European Competition vs. Global Competitiveness Transferring EU Rules on State Aid and Public Procurement Beyond Europe

Abstract

As long as state aid outside the EU is unregulated, the European Commission faces a dilemma: either European firms will be disadvantaged in global competition by strict EU rules, or the Commission will come under pressure to relax the rules, thereby running the risk that fair competition within the EU will be undermined. As a consequence, the Commission attempts to promote EU rules on state aid and public procurement beyond EU borders — in non-member countries as well as at the WTO level. This article analyses the Commission’s channels of regulatory transfer and the factors accounting for its varying success. Bilateral cooperation provides many opportunities to spread European state aid rules, but decentralised enforcement at the national level remains ultimately deficient. Moreover, the transfer of European rules to the multilateral WTO depends heavily on the EU’s ability to reach prior consensus with its most powerful partner and rival, the US government.