WRITTEN QUESTION E-0746/96 by Carl Lang (NI) to the Commission (26 March 1996)

Subject: Relocations and closures

The Danone group, which has been operating at a profit for several years, recently announced the closure of its factory in Seclin in northern France, also a profitable undertaking, with a resulting 169 job losses.

Not only is this closure apparently a relocation, but the company in question is asking for State aid to carry out what it describes as 'restructuring'. Furthermore, it is preparing to invest almost 400 million francs in South Africa, attracted perhaps by the news that a free trade area is to be established between that country and the Union. And, finally, the factory is situated in a region eligible for ERDF Objective 2 funding.

1. Does the Commission's competition policy allow State subsidies for healthy businesses and public funding for policies pursued by private groups with a view to increasing their own competitiveness?

2. Can the Commission give figures on the real impact on employment of the structural funds granted in the sector in question, since they are obviously not fulfilling their aim of halting industrial decline and attracting businesses?

3. Is it true that the European Union is on the point of concluding a free trade agreement with South Africa, and then with other countries and geographical areas, without first studying the overall and sectoral impact on the economies of the Member States and on Union policies?

Answer given by Mr Van Miert on behalf of the Commission (24 April 1996)

The Commission authorizes aid for firms only in the context of the derogations provided for in the EC Treaty. As a matter of course, it publishes in the form of guidelines the conditions governing the application of such derogations. In particular, aid to firms can be approved only if considered necessary for the pursuit of a recognized Community objective, such as environmental protection, the development of small and medium-sized enterprises (SMEs) and regional policy.

As regards Structural Fund assistance in regions experiencing industrial decline, the Commission would point out that such assistance is intended essentially for independent SMEs, and not for the restructuring of large groups. Such assistance has had a significant impact on the Objective 2 region of Nord/Pas-de-Calais despite the difficult economic situation. For instance, the rate of job losses in industry has been reduced (-1.2% in 1994 compared with an average of -2.9% between 1990 and 1993), while service sector employment has risen appreciably (+3.2% in 1994 compared with a national average of +2.6%).

Lastly, it is not true that the European Union is on the point of concluding a free trade agreement with South Africa. The agreement in principle to open such negotiations has been reached, but the negotiations themselves have not yet started. However, the Commission, acting in accordance with the conclusions adopted in June 1995, has sent to the Council a detailed analysis of the impact of such an agreement on Community policies and its compatibility with the rules of the World Trade Organization (WTO). This initial analysis will be followed by more in-depth sectoral studies as and when the negotiations take place.