WRITTEN QUESTION P-0593/00

by José Ribeiro e Castro (UEN) to the Commission

(24 February 2000)

Subject: Lisbon and Tagus Valley Region Structural Funds, 2000-2006

On 21 July 1999, the Council adopted Regulation (EC) No 1260/1999, establishing the general provisions on the Structural Funds(1).

The Lisbon and Tagus Valley Region (Portugal), which met the Objective I eligibility criteria laid down for the Second Community support framework 1994/1999(2), but after assessment, ceased to be eligible from 1999(3). It should nonetheless continue to benefit, on a transitional basis, from the Funds from 1 January 2000 to 31 December 2005(4). In accordance with the Conclusions of the Berlin summit of 24 and 25 March 1999(5), the phasing out mechanism must be applied to former Objective I regions. Over and above this, the Conclusions acknowledge that the Lisbon Region should have special provisional treatment in the shape of a grant of 500 million(6). In view of the obvious disparities between the Region's various economic operators and sectors, the agreement merely reflected the over-arching horizontal principles deriving from the Treaty which apply to all Community policies, namely sustainable development and equal opportunities.

These principles, like the acquis communautaire's competition rules, are undermined by the failure to pursue the agreed phasing-out policy. Economic operators in the neighbouring regions eligible under Objective I will enjoy enormous competitive advantages, giving rise to imbalances and distortions.

Given that the Structural Funds for the Lisbon and Tagus Valley Region are currently suspended, will the Commission give the reasons for this suspension? If it has taken place in the context of negotiations with the Portuguese Government, what are the reasons and who is responsible for failing to apply the provisions of Article 6 of Regulation (EC) No 1260/1999, failing to observe Commission Decision 1999/502/EEC of 1 July 1999 and ignoring what was agreed at the Berlin Summit?

(1) Pursuant to Article 161 of the Treaty and under the procedure laid down in Article 251 thereof.

(2) Regulations (EC) Nos 2052/88 and 4253/88, OJ L 158, 15.7.1988 and OJ L 374, 31.12.1988.

(3) cf. Article 3 of Regulation (EC) No 1260/1999 OJ L 161, 26.6.1999.

(4) i.e. the provisions of Article 6 should have been applied, and likewise the provisions of Articles 7(2), second paragraph and (3), third paragraph of Regulation (EC) No 1260/1999, in accordance with Commission decision 1999/502/EC OJ L 194, 27.7.1999.

(5) And particularly paragraphs 42, 43 and 44(a) thereof.

(6) Paragraph 44(a).

Answer given by Mr Monti on behalf of the Commission

(24 March 2000)

After the guidelines on national regional aid were adopted(1), the Commission asked the Portuguese authorities to send it a notification under Article 88(3) of the EC Treaty (formerly Article 93(3)), supplying

a draft map which would show, first, the regions which the Portuguese authorities suggested should qualify for national regional aid under the exemptions in subparagraphs (a) and (c) of Article 87(3) of the Treaty (formerly Article 92(3)), and, second, the intensity ceilings for aid for initial investment and aid for job creation linked to investment envisaged in each of the regions shown, and the ceilings applicable where aid under different schemes was combined.

The Portuguese authorities supplied a draft map of national regional aid for the period 2000-2006, and on 8 December 1999 the Commission approved the sections of the map defining the regions in Portugal qualifying for the exemption in Article 87(3)(a), namely North, Centre, Alentejo, Algarve, Azores and Madeira.

But in respect of the only Portuguese region which was to qualify under the exemption in Article 87(3)(c), namely Lisboa e Vale do Tejo, the Commission initiated the procedure laid down in Article 88(2): it took the view that on the basis of the available information the proposal made by the Portuguese authorities could not be considered compatible with the guidelines. According to the Portuguese notification the whole of this region, which accounts for 33,4 % of the population of the country, was to be covered by the transitional period referred to in point 5.7 of the guidelines, during which the aid intensities which had applied there until the end of 1999 under Article 87(3)(a) would be adapted. Given the limitations on the geographical scope of point 5.7 of the guidelines which are imposed by footnote 43 to that point, however, only a section of the region accounting for 10,2 % of the population of the country would qualify for such a transitional period.

As the Honourable Member observes, Article 88(3) has the effect of suspending assistance until the Article 88(2) procedure has resulted in a final decision. Regulation (EC) No 1260/1999 states that assistance from the Structural Funds must comply with Community competition law, which means that all public regional aid in the Lisboa e Vale do Tejo region, whether or not part-financed by the Structural Funds, has been suspended since 1 January 2000.

However, this suspension relates only to aid from the State for regional purposes, and does not in any way affect Structural Fund measures which are intended to part-finance aid schemes of other kinds, or which do not comprise any aid to firms. The Lisboa e Vale do Tejo region in its entirety will continue to qualify for transitional support under Objective 1 from 1 January 2000 until 31 December 2005, and the subregions Lezíria do Tejo and Médio Tejo will qualify for the same assistance until 31 December 2006. The Community support framework for Portugal for the period 2000-2006 was approved by the Commission on 14 March 2000, and includes provision for the assistance to be given to the Lisboa e Vale do Tejo region.

(1) OJ C 74, 10.3.1998.