LONDON — The U.K. could agree to write state aid principles into a trade deal with the EU.
Chief British negotiator David Frost said Wednesday the two sides were “beginning a discussion” that could see broad ambitions for subsidies written into the text of a deal.
The U.K. has so far insisted it must have full sovereignty over its state aid regime once the Brexit transition period ends at the end of December, but Brussels wants Britain to stick to current rules.
EU negotiators have reduced their ask for alignment, but still want Britain to set out what its regime will look like and what a regulation and dispute process would entail, amid fears the U.K. could undercut its firms.
Appearing before the House of Lords European Union committee, Frost insisted the U.K. would not set out detail, but said the two sides were discussing whether it was possible “to go further than you normally do in an FTA and agree some provisions that shape and condition the subsidy policy on both sides.”
He said that would involve high-level principles such as how state aid grants must contribute to market failure, be transparent and not have negative effects on trade and investment.
He also admitted that the U.K. could benefit from a dispute resolution process to challenge EU state aid decisions. “I can quite see us being ready to use them just as much as the EU in future,” he said. “Other EU countries subsidize quite often more than we do and that could definitely have an impact on us.”
Frost also refused to spell out what progress would be needed for Britain to continue talks after the October 15 European Council summit — which Boris Johnson has set as a deadline for a deal. He said he would advise the prime minister on progress in the run-up to the summit.