Proposal for a Council and Commission Decision On the position to be taken by the Community within the Association Council established by the Europe Agreement between the European Communities and their Member States of the one part, and the Slovak Republic, of the other part, signed on 4 October 1993, with regard to the adoption of the necessary rules for the implementation of Article 64 paragraph 1 (iii) and paragraph 2 of the Europe Agreement and Article 8 (1) (iii) and (3) of Protocol 2 to the said Agreement on ECSC products
Date: 1997-05-02
Institutions: European Commission
Subjects: Association Council (EU), European Association Agreement, Slovakia, State aid, trading operation

COMMISSION  OF THE  EUROPEAN  COMMUNITIES 

Brussels,  02.05.1997 
COM(97)  179 final 

97/0125  (ACC) 

Proposal for a Council and Commission Decision 

On the position to be taken by the Community within the Association Council established 
by the Europe Agreement between the European Communities and their Member States 
of the one part, and the Slovak Republic, of the other part, signed on 4 October  1993, 
with regard to the adoption of the necessary rules for the implementation of Article 64 
paragraph  1  (iii) and paragraph 2 of the Europe Agreement and Article 8(1)  (iii) and (3) 
of Protocol 2 to the said Agreement on ECSC products 

(presented  by  the  Commission) 

EXPLANATORY  MEMORANDUM 

Article 64 (3) of the Europe Agreement  establishing an association between the European 
Communities  and  their  Member  States,  of the  one part,  and  the  Slovak  Republic,  on the 
other part  signed in Brussels on 4 October  1993, provides that the necessary rules for  the 
implementation  of  paragraphs  1 and  2  of  that  Article  (i.e.  competition  provisions  and 
provisions  on  state  aids)  shall be adopted  by the  Association  Council.  The  time-limit  for 
these  rules  to  be  adopted  is three  years  from  the  entry  into  force  of  the  Agreement;  in 
accordance with Article  124, the time-limit runs from  1  January  1992. 

The provisions on state aids are one of the basic points of the Europe Agreement  between 
the  European  Communities  and  the  Slovak  Republic.  Their  actual  implementation, 
through the adoption of the attached  rules by the Association  Council  is a prerequisite  for 
the  smooth  development  of trade  between  the  two  parties.  Covering  any  aid  granted  by 
the  State  or  through  State  resources  in  any  form  whatsoever  which  might  affect  trade 
between  the  European  Community  and  the  Slovak  Republic,  the  proposed  decision  lays 
down cooperation between the two parties' monitoring authorities. 

According  to  Article  2  (1)  of  the  Decision  of  the  Council  and  the  Commission  of  19 
December  1994  on the  conclusion  of the Europe  Agreement  the  position  to  be taken  by 
the Community  within the  Association  Council  shall be laid  down  in accordance  with  the 
corresponding  provisions  of the Treaties  establishing  the three  Communities.  Article  113 
and  228  of the EC  Treaty  as well  as  Article  95  of  the  ECSC  Treaty  are  an  appropriate 
legal  basis for  the  position  to  be  adopted  by the  Community  in  the  Association  Council 
with  regard  to  the  implementing  rules for  state  aids.  (The  application  of  the  conditions 
resulting  from  Article  92  of  the  EC  Treaty  to  aids  granted  by  the  Slovak  Republic 
requires,  if  their  compatibility  with  the  Europe  Agreement  is  to  be  ensured,  the 
introduction  by  the  Association  Council  of  specific  arrangements  which  then  come 
under  the  commercial  policy).  It  is  therefore  desirable  that  the  Council  and  the 
Commission adopt the attached decision. 

The  Commission  therefore  requests  the  Council  to  adopt  the  attached  proposal  for  a 
Council and Commission Decision. 

Proposal for  a Council and Commission Decision 

On the position to be taken by the Community within the Association  Council established 
by the Europe Agreement between the European Communities and their Member  States 
of the one part, and the Slovak Republic, of the other part, signed on 4 October  1993, 
with regard to the adoption of the necessary rules for the implementation of Article 64 
paragraph  1  (iii) and paragraph 2 of the Europe Agreement and  Article  8(1)  (iii) and  (3) 
of Protocol  2 to the said Agreement on ECSC  products 

The Council of the European Union, 

The Commission of the European Communities, 

Having  regard  to  the  Treaty  establishing  the  European  Community,  and  in  particular 
Article 113 in conjunction  with the first  sentence of  Article 228 (2) thereof, 

Having regard  to  the Treaty  establishing  the European  Coal  and  Steel  Community  and in 
particular Article 95 thereof, 

Having regard to the proposal of the Commission of the European Communities, 

Having regard to the opinion of the Consultative Committee, 

Whereas  the  European  Community  and  its  Member  States  concluded  the  Europe 
Agreement with the Slovak Republic on  19 December  1994; 

Whereas Article 64 (3) of the Europe  Agreement  lays down  that  the  Association  Council 
shall  adopt  the  rules  necessary  for  the  implementation  of  paragraphs  1  and  2  of  that 
Article; 

Whereas Article 8 (3) of Protocol  2 to the Europe Agreement  on products covered  by the 
ECSC  Treaty  lays down  that  the  Association  Council  shall  adopt  the  necessary  rules  for 
the implementation of paragraph  1  and 2 of that Article; 

Whereas  the  application  of  the  conditions  contained  within  Article  92  of  the  Treaty 
establishing the European Community to aids granted by the Slovak Republic requires that 
specific  arrangements  be  drawn  up  to  apply  to  trade  between  the  European  Community 
and the Slovak Republic, 

HAVE DECIDED AS FOLLOWS: 

The position to be taken by the Community within the Association  Council  established by 
the Europe  Agreement  between  the  European  Communities  and  their  Member  States,  of 
the  one  part  and  the  Slovak  Republic  of  the  other  part,  with  regard  to  the  rules 
implementing Article 64 (1) (iii) and (2) of the aforementioned  Europe  Agreement,  and to 
the rules implementing  Article  8 (1) (iii) and  (3)  of Protocol  2 on  ECSC  products  to  the 
Europe  Agreement  shall  be  based  on  the  draft  decision  of  the  Association  Council 
annexed to this Decision. 

Done at Brussels on 

For the Council 

For the Commission 

%: VO 

Association between the European Union 
and the Slovak Republic 
The Association Council 

Draft decision n°.../...  of the Association  Council 
between the European Communities and their Member States of the one part 
and the Slovak Republic of the other part 
of.../... 

adopting  the  necessary  rules  for  the  implementation  of  Article  64(l)(iii)  and  (2)  of the 
Europe  Agreement  between the European  Communities  and their Member  States  of the 
one part and the Slovak Republic of the other part, and the rules for the implementation of 
Article 8(l)(iii) and (3) of Protocol  2 on ECSC products to the said agreement on ECSC 
products 

The Association Council, 

Having regard to the Europe Agreement establishing an association between the European 
Communities and the Member States of the one part, and the Slovak Republic of the other 
part, and in particular Article 64(3) thereof, 

Having  regard  to  Protocol  2  on  ECSC  products  in  the  aforementioned  Europe 
Agreement, and in particular Article 8(3) thereof, 

Whereas Article 64(3)  of the Europe Agreement  lays down that the Association  Council 
shall,  within three years of the entry  into force  of the  Agreement,  adopt  by decision the 
necessary rules for the implementation of paragraphs 1  and 2 of that Article; 

Whereas  Article  8(3)  of  Protocol  2  to  the  Europe  Agreement  lays  down  that  the 
Association  Council  shall,  within  three  years  of  the  entry  into  force  of  the  Agreement, 
adopt by decision the necessary rules for the implementation of paragraphs 1 and 2 of that 
Article; 

HAS DECIDED AS FOLLOWS: 

The necessary  rules implementing  Article 64(l)(iii)  and para 2 of the Europe Agreement 
establishing  as association  between  the European  Communities  and their Member  States 
of  the  one  part,  and  the  Slovak  Republic  of  the  other  part,  and  the  rules  implementing 
Article  8(l)(iii)  and (3)  of Protocol  2 on ECSC products to  the aforementioned  Europe 
Agreement, as set out in the Annex to this Decision, are hereby adopted. 

Done at Brussels on 

The Secretaries 

For the Association Council 
The President 

Implementing Rules for State Aids 

Rules  for  the  implementation  of  the  provisions  on  state  aid  provided  for  in  Article  64 
(l)(iii) and (2) pursuant to Article 64 (3) of the Europe Agreement between the European 
Communities  and their  Member  States, of the one  part,  and the  Slovak  Republic  of the 
other part, 

Having  regard  to  Article  64  (l)(iii),  (2)  and  (3)  of  the  Europe  Agreement  between  the 
European  Communities  and  their  Member  States,  of  the  one  part,  and  the  Slovak 
Republic, of the other part, 

Whereas it is recalled that in accordance with Article 64 (2) of the Europe Agreement, the 
notion of "public aid" as contained in Article 64 (l)(iii) of the Europe Agreement shall be 
assessed on the basis of the criteria arising from  the application of the rules of Article 92 
of the Treaty  establishing  the European  Community,  and thus covers any aid granted by 
the State or through State resources in any form whatsoever which distorts or threatens to 
distort competition by favouring  certain undertakings or the production  of certain goods, 
insofar  as  it  may  affect  trade  between  the  European  Community  (EC)  and  the  Slovak 
Republic (state aid), 

Whereas it is recognised  that the  Slovak  Republic  is an economy  in transition  and  faces 
specific  problems as a consequence.  For the present rules account must be taken  of this 
particular situation, 

Whereas  account  is  to  be  taken  of  the  approximation  of  legislation  as  foreseen  in  the 
Europe Agreement, 

Whereas  the  Slovak  Republic  will  appoint  a  national  institution  or  administration  to 
become a monitoring authority with responsibility for state aid matters, 

Whereas  this  monitoring  authority  will  be  responsible  for  the  analysis  of  existing  and 
future  individual  aid  awards  and programmes  in the  Slovak  Republic,  and  shall  give an 
opinion as to their compatibility with Article 64 (1) (iii), (2) of the Europe Agreement, 

Whereas  the  Slovak  Republic  will,  when  providing  for  the  necessary  rules  to  ensure 
effective  supervision,  ensure  in particular  that  the  monitoring  authority  receives  in  due 
time  all  the  relevant  information  from  the  other  government  departments  at  central, 
regional and local level, 

Whereas the EC Commission will under the relevant Community  programmes, assist the 
monitoring  authority  by  providing  for  documentation,  training,  study  tours  and  other 
relevant technical assistance, 

The  following  rules  have been  adopted  for  the  implementation  of Article  64 (l)(iii)  and 
(2) of the Europe Agreement: 

SURVEILLANCE OF STATE AID AND MONITORING  AUTHORITIES 

ARTICLE 
AUTHORITIES 

1:  SURVEILLANCE  OF  STATE  AID  AND  MONITORING 

Subject to the procedural rules in force in the EC and the Slovak Republic, the granting of 
state aid shall be surveyed  and assessed  as to its compatibility with the Europe  Agreement 
by the responsible monitoring authorities in the EC and the  Slovak Republic,  respectively. 
The  monitoring  authority  in  the  EC  shall  be  the  EC  Commission,  and  in  the  Slovak 
Republic the Ministry of Finance. 

CONCRETE GUIDANCE FOR DEALING WITH CASES 

ARTICLE 2: CRITERIA FOR  COMPATIBILITY 

Regarding the assessment  of compatibility  of individual  aid  awards and  programmes with 
the Europe Agreement as provided  for  in Article  1 of the present implementing rules, they 
shall be  assessed  on  the  basis  of  the  criteria  arising  from  the  application  of  the  rules  of 
Article 92 of the Treaty  establishing  the European  Community,  including the present  and 
future  secondary legislation, frameworks,  guidelines and other relevant administrative  acts 
in force  in the EC, the  case law  of the  Court  of First  Instance  and  the  Court  of Justice, 
and the special guidance to be developed pursuant to Article 4 (3). 

Where changes in the  secondary  EC  legislation  and  other  acts  as well  as the  case  law as 
provided  for  in  the  first  paragraph  of  this  Article  do  not  encounter  objections  on  the 
Slovak  side  within  three  months,  they  shall  become  the  criteria  of  compatibility  as 
provided for in the same first  paragraph of this Article. 

Where  such  changes  encounter  objections  on  the  Slovak  side,  consultations  shall  take 
place  in  the  Association  Committee,  in  accordance  with  the  provisions  contained  in 
Articles 7 and 8 of the present implementing rules. 

The  same  principles  shall  apply  regarding  other  significant  changes  in  the  EC  state  aid 
policy. 

The monitoring  authority  of the  Slovak  Republic  shall be informed  of  any  acts related  to 
the  adoption,  abolition  or  modification  of  the  criteria  of  compatibility  referred  to  in  the 
first paragraph  of this Article as far  as these are not  published  but  are specifically  brought 
to the attention of all Member States. 

ARTICLE 3. DE  MINIMIS AID 

Aid programmes  or individual  aid awards which  do  not  involve export  aid  and  which  are 
limited to a total  amount  of aid per firm  over a three year period  of ECU  100,000 shall be 
considered  as having only a negligible effect  on competition  and trade between the Parties 
and  are therefore  not to  be treated  under the present  implementing  rules1.  This rule  does 
not apply in sectors covered by specific state aid rules. 

1 Amount subject to upward  revision by the Sub-Committee in line with internal  developments of 
the European Union 

6 

ARTICLE 4:  DEROGATIONS 

In accordance  with Article 64  (4)  (a)  of the Europe  Agreement,  the  Slovak  Republic  shall 
be regarded  as an area identical  to  those  areas of the Community  referred  to  in Article  92 
(3)(a)oftheECTreaty. 

The  monitoring  authorities  shall jointly  evaluate  the  maximum  aid  intensities  and  specific 
regional coverage  of areas eligible for regional  assistance. 

The EC  Commission  and the  monitoring  authority  shall  also  work  out,  in  addition  to  the 
types of aid allowed  in the Union,  special  guidance  on the compatibility  of aid designed  to 
combat the specific  problems of the Slovak Republic as it undergoes transition to  a market 
economy. 

PROCEDURES  FOR CONSULTATION  AND  PROBLEM  SOLVING 

ARTICLE  5: EXAMINATION  OF CERTAIN  AID 

Aid  programmes  or  individual  aid  awards  -  whether  covered  by  frameworks  and 
guidelines  in the Community  or not  - where  the amount  of the  aid concerns  amounts  over 
3 million ECU  may be referred  by the  relevant  monitoring  authority to the  Sub-committee 
for  Competition  for  examination.  The  Sub-Committee  may  formulate  appropriate  draft 
decisions  or  recommendations  concerning  the  compatibility  of  the  aid  programme  or  aid 
award  with  the  Europe  Agreement  and  these  implementing  rules  for  the  Association 
Committee. 

The principal  purpose  of  such  decisions  or recommendations  should  be  to  avoid  resort  to 
commercial  defence  measures as a consequence  of the aid in question. 

The  Association  Committee  may  decide,  upon  the  joint  proposal  of  the  Parties  in  the 
framework  of  the  Sub-Committee  for  Competition,  to  further  extend  the  possibility  of 
examination as provided for in this Article. 

ARTICLE 6: REQUEST  FOR  INFORMATION 

Whenever  the  monitoring  authority  of  a  Party  becomes  aware  of  the  fact  that  an  aid 
programme  or  individual  aid  award  appears  to  substantially  affect  important  interests  of 
that  Party,  it  may  request  information  about  this  from  the  authority  responsible.  In  any 
event,  both  authorities  shall  endeavour  to  keep  each  other  informed  of  important 
developments that may be of practical  interest for the other. 

ARTICLE 7: CONSULTATION  AND  COMITY 

Whenever  the  EC  Commission  and  the  Slovak  monitoring  authority  consider  that  the 
award  of  state  aid  on  the  territory  for  which  the  other  authority  is  responsible  is 
substantially  affecting 
it  may  request 
consultation  with  the  other  authority,  and  consequently  it  may  request  that  the  other 
Party's  monitoring  authority  initiate  any  appropriate  procedures  with  a  view  to  take 
remedial  action.  This  is  without  prejudice  to  any  action  under  the  respective  Parties' 
relevant  legislation  and  does  not  hamper  the  full  freedom  of  ultimate  decision  of  the 

interests  of  the  respective  Party, 

important 

authority  so  addressed,  within  the  framework  set  by  the  provisions  of  the  Europe 
Agreement. 

The  monitoring  authority  so  addressed  shall  give  full  and  sympathetic  consideration  to 
such  views  and  factual  material  as  may  be  presented  by  the  requesting  authority  and  in 
particular to the alleged harmful  effects  on the important interests of the requesting Party. 

Without  prejudice  to  any  of  their  rights  and  obligations,  the  monitoring  authorities 
involved  in consultations  under this Article  shall endeavour to find, within three months, a 
mutually acceptable solution in the light of the respective important interests involved. 

ARTICLE 8: PROBLEM  SOLVING 

Where  consultations  under  Article  7  do  not  lead  to  a  mutually  acceptable  solution,  an 
exchange  of views  shall  take  place within the  Sub-Committee  for  Competition  established 
in  the  framework  of  the  Europe  Agreement  at  the  request  of  one  Party  within  three 
months following  the request. 

Following  this  exchange  of  views,  or  after  the  expiration  of  the  delay  stated  above,  the 
matter  may  be  submitted  to  the  Association  Committee  which  may  make  appropriate 
recommendations  for the settlement  of these cases. 

These  procedures  are  without  prejudice  to  any  action  under  the  relevant  respective 
legislation  in force  in the  territories  of  the  Parties,  and  without  prejudice  to  Article  64(6) 
of the Europe Agreement.  Commercial  defence  measures  should  however  only be used  as 
a last resort. 

ARTICLE 9:  SECRECY  AND  CONFIDENTIALITY  OF  INFORMATION 

Having  regard to  Article  64  (7)  of the  Europe  Agreement,  neither  monitoring  authority  is 
required  to  provide  information  to  the  other  authority  if disclosure  of that  information  to 
the  requesting  authority  is  prohibited  by  the  law  of  the  authority  possessing  the 
information. 

Each  monitoring  authority  agrees  to  maintain  the  confidentiality  of  any  information 
provided to it in confidence  by the other authority. 

TRANSPARENCY 

ARTICLE  10:  INVENTORY 

Under  the  relevant  Community  programmes,  the  EC  Commission  shall  assist  the  Slovak 
Republic  to  implement  these  rules,  and  draw  up and  thereafter  update  an  inventory  of  its 
aid  programmes  and  individual  aid  award,  established  on  the  same  basis  as  in  the 
Community,  in order to ensure and continuously  improve transparency. 

The  EC  Commission  shall  provide  the  Slovak  Republic  with  regular  information  on  the 
documentation  it produces with a similar aim in relation to the EC Member States. 

ARTICLE  11: MUTUAL  INFORMATION 

Both  Parties  shall  ensure  transparency  in  the  domain  of  state  aid  by  providing  for 
appropriate  publications  and the  exchange  of  information  on  state  aid  policy  on  a regular 
and reciprocal basis. 

ECSC PRODUCTS 

ARTICLE  12:  TREATY  ESTABLISHING  THE  EUROPEAN  COAL  AND  STEEL 
COMMUNITY (ECSC) 

The  provisions  contained  in  Articles  1,2,4(3)  and  5  to  11  above  shall  apply  mutatis 
mutandis  with  respect  to  the  coal  and  steel  sector  as  referred  to  in  Protocol  2  to  the 
Europe Agreement. 

MISCELLANEOUS 

ARTICLE 13: ADMINISTRATIVE ASSISTANCE (LANGUAGES) 

The  EC  Commission  and  the  Slovak  monitoring  authority  will  provide  for  practical 
arrangements  for  mutual  assistance  or  any  other  appropriate  solution  concerning  in 
particular the question of translations. 

Director General for 
Competition of the Commission 
of the European Communities 

The Slovak Republic 

Alexander Schaub 
The Director-General 

Jozef Magula 
State Secretary 
Ministry of Finance 

10 

ISSN 0254-1475 

COM(97) 179  final 

DOCUMENTS 

EN 

08  11 

Catalogue number  :  CB-C0-97-168-EN-C 

ISBN 92-78-18958-8 

Office  for Official  Publications of the European Communities 

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