WRITTEN QUESTION E-3777/97 by Jean-Antoine Giansily (UPE) and Jacques Donnay (UPE) to the Commission (21 November 1997)

Subject: The French textile plan

The French textile plan introduced in 1995 by the previous French government, more commonly known as the 'Borotra plan', which contained a reduction in social security charges for textile firms, has been the subject of severe criticism from the Commission.

This plan, which would have benefitted over 2 000 firms, would have made it possible to stabilize or even slightly increase the labour force in a sector which has lost half of its jobs in the last ten years.

It appears, however, that Brussels not only regards this plan as illegal, but that the Commission is demanding that certain textile firms should refund the aid they have received.

Can the Commission explain on the basis of what criteria and arguments it has been concluded that the French textile plan is illegal?

Does it not agree that such a conclusion is disturbingly inappropriate at a time when all of Europe's leaders are stressing that absolute priority must be given to safeguarding and encouraging job creation in the European Union?

Does it not think that, in the difficult situation experienced by the textiles industry, an alternative solution would be to reduce the taxes and social security charges which unduly increase the cost of labour and to introduce a social and fiscal import duty at the European Union's frontiers?

Answer given by Mr Van Miert on behalf of the Commission (13 January 1998)

By Decision adopted on 9 April 1997, the Commission ruled that the aid provided under experimental measures to reduce social security contributions for the textile, clothing and leather/footwear industries, commonly known as the 'Textile plan', was not only illegal, but also incompatible with the EC Treaty.

The aid was illegal because France started to grant it to the recipient firms before the Commission had taken a decision on it, disregarding Article 93(3) of the EC Treaty and a number of warnings from the Commission.

The Commission considers that the costs to firms of guarantees concluded between the two sides of industry in a given sector, whether for the purpose of reorganising working time or for other purposes and involving wage increases or paid holidays not required by the common rules and regulations are costs which should normally have been borne from their budgets. The Commission therefore takes the view that it is the very assistance provided by the State in this context which by its nature and in its totality constitutes state aid.

The sectoral character of the aid and the fact that it was granted to sensitive sectors or sectors which are in crisis not only in France but throughout the Community meant that the Commission could not grant the derogations provided for by the guidelines on aid to employment ((OJ C 334, 12.12.1995. )). Only if the measures had applied generally throughout the French economy could they have been exempted from the scope of application of Article 92(1) of the EC Treaty.

The Commission also ordered that that part of the aid illegally granted which exceeded the de minimis threshold of ECU 100 000 over three years be recovered. Such recovery thus applies only to firms employing more than 50 people since, in other cases, the amount of aid granted does not exceed the de minimis threshold, below which the Commission considers that aid is of minor importance.

In the Decision, the Commission stated that it regards measures to promote employment as a fundamental Community priority and believes that success in this area is conditional upon closer integration of the macroeconomic and industrial policies of the Member States, which, together with the Commission, need to show greater imagination and boldness in seeking new solutions to overcome the scourge of unemployment.

The Commission has always made it clear that its comments on the relevant measures do not relate to the objectives pursued by France in trying to create jobs (for young people in particular), but to the means by which it is trying to achieve those objectives and the effects of the measures chosen. Accepting such sectoral aid measures could transfer problems facing firms in one Member State to competitors in other Member States.

The Commission believes that a strict attitude must be adopted on sectoral aid in order to forestall any escalation of aid in the various Member States and ensure that the very concept of the internal market is not called into question.

Lastly, as regards alternative solutions designed to reduce labour costs, the Commission published a notice on monitoring of state aid and reduction of labour costs ((OJ C 1, 3.1.1997. )) in which it identifies the types of measure in this area that are in accordance with the Treaty. In addition, following the European Council on employment, held on 20 and 21 November 1997, the Commission hopes that alternative solutions other than sectoral aid can be proposed for implementation by the Member States.