WORLD TRADE  
ORGANIZATION   
G/SCM/Q2/EU/1 
7 November 2011 
 (11-5646) 
Committee on Subsidies 
and Countervailing Measures Original:   English 
 
 
 
SUBSIDIES 
 
Replies to Questions posed by INDIA1 regarding the New and Full 
Notification of the EUROPEAN UNION2 
   The following communication, dated 4 November 2011, is being circulated at the request of 
the Delegation of the European Union. 
 
_______________ 
 
 
Aid to the Coal Industry 
 Question 1  
Who are the beneficiaries and how are they identified for availing of aid under this 
programme?  Could the EU also provide the details of entities that have benefited from this aid? 
 
Reply 
 
 Council  Regulation 1407/2002 introduced 3 types of aid: 
 1. aid for the reduction of activity (Article 4); 
 
2. aid for accessing coal reserves which can be divided between aid for: 
  (i) aid for initial investment (Article 5(2)) and  (ii) current production aid (Article 5(3)).  
3. aid to cover exceptional expenses (Article 7). 
  The beneficiaries are coal mining companies th at meet the requirements of Council Regulation 
1407/2002 for the different types of aid.   Beneficiary of aid for the reduction of activity  could only satisfy the conditions for granting 
aid if (i) operation of its production units was discon tinued definitively by 31 December 2007, (ii) the 
aid notified per tonne coal equivalent did not ex ceed the difference between the foreseeable production 
costs and the foreseeable revenue for a coal year, ( iii) the amount of aid per tonne coal equivalent did 
not cause delivered prices for Community coal to be lower than those for coal of a similar quality from 
                                                      
1 G/SCM/Q2/EEC/67. 
2 G/SCM/N/186/EEC. G/SCM/Q2/EU/1 
Page 2  
 
  third countries and (iv) aid did not lead to any di stortion of competition between coal buyers and users 
in the European Union as well as (v) on the electric ity market, the market of combined heat and 
electricity production, the coke production market and the steel market (Article 4 of the Council 
Regulation 1407/2002).  
 Beneficiary of aid for initial investment was requi red to comply with conditions that (i) the aid 
notified and actually paid did not exceed 30 per cent of the total costs of the relevant investment 
project which enabled a production unit to become co mpetitive in relation to the prices for coal of a 
similar quality from third countries,  (ii) the aid had to be earmarked for existing production units 
which have not received aid under Article 3 of D ecision No. 3632/93/ECSC or which have received 
aid authorised by the Commission under the said Article 3 having demonstrated that they were able to 
achieve a competitive position vis-à-vis prices for coal  of a similar quality from third countries and 
(iii)  the aid granted to the investment project in question ensured the economic viability of production 
units of the beneficiary which are subject to aid. Th is kind of aid could not be paid to the beneficiary 
after 31 December 2010 (Article 5(2) of the Council Regulation 1407/2002). 
 
 Current production aid was granted only if beneficiary (i) discontinued operation of its 
production units definitively by 31 December 2007, (ii)  the aid notified per tonne coal equivalent did 
not exceed the difference between the foreseeable production costs a nd the foreseeable revenue for a 
coal year, (iii) operation of the production units c oncerned or of the group of production units in the 
same undertaking formed a part of a plan for accessi ng coal reserves and (iv) aid could be granted to 
production units which, with particular reference to the level and pattern of production costs and 
within the limits of the quantity of indigenous coal afford best (Article 5(3) of the Council 
Regulation 1407/2002).   Beneficiary of aid to cover exceptional expenses needed to prove that he was carrying out or 
had carried out an activity in connection with coal pr oduction to enable them to cover the costs arising 
from or having arisen from the rationalisation and restructuring of the coal industry that are not related to current production. The aid could not exceed such costs (Article 7 of the Council Regulation 1407/2002).    It shall be noted that the Council Regulati on 1407/2002 only applied to hard coal. Other 
qualities of coal, such as lignite, were gove rned by the general State aid rules. 
  Out of the 10 hard coal-producing Member States,  6 countries are giving at least some form of 
State aid under the Council Regula tion 1407/2002until 2010: mainly Germany and Spain, and to a 
lesser extent also Hungary , Poland , Romania  and Slovakia . 
 
 Relevant information concerning State aid gran ted to EU mining companies can be found in 
European Commission's State Aid Scoreboard under:  http://ec.europa.eu/competition/state_aid/studies_reports/studies_reports.html.   Council Regulation 1407/2009 e xpired on 31 December 2010. The Indian authorities could 
also consult the Impact assessment carried out by the Commission in view of the expiry of the Council 
Regulation 1407/2002 in 2009:   http://ec.europa.eu/governance/impact/index_en.htm  
Question 2 
  How does the EU ensure that the aid does "n ot cause lower prices than those from third 
countries?  What steps are taken to ensure th at there is no "distortion of competition"?  G/SCM/Q2/EU/1 
 Page 3 
 
 
  Reply 
 
 One of the conditions of granting of aid for the reduction of activity to beneficiary was introduced by the Article 4(c) of the Council Regulation 1407/2002. This provision explicitly 
prohibited that the amount of aid per tonne coal equi valent must not have caused prices for EU coal at 
utilisation point to be lower than those for coal of a similar quality from third countries. 
  The number of beneficiaries of aid for initial investment was limited only to these undertakings which were not subject to previous ly granted aid under Decision 3692/93/ECSC or in 
case they received such an aid these undertakings must have achieved a competitive position vis-à-vis 
prices for coal of a similar quality from third countries (Article 5(2)(a) of the Regulation 1407/2002). 
Such a provision guaranteed that only undertakings  which were competitive enough to maintain on the 
global market or had proven sufficient progress in  terms of competitiveness and achieved competitive 
position on the global market were allowed to use State aid for initial investment.  
 Moreover, aid for initial investment could be only granted for such projects which enabled 
production units to reach competitiveness level in rela tion to the prices for coal of a similar quality 
from third country (Article 5(2)(c) of the Regula tion 1407/2002). This ensured that only investments 
which allowed a production unit to adjust to the conditi ons of global competition in coal industry were 
supported.  
 Prevention of distortion of competition is ensured by including it as one of condition of the 
test for granting aid for the reduction of activity (Article 4(d) of the Council Regulation 1407/2002). 
 
Question 3 
 
 What are the aspects for which 'operating aid' is provided?  What are the items covered under the category "other" and what is the natu re of activities sought to be 'reduced'? 
 
Reply 
 
 Aid for the reduction of activity could be gran ted to those production units which were subject 
to closure plans whose deadline did not extend beyond 31 December 2007. Closure plans had to lead towards definitive closure of the coal production unit (Article 4(a) in conjunction with Article 2(c) of 
the Council Regulation 1407/2002).   'Operating aid' covered current production aid (A rticle 5(3) of the Regulation 1407/2002). It 
was intended to cover current production losses which we re calculated according to Article 4(b) of the 
Council Regulation 1407/2002, meaning that per tonne coal equiva lent did not exceed the difference 
between the foreseeable production co sts and the foreseeable revenue for a coal year. The aid actually 
paid should have been subject to annual correction, based on the actual costs and revenue, at the latest 
by the end of the coal production year follo wing the year for which the aid was granted. 
 
 Category 'other' included (i) aid for initial i nvestment and (ii) aid to cover exceptional 
expenses. The former was intended to cover expen ses of accessing coal reserves and the latter to cover 
expenses of restructuring and not related to current  production. These included, among others, the cost 
of paying social welfare benefits resulting from the pensioning-off of workers before they reach 
statutory retirement age, the cost for the readaptati on of workers, the supply of free coal to workers 
who lose their jobs as a result of restructuring an d rationalisation and to workers entitled to such 
supply before the restructuring, mining damage provi ded that it had been caused by production units 
subject to closure due to restructuring, costs relate d to the rehabilitation of former coal mining sites, 
(see Annex to the Council Regulation 1407/2002). G/SCM/Q2/EU/1 
Page 4  
 
   
 
Subsidies relating to Fisheries 
 
A. Financial Instrument of Fisheries Guidance (FIFG) 
Question 1 
 
 Can the EU provide the breakup of subsidies provided for various types of aid under item 5 of this programme? 
 
Question 2  
 How are the beneficiaries mentioned in item 6 under this programme identified? 
 
Replies to Questions 1 and 2 
 
 Detailed information on the break of subsidies provided for the various types of aid provided 
is publicly available. In particular the document "E x-Post evaluation of the Financial Instrument for 
Fisheries Guidance (FIFG) 2000-2006" provides extens ive data on the implementation of the Financial 
Instrument of Fisheries Guidance (FIFG). This document is available at the following webpage: 
 
 http://ec.europa.eu/fisheries/documenta tion/studies/fifg_evaluation/index_en.htm 
 
B. European Fisheries Fund (EFF) 
Question 1 
 
 Can the EU clarify the nature of "local strategies in support of the sustainable development of fisheries areas" that has o ccurred under EEF support?  What kind of local 
strategies for sustainable development have benefited from this support? 
 
Reply  
 
 As for the FIFG detailed information on the implementation of EFF is publicly available. 
Concerning the nature of "local strategies in support of the sustainable development of fisheries areas" 
and the kind of local strategies for sustainable development have benef ited from this support, 
information can be found in the following document:  
 
 "Interim evaluation of the European Fisheries Fund (2007-2013) Final report "  (see section 3.6. EQ No. 8: preliminary results achieved by the Axis 4 projects, pages 81-90) available at:   http://ec.europa.eu/fisheries/documentation/studies/eff_interim_evaluation_en.pdf  
 Further information on the implementation of the EFF, including yearly reports, is available at 
the following webpage:   http://ec.europa.eu/fisheries/cfp/eff/index_en.htm   G/SCM/Q2/EU/1 
 Page 5 
 
 
  Question 2 
  How are the beneficiaries identified for receiving the subsidies under this programme? 
 
Reply 
 
 Information on how beneficiaries are identified can be found in the document  
http://ec.europa.eu/fisheries/documenta tion/publications/fep_brochure_en.pdf 
  See also documents available at the web pa ge with general information on the EFF: 
  http://ec.europa.eu/fisheries/cfp/eff/index_en.htm 
 
C. Common Organization of Markets in Fishery and Aquaculture Products 
Question 1 
 
 What is the exact duration of the programme? 
 
Reply 
 
 There is no specific duration for this programme.  
 
Question 2 
 
 Who are the "producer organizations" and ho w are they identified for receiving the 
subsidy? 
 
Reply 
 
 Producer Organisations (POs) are designed to enable producers (whether they catch and/or 
farm fish) to cooperate to manage their resources in a way that makes economic, as well as ecological, 
sense. They do this by drawing up an annual opera tional programme, binding on all their members. 
The programme sets out how catches/production will be spread over the fishing season so as to avoid 
gluts and scarcity, and includes a marketing strategy.  POs are expected to anticipate difficulties, not 
just react to them, and have the power to impose penalties on members who do not respect their production plan. Only producers who belong to a PO  have access to the EU's price support scheme. 
More recently some POs have taken greater respons ibility for fisheries management, for instance by 
managing the quota uptake of their members to ensure  that it is within the total quota available to 
them.   The legal definition of Producer Organisations  is set out in Article 5 of Council Regulation 
(EC) 104/2000.  Detailed rules for the application of Council Regulation (EC) No. 104/2000 as 
regards the grant of specific recognition to producers'  organisations in the fisheries sector in order to 
improve the quality of their products are laid dow n in Commission Regulation (EC) No. 1924/2000 of 
11 September 2000.   The above mentioned Regulations can be found at the following web address: 
 
 http://europa.eu/legislation_summaries/mariti me_affairs_and_fisheries/fisheries_sector_organi
sation_and_financing/l66002_en.htm  G/SCM/Q2/EU/1 
Page 6  
 
   The list of Producers Organisations that can benefit from aid under the Common Organisation 
of Markets is public. The most recent version of this  list can be found in issue C 225/9 of 30.7.2011 of 
the Official Journal of the European Union at the following web address:   http://eur-lex.europa.eu/LexUriServ/LexUr iServ.do?uri=OJ:C:2011: 225:0009:0037:EN:PDF 
 
Question 3  
 What are the steps taken to ensure that th e subsidy promotes "sustainable fishing and 
optimum use of fish products", as specified in the EC notification?  
Reply 
 
 The sustainability of fisheries in the EU is the subject of specific and separate legislation on 
the conservation and management of  marine resources. This legislation can be found in the following 
webpage: 
 
 http://europa.eu/legislation_summaries/mariti me_affairs_and_fisheries/fisheries_resources_ 
and_environment/l66006_en.htm   The provisions and measures under the Common Or ganisation of Markets concern, as one of 
the key objectives, the optimum use of fish produc ts. Examples of such me asures are th e marketing 
standards, including the prohibition to sell unde rsized fish, or the establishment by Producer's 
(fishermen) Organisations of catch plans to ensure th e sustainability of fish stocks or to avoid catches 
of fish for which demand is low or non-existent.  
Question 4 
 
 What is the percentage of the overall cost of fishing which is subsidized for the beneficiaries of the programme? 
 
Reply 
 
 There are no figures available concerning the percentage of the cost of fishing in comparison 
with the yearly budget (less than 40 MEUR on a year ly basis) allocated to the Common Organisation 
of Markets. Nevertheless it should be stressed that the aid provided in 2008, i.e. 32.5 MEUR represented less than 0.002 per cent of the total of  EU catches in value terms (over 6,000 MEUR). 
 
Question 5 
 
 Can the EU provide the break-up of subsidies provided for marine fisheries and aquaculture products? 
 
Reply 
 
 There is no break-up available for subsidies pr ovided for marine fisheries and aquaculture.  
 
Question 6 
 
 What is the amount of subsidies fo r programmes for "guarantee of reasonable 
consumer prices" and programme for "support of fishermen's incomes?" 
  G/SCM/Q2/EU/1 
 Page 7 
 
 
  Reply 
 
 In the budget allocated to the Common Orga nisation of Markets (less than 40 MEUR/year) 
there are no specific amounts allocated for the "guarantee of reasonable consumer prices" of for 
"support of fishermen's incomes". These are rather objectives pursued by the Common Organisation of 
Markets and may be achieved by bud getary and non-budgetary measures. 
 
 
__________