Proposal for a COUNCIL DECISION on the position to be taken by the Community within the Association Committee established by the Europe Agreement between the European Communities and their Member States, of the one part, and Slovakia, of the other part, with regard to the adoption of a Regional aid map on the basis of which regional aid granted by Slovakia will be assessed

(presented by the Commission)

EXPLANATORY MEMORANDUM

1. This is a proposal for the adoption of a Regional aid map on the basis of which regional aid granted by Slovakia will be assessed.

According to Article 64(4)(a) of the Europe Agreement, the Parties recognised that during the first five years after its entry into force, any regional aid granted by Slovakia shall be assessed taking into account the fact that Slovakia shall be regarded as an area identical to those areas of the Community described in Article 87(3)(a) of the Treaty establishing the European Community.

On 18 May 2001 the EU-Slovakia Association Council adopted decision No 3/2001 with regard to the extension for a further period of five years of Slovakia as an area identical to those areas of the Community described in Article 87(3)(a) of the Treaty establishing the European Community. The decision was applied as from 1 March 1997 and has expired on 28 February 2002.

Article 2 of decision No 3/2001 obliged Slovakia to submit the GDP per capita figures which have been harmonised at NUTS level II to the European Commission within six months of the date of the adoption of the decision. On that basis, Slovakia State aid monitoring authority (State aid Office of Slovakia) and the European Commission jointly evaluated the eligibility of the regions as well as the maximum aid intensities in relation thereto, in order to draw up the regional aid map on the basis of the Community guidelines on national regional aid [1].

[1] OJ C 74 of 10.3.1998, p. 9.

In reference to Article 4(2) of the Implementing Rules for the application of the provisions on State aid of the Europe Agreement, it is considered that the duration of the Regional aid map should cover the period between 28 February 2002, the expiry date of the period for which Slovakia was considered as an area identical to those areas of the Community described in Article 87(3)(a) of the Treaty in accordance with the decision of decision No 3/2001 of the EU-Slovakia Association Council of 18 May 2001, and the date of accession or 31 December 2006, whatever comes first. The inclusion of 31 December 2006 as end date is important to maintain consistency with the maps for the current Member States, all of which (except the map for Germany) will expire on that date, as well as with the programming of Structural Funds support.

2. According to the Community guidelines on national regional aid, the eligibility conditions for the derogation foreseen under Article 87(3)(a) of the Treaty are fulfilled if the region, being a NUTS level II geographical unit, has a per capita gross domestic product, measured in purchasing power standards (GDP/PPS), of less than 75% of the Community average. In the case of regions falling under Article 87(3)(a) the intensity of regional aid must not exceed the rate of 50% net grant equivalent (NGE), except in the outermost regions, where it may be as much as 65% NGE. In the NUTS level II regions eligible under Article 87(3)(a) whose per capita GDP/PPS is greater than 60% of the Community average, the intensity of regional aid must not exceed 40% NGE, except in the outermost regions, where it may be as high as 50% NGE. The GDP/PPS of each region and the Community average to be used in the analysis must relate to the average of the last three years for which statistics are available.

Also according to the Community guidelines on national regional aid, a national ceiling on population coverage for regions eligible under Article 87(3)(c) of the Treaty is set, in each Member State, at a sufficient level to include all the regions which have just lost their Article 87(3)(a) status and areas with a low population density. For parts of the regions that lose their Article 87(3)(a) status as a result of the review of the regional aid map and that acquire Article 87(3)(c) status, the Commission could accept, during a transitional period of four years, a progressive reduction of the aid intensity ceilings for which such regions would have been eligible under Article 87(3)(a), at a linear or faster rate, until the intensity ceiling corresponding to their new status is reached.

In the case of regions falling under Article 87(3)(c), the ceiling on regional aid must not exceed 20% NGE, except in the low population density regions or in the outermost regions, where it may be as high as 30% NGE. In regions eligible under Article 87(3)(c), which have both a higher per capita GDP/PPS and a lower unemployment rate than the respective Community average, the intensity of regional aid must not exceed 10% NGE except in the low population density regions or in the outermost regions, where it may be as high as 20% NGE. Exceptionally in the case of regions subject to the said ceiling of 10% NGE, higher intensities not exceeding the normal ceiling of 20% NGE may be approved for regions (corresponding to NUTS level III or smaller) adjoining a region with Article 87(3)(a) status. Again, the GDP/PPS of each region and the Community average to be used in the analysis must relate to the average of the last three years for which statistics are available.

In the case aid is granted to small and medium-sized enterprises [2], the above aid intensity ceilings may be raised by 15 percentage points gross grant equivalent (GGE) in Article 87(3)(a) regions and by 10 percentage points GGE in Article 87(3)(c) regions.

[2] OJ L 107 of 30.4.1996, p. 4.

The above ceilings constitute upper limits which apply to the total aid whenever assistance is granted concurrently under several regional schemes, and regardless of whether it comes from local, regional, national or Community sources. Beneath these ceilings, regional aid intensity ceilings are to be adjusted to reflect the seriousness and intensity of the regional problems addressed. The seriousness and intensity of the regional problems must be assessed within the broader context of the Community and of the countries with which Europe agreements have been concluded.

3. Slovakia consists of four NUTS level II regions. Three of these (Zapadne Slovensko, Stredne Slovensko and Vychodne Slovensko) have a per capita GDP/PPS that is lower than 60% of the Community average according to the statistical data available for the years 1998-2000. According the same data, the NUTS level II region Bratislavsky has a per capita GDP/PPS that exceeds 75% of the Community average. However, the Bratislavsky region, which is also a single NUTS level III region, had been eligible for Article 87(3)(a) until 28 February 2002, and can therefore be regarded as a region that just lost its Article 87(3)(a) status.

4. In the proposed regional aid map, the NUTS level II regions Zapadne Slovensko, Stredne Slovensko and Vychodne Slovensko are granted the Article 87(3)(a) status and the regional aid intensities ceilings for these regions are set at 50% NGE. This ceiling is raised by 15 percentage points GGE in the case of aid granted to small and medium-sized enterprises.

5. As a former Article 87(3)(a) region, the NUTS level II region of Bratislavsky is granted the Article 87(3)(c) status. Since Slovakia does not wish to make use of the possibility to apply a transitional period during which aid intensities can be progressively reduced, and considering that Bratislavsky is also a NUTS level III region which adjoins regions with an Article 87(3)(a) status, the regional aid intensity ceiling is set at 20% NGE. This ceiling is raised by 10 percentage points GGE in the case of aid granted to small and medium-sized enterprises.

6. The Slovakian State aid monitoring authority and the European Commission jointly evaluated the proposed regional aid map for Slovakia (eligibility of the regions as well as the maximum aid intensities in relation thereto) and concluded that it is in conformity with the Community guidelines on national regional aid.

7. The Commission hereinafter submits the joint proposal to the Council and requests the Council to adopt the attached proposal for an Association Committee Decision.

2003/0187 (ACC)

Proposal for a COUNCIL DECISION on the position to be taken by the Community within the Association Committee established by the Europe Agreement between the European Communities and their Member States, of the one part, and Slovakia, of the other part, with regard to the adoption of a Regional aid map on the basis of which regional aid granted by Slovakia will be assessed

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article 133 in conjunction with the first sentence of Article 300(2) first subparagraph first sentence and second subparagraph thereof;

Having regard to the proposal of the Commission;

Whereas:

(1) The European Communities and their Member States signed the Europe Agreement with the Slovakia in October 1993.

(2) Article 64(4)(a) of the Agreement provides that the Parties recognise that during the first five years after the entry into force of this Agreement, any public aid granted by the Slovak Republic shall be assessed taking into account the fact that the Slovak Republic shall be regarded as an area identical to those areas of the Community described in Article 92 (3) (a) of the Treaty establishing the European Economic Community.

(3) Article 4(2) of the Implementing Rules for the application of the provisions on State Aid of the Europe Agreement, as adopted by the Decision No.6/2001 of the EU Slovakia Association Council 0f 22 November 2001, provides that the monitoring authorities shall jointly evaluate the maximum aid intensities and specific regional coverage of the areas eligible for national regional aid. They shall submit a joint proposal to the Association Committee which shall establish a decision to this effect.

(4) Article 2 of the decision No 3/2001of the EU - Slovakia Association Council of 18 May 2001 with regard to the extension for a further period of five years of Slovakia as an area identical to those areas of the Community described in the Article 87(3)(a) of the Treaty obliged Slovakia within six months of the date of the adoption of the decision to submit the GDP per capita figures which have been harmonised at NUTS level II to the European Commission;

(5) The Slovakian State aid monitoring authority and the European Commission jointly evaluated the eligibility of the regions as well as the maximum aid intensities in relation thereto in order to draw up the regional aid map on the basis of the Community guidelines on national regional aid [3];

[3] OJ C 74 of 10.3.1998, p. 9.

(6) According to Article 4(2) of the Implementing rules, in conjunction with Article 2, third sentence of Decision No 3/2001 of the EU-Slovakia Association Council, a joint proposal shall be submitted to the Association Committee, which shall take a decision to this effect;

(7) According to the Community guidelines on national regional aid, the eligibility conditions for the derogation foreseen under Article 87(3)(a) of the Treaty are fulfilled if the region, being a NUTS level II geographical unit, has a per capita gross domestic product, measured in purchasing power standards (GDP/PPS), of less than 75% of the Community average;

(8) In the case of regions falling under Article 87(3)(a) the intensity of regional aid must not exceed 50% NGE, except in the outermost regions, where it may be as much as 65% NGE. In the NUTS level II regions eligible under Article 87(3)(a) whose per capita GDP/PPS is greater than 60% of the Community average, the intensity of regional aid must not exceed 40% NGE, except in the outermost regions, where it may be as high as 50% NGE;

(9) The GDP/PPS of each region and the Community average to be used in the analysis must relate to the average of the last three years for which statistics are available;

(10) Within the limit of 75% NGE, the above mentioned aid intensity ceilings may be raised by 15 percentage points gross grant equivalent (GGE) in the case of aid granted to small and medium-sized enterprises [4] in Article 87(3)(a) regions;

[4] OJ L 107 of 30.4.1996, p. 4.

(11) Also according to the Community guidelines on national regional aid, a national ceiling on population coverage for regions eligible under Article 87(3)(c) of the Treaty is set, in each Member State, at a sufficient level to include all the regions which have just lost their Article 87(3)(a) status and areas with a low population density. For parts of the regions that lose their Article 87(3)(a) status as a result of the review of the regional aid map and that acquire Article 87(3)(c) status, the Commission could accept, during a transitional period of four years, a progressive reduction of the aid intensity ceilings for which such regions would have been eligible under Article 87(3)(a), at a linear or faster rate, until the intensity ceiling corresponding to their new status is reached;

(12) In the case of regions falling under Article 87(3)(c), the ceiling on regional aid must not exceed 20% NGE, except in the low population density regions or in the outermost regions, where it may be as high as 30% NGE. In regions eligible under Article 87(3)(c), which have both a higher per capita GDP/PPS and a lower unemployment rate than the respective Community average, the intensity of regional aid must not exceed 10% NGE except in the low population density regions or in the outermost regions, where it may be as high as 20% NGE. Exceptionally in the case of regions subject to the said ceiling of 10% NGE, higher intensities not exceeding the normal ceiling of 20% NGE may be approved for regions (corresponding to NUTS level III or smaller) adjoining a region with Article 87(3)(a) status. Again, the GDP/PPS of each region and the Community average to be used in the analysis must relate to the average of the last three years for which statistics are available;

(13) Within the limit of 30% NGE, the above mentioned aid intensity ceilings may be raised by 10 percentage points GGE in the case of aid granted to small and medium-sized enterprises [5] in Article 87(3)(c) regions;

[5] OJ L 107 of 30.4.1996, p. 4.

(14) All the above aid intensity ceilings constitute upper limits which apply to the total aid whenever assistance is granted concurrently under several regional schemes, and regardless of whether it comes from local, regional, national or Community sources. Beneath these upper limits, regional aid intensity ceilings are to be adjusted to reflect the seriousness and intensity of the regional problems addressed; the seriousness and intensity of the regional problems must be assessed within the broader context of the Community and of the countries with which Europe Agreements have been concluded;

(15) Slovakia consists of four NUTS level II regions. Three of these (Zapadne Slovensko, Stredne Slovensko and Vychodne Slovensko) have a per capita GDP/PPS that is lower than 60% of the Community average according to the statistical data available for the years 1998-2000. According the same data, the NUTS level II region Bratislavsky has a per capita GDP/PPS that exceeds 75% of the Community average. However, the Bratislavsky region, which is also a single NUTS level III region, had been eligible for Article 87(3)(a) until 28 February 2002, and can therefore be regarded as a region that just lost its Article 87(3)(a) status;

(16) In the proposed regional aid map, the NUTS level II regions Zapadne Slovensko, Stredne Slovensko and Vychodne Slovensko are granted the Article 87(3)(a) status and the regional aid intensities ceilings for these regions are set at 50% NGE. This ceiling is raised by 15 percentage points GGE in the case of aid granted to small and medium-sized enterprises;

(17) As a former Article 87(3)(a) region, the NUTS level II region Bratislavsky is granted the Article 87(3)(c) status. Since Slovakia does not wish to make use of the possibility to apply a transitional period during which aid intensities can be progressively reduced, and considering that Bratislavsky is also a NUTS level III region which adjoins regions with an Article 87(3)(a) status, the regional aid intensity ceiling is set at 20% NGE. The above aid intensity is raised by 10 percentage points GGE in the case of aid granted to small and medium-sized enterprises;

(18) The maximum aid intensities applicable in each of the above mentioned regions, as jointly evaluated by Slovakia State aid monitoring authority and the European Commission, are in conformity with the requirements set by the Community guidelines on national regional aid.

HAS DECIDED AS FOLLOWS:

Sole Article

The position to be taken by the Community within the Association Committee established by the Europe Agreement between the European Communities and their Member States, of the one part, and Slovakia, of the other part, with regard to the adoption of the regional aid map shall be based on the draft decision of the Association Committee annexed to this Decision.

Done at Brussels,

For the Council

The President

ANNEX

ASSOCIATION

BETWEEN THE

EUROPEAN UNION

AND SLOVAKIA

__________

- The Association Committe -

DECISION No .../2002 OF THE ASSOCIATION COMMITTE

BETWEEN THE EUROPEAN COMMUNITIES

AND THEIR MEMBER STATES, OF THE ONE PART,

AND SLOVAKIA, OF THE OTHER PART,

of

adopting a regional aid map on the basis of which regional aid

granted by Slovakia will be assessed

THE ASSOCIATION COMMITTEE,

Having regard to the Europe Agreement establishing an association between the European Communities and their Member States, of the one part, and Slovakia, of the other part, and in particular Article 64(4) thereof;

Having regard to Article 4(2) of the Implementing Rules for the application of the provisions on State aid of the Europe Agreement, as adopted by Decision n° 6/2001 of the EU-Slovakia Association Council of 22 November 2001;

Having regard to decision No 3/2001 of the EU-Slovakia Association Council of 18 May 2001 with regard to the extension for a further period of five years of Slovakia as an area identical to those areas of the Community described in Article 87(3)(a) of the Treaty establishing the European Community and in particular its Article 2, third sentence;

Whereas:

(1) Article 2 of the decision No 3/2001 obliged Slovakia within six months of the date of the adoption of the decision to submit the GDP per capita figures which have been harmonised at NUTS level II to the European Commission;

(2) the Slovakian State aid monitoring authority and the European Commission jointly evaluated the eligibility of the regions as well as the maximum aid intensities in relation thereto in order to draw up the regional aid map on the basis of the Community guidelines on national regional aid [6];

[6] OJ C 74 of 10.3.1998, p. 9.

(3) according to Article 4(2) of the Implementing rules, in conjunction with Article 2, third sentence of Decision No 3/2001 of the EU-Slovakia Association Council, a joint proposal shall be submitted to the Association Committee, which shall take a decision to this effect;

(4) according to the Community guidelines on national regional aid, the eligibility conditions for the derogation foreseen under Article 87(3)(a) of the Treaty are fulfilled if the region, being a NUTS level II geographical unit, has a per capita gross domestic product, measured in purchasing power standards (GDP/PPS), of less than 75% of the Community average;

(5) in the case of regions falling under Article 87(3)(a), the intensity of regional aid must not exceed 50% net grant equivalent (NGE), except in the outermost regions, where it may be as much as 65% NGE. In the NUTS level II regions eligible under Article 87(3)(a) whose per capita GDP/PPS is greater than 60% of the Community average, the intensity of regional aid must not exceed 40% NGE, except in the outermost regions, where it may be as high as 50% NGE;

(6) the GDP/PPS of each region and the Community average to be used in the analysis must relate to the average of the last three years for which statistics are available;

(7) within the limit of 75% NGE, the above mentioned aid intensity ceilings may be raised by 15 percentage points gross grant equivalent (GGE) in the case of aid granted to small and medium-sized enterprises [7] in Article 87(3)(a) regions;

[7] OJ L 107 of 30.4.1996, p. 4.

(8) also according to the Community guidelines on national regional aid, a national ceiling on population coverage for regions eligible under Article 87(3)(c) of the Treaty is set, in each Member State, at a sufficient level to include all the regions which have just lost their Article 87(3)(a) status and areas with a low population density. For parts of the regions that lose their Article 87(3)(a) status as a result of the review of the regional aid map and that acquire Article 87(3)(c) status, the Commission could accept, during a transitional period of four years, a progressive reduction of the aid intensity ceilings for which such regions would have been eligible under Article 87(3)(a), at a linear or faster rate, until the intensity ceiling corresponding to their new status is reached;

(9) in the case of regions falling under Article 87(3)(c), the ceiling on regional aid must not exceed 20% NGE, except in the low population density regions or in the outermost regions, where it may be as high as 30% NGE.

(10) In regions eligible under Article 87(3)(c), which have both a higher per capita GDP/PPS and a lower unemployment rate than the respective Community average, the intensity of regional aid must not exceed 10% NGE except in the low population density regions or in the outermost regions, where it may be as high as 20% NGE. Exceptionally in the case of regions subject to the said ceiling of 10% NGE, higher intensities not exceeding the normal ceiling of 20% NGE may be approved for regions (corresponding to NUTS level III or smaller) adjoining a region with Article 87(3)(a) status. Again, the GDP/PPS of each region and the Community average to be used in the analysis must relate to the average of the last three years for which statistics are available;

(11) within the limit of 30% NGE, the above mentioned aid intensity ceilings may be raised by 10 percentage points GGE in the case of aid granted to small and medium-sized enterprises [8] in Article 87(3)(c) regions;

[8] OJ L 107 of 30.4.1996, p. 4.

(12) All the above aid intensity ceilings constitute upper limits which apply to the total aid whenever assistance is granted concurrently under several regional schemes, and regardless of whether it comes from local, regional, national or Community sources. Beneath these upper limits, regional aid intensity ceilings are to be adjusted to reflect the seriousness and intensity of the regional problems addressed; the seriousness and intensity of the regional problems must be assessed within the broader context of the Community and of the countries with which Europe agreements have been concluded;

(13) Slovakia consists of four NUTS level II regions. Three of these (Zapadne Slovensko, Stredne Slovensko and Vychodne Slovensko) have a per capita GDP/PPS that is lower than 60% of the Community average according to the statistical data available for the years 1998-2000. According the same data, the NUTS level II region of Bratislavsky has a per capita GDP/PPS that exceeds 75% of the Community average. However, the Bratislavsky region, which is also a single NUTS level III region, had been eligible for Article 87(3)(a) until 28 February 2002, and can therefore be regarded as a region that just lost its Article 87(3)(a) status;

(14) In the proposed regional aid map, the NUTS level II regions Zapadne Slovensko, Stredne Slovensko and Vychodne Slovensko are granted the Article 87(3)(a) status and the regional aid intensities ceilings for these regions are set at 50% NGE. This ceiling is raised by 15 percentage points GGE in the case of aid granted to small and medium-sized enterprises.

(15) As a former Article 87(3)(a) region, the NUTS level II region of Bratislavsky is granted the Article 87(3)(c) status. Since Slovakia does not wish to make use of the possibility to apply a transitional period during which aid intensities can be progressively reduced, and considering that Bratislavsky is also a NUTS level III region which adjoins regions with an Article 87(3)(a) status, the regional aid intensity ceiling is set at 20% NGE. The above aid intensity is raised by 10 percentage points GGE in the case of aid granted to small and medium-sized enterprises;

(16) The maximum aid intensities applicable in each of the above mentioned regions, as jointly evaluated by Slovakia State aid monitoring authority and the European Commission, are in conformity with the requirements set by the Community guidelines on national regional aid.

HAS DECIDED AS FOLLOWS:

Article 1

The NUTS level II regions Zapadne Slovensko, Stredne Slovensko and Vychodne Slovensko shall be regarded as areas eligible for regional aid, identical to those areas in the Community described in Article 87(3)(a) of the Treaty establishing the European Community.

The NUTS level II region Bratislavsky shall be regarded as an area eligible for regional aid, identical to those areas in the Community described in Article 87(3)(c) of the Treaty

Article 2

The regional aid intensity ceiling shall be limited to 50% net grant equivalent in the NUTS level II regions Zapadne Slovensko, Stredne Slovensko and Vychodne Slovensko and to 20% net grant equivalent in the NUTS level II region of Bratislavsky.

The regional aid intensity ceilings referred to under Article 2, paragraph 1, may be raised by 15 percentage points gross grant equivalent in the case of aid granted to small and medium-sized enterprises [9] in the NUTS level II regions Zapadne Slovensko, Stredne Slovensko and Vychodne Slovensko and by 10 percentage points gross grant equivalent in the case of aid granted to small and medium-sized enterprises [10] in the NUTS level II region Bratislavsky.

[9] OJ L 107 of 30.4.1996, p. 4.

[10] OJ L 107 of 30.4.1996, p. 4.

The regional aid intensity ceilings referred to under Article (2), paragraphs 1 and 2, shall constitute upper limits which apply to the total aid whenever assistance is granted concurrently under several regional schemes, and regardless of whether it comes from local, regional, national or Community sources.

Article 3

This Decision shall enter into force on the day of its adoption. It shall expire on 31 December 2006 or the date of Slovakia's accession to the European Union, whichever comes earlier.

Done at Brussels,

For the Association Committee

The President