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Analysis of the EU state aid regime

Author: ZhangYun
Tutor: HuangDongLi
School: Graduate School of the Chinese Academy of Social Sciences
Course: Legal
Keywords: State Aid Environmental Protection Tradable Permit Scheme EU Emission Tradable Scheme
CLC: D99
Type: Master's thesis
Year: 2011
Downloads: 121
Quote: 0
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Abstract


With the advancement of economic integration, European Union has become a highly unified market where market economies prevail. The market economy respects the spontaneous regulatory by market forces per se and objects the state intervention in general. However, modern economic theories have established that a pure market regulatory without any state interference can’t promise the efficiency all the time. Therefore, in case of market failure, the state intervention becomes an efficient lever for resource allocation via various instruments, one of which is state aid. State aid refers to a state measure that grants benefits to certain enterprises through public resource, which has an influence on the competition in a manner of artificially improving the market position of the beneficiary enterprises within the granting country, and which might distorts the domestic competition of the granting country as well if misused or abused. In addition, the highly openness of EU market makes its member states more vulnerable to the measures and policies of the others. Therefore, EU hold such a cautious attitude towards the authority of the state aid that state aid shall be generally prohibited unless it is justified by its compatibility with common market. With this sense, EU state aid system is established as a huge complicated system of rules of different levels and of different scopes, among which Article 87 and 88 of“The consolidated Version of Treaties establishing the European Community”constitute its framework, the interpretation of the treaties by the Council of EU(“Council”hereafter) takes the form of“direct legislation”, more detailed rules on the application of treaties and the Council’s direct legislation are enacted by the Commission of EU(“Commission”hereafter), and case laws of the Commission and courts on the EU level are used as reference to the assessment and authority of State aids. As mentioned above, the environment might address a market failure as well, and the Emission Tradable Scheme is the very tool to deal with the“environmental failure”by EU and its member states. Still it can’t integrate with other relevant schemes perfectly due to its immaturity and result in many disputes involving state aid. In view of this, this article will first address the EU state aid laws systematically; on basis of this further discuss how EU state aid laws work on the Emission Tradable Scheme, with an eye on the current theory and practice of EU Emission Tradable Scheme so as to achieve a higher standard of environmental protection. This article is written in the hope of a reference for the construction and operation of Emission Tradable System of China.

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