A recent piece in the Financial Times on the negotiations over EU state aid mainly discusses the issue’s potential to cause an impasse in negotiations. Yet there is also a danger that the EU might seek to use its continued jurisdiction over Northern Irish state aid as a backdoor to enforce these rules in the rest of the UK, if (say) the Northern Irish subsidiary of a British firm benefited from UK government assistance.
Needless to say, a thin free trade agreement with the EU is hardly worth the sacrifice of key sectors to unfair competition from heavily subsidised EU rivals, especially when even nationwide emergency schemes like furlough might be open to challenge in this fashion by the ECJ. And while highlighting the deleterious effects of the backstop, it also exposes how impractical it is. If the Commission tries to extend its remit to the rest of the UK, the government could simply refuse to answer a summons to the ECJ.
In that event there is nothing much the Commission can do about it, unless they wish to risk imposing tariffs and threatening the cancellation of the withdrawal agreement. There are ancillary concerns that EU state aid rules will be incorporated by default into British law if no new state aid rules are put forward in Parliament. Yet it’s perfectly possible for the Commons to repeal whole swathes of retained EU law, including on state aid, on 31 December – as indeed they should.