.2 Summary of Discussions 8.2.1 State Aid Near and Far Correlating to Investment Policy 8.2.2 EU State Aid Regime and Its Multiple Purposes 8.2.3 Intra-EU BITs and State Aid Law 8.2.4 The Autonomy of the EU Legal Order and ISDS 8.2.5 Extra EU-BITs and State Aid Law 8.3 Original Contribution 8.4 The Purpose and Statements of This Monograph 8.4.1 The First Argument: Incorporation of State Aid Clauses in Trade Agreements 8.4.2 The Second Argument: Ending Intra-EU BITs 8.4.3 The Third Argument: Replacing Extra-EU BITs with EU FTAs 8.5 Main Findings 8.6 Conclusions: State Aid to Tame Investment Protection Now and in the Future 8.7 Future Challenges Cases References Appendix A. The EU´s BITs, TIPs and IPAs with Countries (State of Play, October 2019) Appendix B. EU´s BITs, TIPs and IPAs with Trading Blocs (State of Play in October 2019) Appendix C. Micula Case Timeline