Possibility of Developing and Expanding the Regulation of Subsidies through Free Trade Agreements (FTAs): ―Analysis Focusing on a Trend in FTAs Concluded by the EU―

In the absence of progress in the revision of the World Trade Organization (WTO) Agreement on Subsidies and Countervailing Measures (SCM Agreement), the European Union (EU) is making efforts to develop and disseminate rules on subsidies through free trade agreements (FTAs). What is particularly noteworthy about this initiative is that the EU seeks to link the regulation of subsidies with competition law. The specifics vary depending on the circumstances of counterparties to agreements, but as a general trend, the agreements include a provision that encourages the regulation of subsidies through the framework of State aids or competition law. Among other rules that have been recently introduced are those concerning the expansion of prohibited subsidies, redefinition of permissible subsidies, and the regulation of the scope of subsidies related to trade in services. The fact that the EU has succeeded in introducing those new rules under a substantial number of agreements indicates the possibility that those rules may be adopted on a plurilateral or multilateral basis. On the other hand, in light of the small number of agreements concluded with countries that are expected to be unwilling to accept the rules, it may be too early to reach that conclusion. Even so, how the trend in regional agreements will play out will be one of the key points in the future development of subsidy disciplines.