WRITTEN QUESTION E-2856/97 by Werner Langen (PPE) to the Commission (11 September 1997)

Subject: Repayment of French textile subsidies

On 9 April 1997, the Commission decided in regard to the subsidization of the French textile and clothing industry through the waiver of some DM 600 million in social security contributions that the aid was not consistent with European law, with the exception of those funds which fall under the 'De-Minimis' rule. Accordingly, the Commission regards Article 92(1) of the EC Treaty as inapplicable only where the total amount of aid does not exceed the sum of ECU 100 000 within a period of 3 years.

The French Government was, therefore, requested to ensure that the aid was repaid within 2 months or to notify the Commission of the measures it would take to repay the funds.

As the deadline for the French Government's reply expired on 10 July 1997, will the Commission say:

1. what measures the French Government will take to repay the unjustified aid to the French textile and clothing industry in accordance with its obligations under Community law?

2. how it intends to carry out its task of overseeing the repayment of the subsidies?

3. what further action it will take in respect of any future multisectoral aid scheme operating in conjunction with regional aid instruments and what further steps are planned in regard to checks on aid to the textile industry?

Answer given by Mr Van Miert on behalf of the Commission (4 November 1997)

On 28 April 1997 the Commission informed France that, in its view, reductions in social security contributions in the textile and clothing industry and in the leather and footwear sector exceeding the de minimis threshold of ECU 100 000 over a three-year period were incompatible with the EC Treaty. Following this notification, numerous contacts of both a political and a technical nature have taken place between the French Government and the Commission to discuss replacement of the sectoral approach, which is incompatible with the Treaty, by a new general scheme based on the reduction of social security contributions. The French scheme would fall outside the scope of Article 92(1) of the EC Treaty only if the measures in question were applicable across the board.

Following the French general elections, the new government has informed the Commission that it intends to devise a new scheme for the reduction of social security contributions which will be quite different from the sectoral measures previously in force. In addition, France has brought proceedings before the Court of Justice with a view to having the negative decision on the above-mentioned sectoral measures declared void.

If the new scheme were indeed a general measure, the Commission could decide that it was not subject to the provisions of the Treaty governing state aid. However, such a decision would not prejudge the issue of France's compliance with the Commission's decision that the previous sectoral arrangements were incompatible with the Treaty.

As regards the future multisectoral framework for regional aid to major investment projects, the Commission is currently discussing a draft document with the Member States on a bilateral basis. It believes that it may be possible to adopt this framework by the end of the year. The framework may also include a specific notification threshold for the textile industry, with a view to meeting the latter's concerns about the maintenance of strict controls on state aid.