Ministers to hold fire on aid reform plans

Date: 17/04/1997

By Chris Johnstone

STATE aid is set to dominate next week's meeting of EU industry ministers - but immediate political decisions on controversial shipbuilding subsidies, rather than long-term reform, will hog the limelight.

European Commission moves to shake up its rules for scrutinising subsidies will take a back seat, given that firm proposals have yet to surface. “There is still nothing on paper,” said one official.

But Competition Commissioner Karel van Miert will nevertheless use next Thursday's (24 April) meeting to update ministers on plans for the biggest shake-up of state aid rules in 30 years.

Officials are preparing two regulations which together would amount to a thorough overhaul of subsidy procedures.

One will aim to clear the decks for further reform, cutting the workload of the Directorate-General for competition (DGIV) by drawing up a new set of block exemptions for subsidies to sectors such as research and development and the environment. The largest cases, however, would still be scrutinised.

The other will set new procedural rules for dealing with cases, including deadlines for decisions and a clear set of consultation rights for interested parties. Both changes would activate Article 94 of the Treaty of Rome, under which supplementary regulations can be drawn up and voted through by qualified majority.

Van Miert told national experts recently that the two regulations would probably not appear before the autumn. However, officials say the block exemptions proposal might be ready before the summer break.

A new set of exemptions would allow competition officials to focus on ad hoc cases of individual aid, often used to rescue and restructure companies, which have mushroomed over the last few years. The number of such cases increased to 36&percent; of all industry aid in 1994 compared with only 7&percent; in 1990.

Impetus for a shake-up of state aid rules came last year from Ireland, with Dublin taking advantage of its EU presidency to put forward its own ideas. It appears that some suggestions, such as establishing registers of how aid rulings are arrived at by the Commission and how governments spend the cash, have already been taken on board.

Meanwhile, industry ministers are set to take immediate decisions on new shipbuilding aid to yards in Germany, Greece and Spain.

“We are optimistic we will get the right decision on shipbuilding aid, but this is a matter for ministers,” said an official from one of the countries involved.