Belgian plan to aid export firms under investigation

Date: 02/05/1996

AN investigation by the European Commission into a Belgian scheme to help exporters may call into question the ability of member states to respond to competitive devaluations elsewhere in the Union and beyond.

“While it is surely true that these schemes must be checked for anti-competitive behaviour, they are one of the last safeguards member states have,” said a diplomat.

With the disappearance of currency and capital controls and the advent of the single European market, industry in countries based in the so-called 'core' of the Exchange Rate Mechanism are more exposed than ever to currency swings elsewhere.

Unable to reintroduce old-fashioned safeguards, some member states have created special programmes to ensure the competitiveness of their exporting industries.

But these are coming under scrutiny in DGIV, the Directorate-General for competition, as officials look into a 400-million-ecu Belgian programme to bolster vulnerable exporters.

In February, the Commission warned the Belgian government that its 'Maribel bis/ter' schemes, first introduced in 1981 and revised in 1993-94, could amount to illegal state aid and distort competition. A month later, an investigation began.

'Maribel' sanctions reductions in employers' social security payments for manual workers with the aim of improving the competitiveness of enterprises.

In the 1993 budget, 'Maribel bis' was created with a reduction in the size of the social security breaks and, in February 1994, a third 'Maribel ter' was established, allowing greater tax and cost advantages for companies facing international competition.

When the Italian lira and Spanish peseta began their long slide against the 'core' currencies of the ERM in 1993, it was Belgian Finance Minister Philippe Maystadt who first suggested the need for safeguards for the hard currency countries.

He suggested allowing governments in strong currency countries to permit special tax breaks for those industries most exposed to competition from weak currency countries.

The last such generalised scheme in favour of exporters to receive clearance from the Commission was in Ireland, when Dublin tried to defend the punt from devaluation in late 1992 by establishing a 60-million-ecu Market Development Fund to help small and medium-sized enterprises whose survival was under genuine threat.

The Commission allowed the scheme in view of “unique and exceptional circumstances”, historic links between the UK and Irish economies, the small and open nature of the Irish economy and the fact that it was a 'cohesion' country.