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The EU State aid mechanism is a special topic. This paper delivers a relatively comprehensive presentation and analysis on EU State aid mechanism. Based on EU Treaty, by frequently referring to ECJ classic and latest cases and existing research fruits achieved by Chinese and foreign scholars, this paper makes a research whose focus is on several principal pillars of EU State aid mechanism, such as the definition, components, basic forms and legal analysis of State aid, as well as basic substantial and procedural regulations, detailed regulations, relations with WTO subsidy and countervailing system, reform and new developments etc.Chapter 1 is an introduction of EU State aid. State aid is greatly similar to subsidy. To be simple, it means various aids granted by EU member state with its national resources to certain enterprises or products. Its components include "Advantage", "State", "Specificity", "Distortion or threat of distortion of competition" and "Affecting trade between member states". Its basic forms include direct grant, reduction and exemption, favorable clauses, security and equity participation. EU State aid mechanism falls into the category of EU competition law and should have a very peculiar legal status. Chapter 2, in substances and procedures, presents the basic regulation of Sate aid. On substantial side, apart from the general State aid, EU also establishes rules for permitted and maybe permitted State aid, as exceptions. Such cases generally involve special incidents or regions; on procedural side, the Commission, as the principal administrator of State aid, handles the inspection of existing State aid, notification and preliminary inspection of new State aid, formal investigation, litigation and recovery of illegal State aid. The Council is rarely involved. ECJ, as the final arbitrator of litigation, gives meaningful responses to many detailed questions. Chapter 3 further presents the detailed regulation both in horizontal and sector respects with selection. On the basis of basic regulation, such detailed regulation applies to a certain aid. Chapter 4 firstly briefly explains the basic rules of WTO subsidy and countervailing measures, then makes a comparison between EU State aid mechanism and WTO subsidy and countervailing measures rules and points out that State aid is not comprised by subsidy, vice versa. Actually they has some overlapping characteristics. This paper presents and analyses the point that EU State aid is subjected to double regulation, namely EU law and WTO law. This chapter is also supported by a typical WTO case, namely the Airbus case. Chapter 5 shows the reform and new developments of EU State aid mechanism, including a reform action plan and certain specific regulations adopted during the 2008 financial crisis.
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