No C 75/12 Official Journal of the European Communities 3. 4. 86 
Opinion on national regional development aid 
(86/C 75/04) 
After discussing the information report on national regional development aid, the Economic 
and Social Committee decided unanimously at its plenary session on 25 September 1985 to 
instruct the Section for Regional Development to draw up an own-initiative opinion on the 
subject. 
The Section for Regional Development adopted its opinion on 13 December 1985 in the light 
of the Report by Mr Broicher and Mr Delia Croce, corapporteurs. 
At its 233rd plenary session (meeting of 29 January 1986) the Economic and Social Committee 
adopted the following opinion unanimously: 
1. Preliminary comments 
1.1. In the revision of the Regulation on the Euro­
pean Regional Development Fund the problems of 
Community coordination of national aid policies were 
pushed into the background by the urgency of the 
geographical concentration of European regional aid. 
1.2. Under Articles 1 and 2 of this Regulation (!), 
regional policy guidelines and priorities are coordinated 
between the Community and Member States, taking 
account of the regional impact of Community and 
national economic and sectoral policies. An important 
element in the coordination of these systems of aid is 
the review of national aid under Articles 92, 93 and 94 
of the EEC Treaty. 
1.3. The relevant Commission communication (2) 
dating from 1979 should be adapted to the new circum­
stances, with the maximum rates of public aid being 
geared to the degree of regional variation within the 
Member States and in the Community as a whole. 
2. Aims of regional aid as an instrument of regional 
policy 
2.1. Regional policy in general and regional aid in 
particular arise from the existence of geographical dis­
tortions of competition adversely affecting areas which 
are either peripheral or sparsely populated, or poorly 
endowed with infrastructure or disadvantaged in terms 
of economic structure. These factors can occur singly 
or in various combinations and in different degrees of 
severity. AlLof them are present in the regions which 
are most severely disadvantaged and consequently 
exceptionally underdeveloped. Long-industrialized 
problem regions mostly have a one-sided economic 
(') Council Regulation (EEC) No 1787 of 19 June 1984 on 
the European Regional Development Fund, OJ No L 169, 
28. 6. 1984, p. 1. 
(2) OJ No C 31, 3. 2. 1979, p. 9. structure (dependence on, for instance, coal, iron, ship^ 
building or textiles); this is why they are faced with 
particularly serious unemployment problems and an 
urgent need for restructuring. To the extent that 
regional aid tackles these problems and corresponds to 
the intensity of the need, it causes no distortions of 
competition but compensates for existing distortions of 
competition. 
2.2. In accordance with the preamble to the EEC 
Treaty, regional aid must also contribute to conver­
gence in the Community by reducing the differences 
between the various regions and the backwardness of 
the less-favoured regions. Differences and backward­
ness can be assessed in terms of elements in the general 
standard of living or in terms of their causes. Hence 
basic aims of regional policy must be to increase 
employment, expand infrastructure and raise incomes. 
2.3. From this viewpoint regional aid must be 
adequate to cope with the causes of backwardness and 
be tailored to regional needs. In other words, regional 
aid must: 
— tackle the causes of geographical distortions of com­
petition, 
— reduce the increases in production costs caused by 
the geographical distortions of competition, so as 
to make the products of the disadvantaged regions 
more competitive, 
— and thereby foster the development of the disadvan­
taged regions. 
2.4. Since the national aid systems differ, the aid 
which the Member States can and should provide for 
their less-developed regions must accord with the above 
principles and be integrated in a Community frame­
work. Within this framework, each Member State must 
be able to pursue its legitimate goal of reducing harmful 
regional disparities, where necessary by means of 
regional aid. On the other hand, the Community frame­
work must ensure that aid granted in Member States 
does not have effects on Community trade which are 
at variance with the Community interest. 
3. 4. 86 Official Journal of the 
3. Relationship between regional policy and the Com­
munity's competition policy 
3.1. According to Article 92 (3) (a) of the EEC Treaty 
'aid to promote the economic development of areas 
where the standard of living is abnormally low or where 
there is serious under employment' may be considered 
to be compatible with the common market. Subpara­
graph (c) of the same paragraph stipulates that 'aid to 
facilitate the development of certain economic activities 
or of certain economic areas' may be considered com­
patible with the common market only where such aid 
'does not adversely affect trading conditions to an 
extent contrary to the common interest'. 
3.2. A clear distinction is made between aid for 
obviously underdeveloped regions as per Article 92 (3) 
(a) where there is hardly any danger of aid measures 
having a permanent adverse effect on intra-Community 
trade, and other areas as per Article 92 (3) (c), where 
this danger could exist. It should be agreed with the 
Commission that Article 92 (3) (a) may apply not only 
to regions that are underdeveloped in relation to the 
Community average, but also — with the necessary 
safeguards — to regions that are extremely seriously 
disadvantaged in relation to the national average or the 
majority of regions in a Member State. 
3.3. A Community system of indicators should be 
devised so that in future regional disparities in develop­
ment can be measured at both Community and national 
levels. This would make it possible to fix for each 
Member State a level of development below which 
aid could be considered compatible with the common 
market under Article 92 (3) (a). Article 92 (3) (c) would 
then apply to the other regional development areas. In 
order to avoid distortions of competition as referred to 
in these provisions, a number of restrictions or correc­
tive measures are needed, such as limitation of aid to a 
certain period, graduation of aid and ceilings. These 
must in the first instance be based on indicators geared 
to the Community average, but they cannot disregard 
the regional imbalances within a Member State viewed 
from the angle of 2.4. This is the only way to ensure 
the right of the Member States to promote the develop­
ment of disadvantaged regions, and to show the man 
in the street that this responsibility is being taken seri­
ously. 
4. Relationship between regional aid and other forms 
of aid 
4.1. Any assessment of national or Community 
regional aid must take account of the fact that there European Communities • No C 75/13 
are also other forms of financial aid and in particular 
other forms of concession granted mainly to highly 
developed regions. 
4.2. The more aid there is with non-regional aims 
the less effective regional aid will be. The former kind 
of aid benefits mainly (sometimes even exclusively) 
regions which are already more highly developed, so 
that regional aid initially only serves to offset the 
additional geographical distortions of competition 
resulting from non-regional aid. This situation leads to 
a raising of the overall level of aid and a subsidies race 
between development areas and other areas. A more 
efficient policy would be either to dismantle non-
regional aid so as to reduce the overall level of subsidies, 
or else to try to gear other forms of aid to regional policy 
and channel them more to underdeveloped regions. 
4.3. Aid for advanced technology, especially for elec­
tronics, data processing and modern communications 
systems, could be particularly important in this connec­
tion. Although it is recognized that there is a need for 
such aid, experience has shown that the firms that 
benefit from it are located in regions which are already 
relatively well developed and urbanized. Where large 
sums are provided for the promotion of research and the 
practical application of findings in industrial projects it 
is quite clear that this will be at cross-purposes with 
regional aid. One should determine in which sectors 
such assistance should be channelled as far as possible 
to underdeveloped regions. Such sectors could include 
data processing, data transmission and office auto­
mation. 
At all events the provision of telecommunications infra­
structure is a priority task, if the Community's periph­
eral areas are not to be further disadvantaged in the 
coming years. 
5. Relationship between national regional policies and 
the Community's regional policy 
5.1. The EEC Treaty underestimates the importance 
of regional policy for European integration and political 
union. Despite the unambiguous wording of the pre­
amble, regional policy has not been accorded the atten­
tion it deserves. 
5.2. As the Commission's second periodic report on 
the socio-economic position and development of the 
regions of the European Community shows, regional 
disparities in terms of production, productivity, income 
No C 75/14 Official Journal of the European Communities 3. 4. 86 
and employment have not lessened in the last 10 years 
but have even increased in some cases. They are there­
fore still unacceptably large. 
53. These disparities increased when Greece joined 
the Community and are even more marked as a result 
of the accession of Portugal and Spain. In the Com­
munity of Twelve twice as many people as in the 
Community of Ten are living in areas considered least 
developed. All in all the regional problems of the Com­
munity have become even more acute with enlargement, 
hence the growing importance of (a) the Community's 
regional policy and the efficient use of Community 
regional policy instruments, and (b) the regional policies 
of the Member States and their financial aid for regional 
development. 
5.4. The Community's regional policy therefore has 
three main functions: 
— to provide special additional assistance to regions 
which are extremely underdeveloped by Com­
munity standards so that they can catch up more 
quickly with the general level of development, 
— to counteract the undesirable regional effects of 
other kinds of aid and other Community policies, 
— to provide a framework for national regional poli­
cies that enables the aims of an appropriate regional 
policy to be achieved: a system of regional aid 
which makes it possible to select development areas 
according to the severity of the regional problems 
within each Member State and to graduate aid 
accordingly. 
5.4.1. The first of these functions implies that Euro­
pean Regional Development Fund resources should be 
used first and foremost to assist regions that are disad­
vantaged by Community standards. The funds must no 
longer be used solely for the financing of national 
measures, but should enable the Commission to work 
out agreements, on the basis of carefully prepared devel­
opment programmes, in cooperation with the parties 
responsible for regional development in Community 
development areas. This is the only way to ensure that 
those responsible for regional policy become involved 
in the development areas and that Community funds 
are genuinely 'additional'. The existence and living 
presence of the Community should also be brought 
home to the citizens of Europe through concrete meas­
ures. 
5.4.2. The second function involves ensuring that 
promotion of the development of economically weak 
areas by regional, aid is not thwarted, particularly by 
other, non-regional, aid. Account should be taken of 
the fact that if only regional aid has to conform to the 
competition policy aims of the EEC Treaty, while other 
subsidies are accepted as political priorities, the Mem­
ber States may switch over from regional aid to sectoral 
aid, as the latter would pose fewer problems. Disparities between regions would in that case be further exacer­
bated. In the same way that solutions have to be found 
to the problems arising out of the coexistence of 
national regional and non-regional aid, the Community 
must also ensure that inter-regional financial equaliza­
tion through the Regional Fund is not thwarted by 
other Community policies. This applies above all to the 
CAP. The CAP must be reformed to rectify the 'per­
verse' financial equalization stemming therefrom. 
Otherwise the Regional Fund too will be condemned 
in very many cases to merely offsetting the effects of 
the flows of agricultural money. It does not have enough 
funds, however, to make a real contribution to reducing 
regional disparities. 'Integrated measures' should help 
to increase efficiency, but cannot fully compensate for 
the inadequacy of the Regional Fund's resources, par­
ticularly when the accession of Portugal and Spain is 
taken into account. 
5.4.3. As to the third function of Community 
regional policy, it would be useful if an operational 
system of criteria could be developed in order to analyze 
and evaluate (a) regional development disparities, and 
(b) the measures taken to correct such imbalances. The 
Commission has taken the first step towards developing 
such a system in the form of a 'synthetic indicator'. 
Efforts should, however, be intensified in order to 
develop a system that is both comprehensive and 
coherent. 
In keeping with the principle that the level of aid should 
match the severity of the regional problems in the 
development areas, the Community, in developing the 
graduated system of aid ceilings mentioned in point 3.3, 
should use 'net subsidy equivalents' wherever possible. 
Account should be taken of Member States' interest in 
bringing about a reduction of the disparities within 
their territories. The measures to be taken should by 
and large be left to the discretion of Member States so 
that national imbalances can be tackled with appropri­
ate instruments and combinations of instruments. 
6. Additional recommendations 
6.1. The Directorate-General for Competition 
should be recommended to adopt a more flexible 
approach to the provisions of Articles 92 and 93 of the 
EEC Treaty. However, this flexibility should not run 
counter to the aim of making the products of less-
developed regions competitive but rather should enable 
national aid to be adapted to the specific needs of the 
regions. 
6.2. There would seem to be a need to concentrate 
measures so that tangible results can be achieved more 
quickly. This applies also to Member States that wholly 
or largely comprise development areas. 
3. 4. 86 Official Journal of the European Communities No C 75/15 
6.3. Member States should be recommended to seek 
a better balance between discretionary and automatic 
granting of aid. 
There is a strong case for pragmatically weighing up 
the pros and cons of both systems, although priority 
should be given to a more automatic grant procedure 
(by limiting discretionary powers) so that industry can 
calculate what aid it is to receive. 6.4. The last link in the chain for a comprehensive 
analysis and evaluation of regional aid measures must 
be a system for monitoring results. But whilst the Mem­
ber States and the Community already have quite a 
sound foundation for developing a system for evaluat­
ing the severity of regional problems, the scientific and 
empirical basis needed for such a result-monitoring 
system barely exists as yet. There is an important task 
here for the European Community too. 
Done at Brussels, 29 January 1986. 
The Chairman 
of the Economic and Social Committee 
Gerd MUHR 
Opinion on the proposal for a 21st Council Directive on the harmonization of the laws of 
the Member States relating to turnover taxes — deferment of the introduction of the common 
system of value added tax in the Hellenic Republic 
(86/C 75/05) 
On 24 January 1986, the Council decided to consult the Economic and Social Committee, 
pursuant to Articles 99 and 100 of the Treaty establishing the European Economic Com­
munity, on the abovementioned proposal. 
The Economic and Social Committee decided to appoint Mr Dassoulas as rapporteur-general 
with the task of preparing its work on the matter. 
At its 233rd plenary session (meeting of 29 January 1986), the Economic and Social Committee 
adopted the following opinion by 85 votes to 0, with 7 abstentions. 
The Economic and Social Committee approves the pro­
posed deferment for one year. 
Already when commenting on the last proposal for 
a deferment in its opinion of 15 December 1983, the 
Committee appreciated that it would be impossible for 
technical reasons to introduce VAT in Greece by 1 
January 1984, though it did hope that Greece would 
not apply for any further deferment. 
The reasons now put forward by the Greek Government 
seem well founded and the renewed deferment will not 
affect the level of Greece's 1986 contribution to the Community budget on the basis of VAT receipts. On 
the other hand, the Committee would point out to 
the Council of Ministers that one country's failure to 
introduce the common system of VAT will make it all 
the more difficult to complete the internal market. 
Therefore, the Committee would urge that the VAT 
system be introduced in Greece as soon'as possible, and 
by 1 January 1987 at the latest, and proposes that the 
Commission of the European Communities provide 
Greece with every possible assistance in introducing a 
VAT system similar to the systems which apply in the 
other Member States of the Community. 
Done at Brussels, 29 January 1986. 
The Chairman 
of the Economic and Social Committee 
Gerd MUHR