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 Bulgaria, of the other part, with regard to the adoption of a Regional aid map on the basis of which regional aid granted by Bulgaria 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 Bulgaria 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 Bulgaria shall be assessed taking into account the fact that Bulgaria 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 28 February 2000 the EU-Bulgaria Association Council adopted decision No 1/2000 with regard to the extension for a further period of five years of Bulgaria 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 January 1998.

Article 2 of decision No 1/2000 obliged Bulgaria 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, the Bulgarian Ministry of Finance 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.

The joint evaluation by the Bulgarian Ministry of Finance and the European Commission demonstrates that per capita Gross Domestic Product, measured in Power Purchasing Standards (GDP/PPS) in all NUTS level II regions in Bulgaria is significantly lower than 60% of the Community average. In view of this and 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 not be limited to 31 December 2002, the expiry date of the period for which Bulgaria is 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 1/2000 of the EU-Poland Association Council of 28 February 2000. Instead, it is proposed to extend the duration of the regional aid map until the date of accession or to 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, in the case of regions falling under Article 87(3)(a) of the Treaty 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.

All the above mentioned ceilings may be raised by 15 percentage points gross grant equivalent (GGE) in the case of aid granted to small and medium-sized enterprises [2].

[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. Bulgaria consists of seven NUTS level II regions, of which none has a per capita GDP/PPS that exceeds 60% of the Community average, according to statistical data available for the years 1998-2000;

4. In the proposed regional aid map, all NUTS level II regions are therefore granted the Article 87(3)(a) status. The relative per capita GPP/PPS levels of the seven NUTS level II regions do not justify any differentiation of the regional aid intensity ceilings;

5. The maximum aid intensities applicable in each of the above mentioned regions, as jointly evaluated by the Bulgarian Ministry of Finance and the European Commission, are in conformity with the requirements set by the Community guidelines on national regional aid;

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

2003/0186 (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 Bulgaria, of the other part, with regard to the adoption of a Regional aid map on the basis of which regional aid granted by Bulgaria 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 Bulgaria in March 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 Bulgaria shall be assessed taking into account the fact that the Bulgaria 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.2/2001 of the EU Bulgaria Association Council 0f 23 May 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 1/2000 of the EU - Bulgaria Association Council of 28 February 2000 with regard to the extension for a further period of five years of Bulgaria as an area identical to those areas of the Community described in the Article 87(3)(a) of the Treaty obliged Bulgaria 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 Bulgarian Ministry of Finance 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 1/2000 of the EU-Bulgaria 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 a 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, all the above mentioned 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];

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

(11) 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;

(12) Bulgaria consists of seven NUTS level II regions, of which none has a per capita GDP/PPS that exceeds 60% of the Community average, according to statistical data available for the years 1998-2000;

(13) The relative per capita GPP/PPS levels of the seven NUTS level II regions do not justify any differentiation of the regional aid intensity ceilings;

(14) The maximum aid intensities applicable in each of the above mentioned regions, as jointly evaluated by the Bulgarian Ministry of Finance 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 Bulgaria, 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 BULGARIA

- The Association Committee-

DECISION No .../2002 OF THE ASSOCIATION COMMITTE

BETWEEN THE EUROPEAN COMMUNITIES

AND THEIR MEMBER STATES, OF THE ONE PART,

AND BULGARIA, OF THE OTHER PART,

of

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

granted by Bulgaria 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 Bulgaria, of the other part, and in particular Article 64 (4) (a) 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 No 2/2001 of the EU-Bulgaria Association Council of 23 May 2001;

Having regard to decision No 1/2000 of the EU-Bulgaria Association Council of 28 February 2000 with regard to the extension for a further period of five years of Bulgaria 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 1/2000 obliged Bulgaria 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 Bulgarian Ministry of Finance 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 [5];

[5] 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 1/2000 of the EU-Bulgaria 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 a 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% 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, all the above mentioned ceilings may be raised by 15 percentage points gross grant equivalent (GGE) in the case of aid granted to small and medium-sized enterprises [6];

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

(8) 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;

(9) Bulgaria consists of seven NUTS level II regions, of which none has a per capita GDP/PPS that exceeds 60% of the Community average, according to statistical data available for the years 1998-2000;

(10) the relative per capita GPP/PPS levels of the seven NUTS level II regions do not justify any differentiation of the regional aid intensity ceilings;

(11) the maximum aid intensities applicable in each of the above mentioned regions, as jointly evaluated by the Bulgarian Ministry of Finance 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 entire territory of Bulgaria shall be regarded as an area eligible for regional aid, identical to those areas in the Community described in Article 87(3)(a) of the Treaty establishing the European Community.

Article 2

The regional aid intensity ceilings applicable throughout Bulgaria shall be limited to 50% net grant equivalent.

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 [7].

[7] 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 Bulgaria's accession to the European Union, whichever comes earlier.

Done at Brussels,

For the Association Committee

The President