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 Romania, of the other part, signed on 1 February 1994, with regard to the adoption of the necessary rules on state aid for the implementation of Article 64(1) (iii) and (2) of the Europe Agreement and Article 9(1) (iii) and (2) of Protocol 2 to the said agreement on European Coal and Steel Community products
Date: 1999-07-14
Institutions: European Commission
Subjects: Romania, State aid, agreement (EU), exchange of information, iron and steel product

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 14.07.1999
COM(1999)356 final

99/0150(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 Romania, of the other part, signed on
1 February 1994, with regard to the adoption of the necessary rules on state aids
for the implementation of Article 64 (1) (iii) and (2) of the Europe Agreement
and Article 9 (1) (iii) and (2) of Protocol 2 to the said agreement on European
Coal and Steel Community products

(presented by the Commission)

EXPLANATORY MEMORANDUM

between

The Europe Agreements
the European
establishing Associations
Communities and their Member States, of the one part, and respectively Republic of
Bulgaria, Republic of Estonia, Republic of Latvia, Republic of Lithuania, Republic of
Poland, Romania and the Republic of Slovenia, of the other part, lay down that the
Association Council shall adopt the necessary implementing rules for the application
of the provisions on state aids. The relevant Articles are: Article 63 of the Europe
Agreement with the Republics of Estonia and Poland; Article 64 of the Europe
Agreement with Romania and the Republics of Bulgaria, Latvia and Lithuania; and
Article 65 of the Europe Agreement with the Republic of Slovenia.

The provisions on state aids are one of the basic points of the Europe Agreement
between the European Communities and the respective States. Covering any aid
granted by the State or through State resources in any forms whatsoever which might
affect trade between the European Community and the respective States, the proposed
decision lays down co-operation between the two parties' monitoring authorities.

According to the respective Decisions of the Council and the Commission on the
conclusion of the Europe Agreements the position to be taken by the Community
within the Association Councils shall be laid down in accordance with the
corresponding provisions of the Treaties establishing the three Communities. Articles
133 and 300 of the EC Treaty as well as Article 95 of the European Coal and Steel
Community Treaty are an appropriate legal basis for the position to be adopted by the
Community in the Association Councils with regard to the implementing rules for the
application of the provisions on state aids.

The Council has so far agreed to the implementing rules for the application of the
provisions on state aids concerning the Czech Republic and the Slovak Republic. The
Implementing Rules for the application of the State aid provisions in the Czech
Republic were adopted by the Association Council on 24 June 1998 (OJ L 195,
11.07.1998). The attached proposal follows the model as agreed for the Slovak
Republic.

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

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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 Romania, of the other part, signed on
1 February 1994, with regard to the adoption of the necessary rules on state aids
for the implementation of Article 64 (1) (iii) and (2) of the Europe Agreement
and Article 9 (1) (iii) and (2) of Protocol 2 to the said agreement on European
Coal and Steel Community 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 133 in conjunction with the first sentence of Article 300 (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,

(1)

(2)

(3)

Whereas the European Community and its Member States concluded the Europe
Agreement with the Republic of Romania 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 9 (3) of Protocol 2 to the Europe Agreement on products covered
by the European Coal and Steel Community Treaty lays down that the Association
Council shall adopt the necessary rules for the implementation of paragraph 1
and 2 of that Article;

HAVE DECIDED AS FOLLOWS:

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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 Republic of Romania, 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 9 (1) (iii) and (2) of Protocol 2 on European Coal and Steel Community
products to the Europe Agreement shall be based on the draft decision of the Association
Council annexed to this Decision.

Done at Brussels,

For the Council

For the Commission

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ANNEX

ASSOCIATION BETWEEN THE
EUROPEAN UNION
AND ROMANIA

- The Association Council -

DECISION No ....../99 OF THE ASSOCIATION COUNCIL

BETWEEN THE EUROPEAN COMMUNITIES AND
THEIR MEMBER STATES, OF THE ONE PART,
AND ROMANIA, OF THE OTHER PART

adopting the implementing rules for the application of the provisions on state aid referred to in
Articles 64(1)(iii) and (2) pursuant to Article 64(3) of the Europe Agreement establishing an
association between the European Communities and their Member States, of the one part, and
Romania, of the other part, and in Article 9(1)(iii) and (2) of Protocol 2 on European Coal and Steel
Community (ECSC) products to that Agreement

THE ASSOCIATION COUNCIL,

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

Having regard to Protocol 2 on European Coal and Steel Community (ECSC) products to the
Europe Agreement and in particular Article 9(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 it is recalled that in accordance with Article 64(2) of the Europe Agreement, the concept
of "public aid" as contained in Article 64(1)(iii) of the Europe Agreement is to be assessed on the
basis of criteria arising from the application of the rules of Article 87 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 and Romania (state aid);

Whereas Romania 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 Romania and will give an opinion as to their
compatibility with Article 64(1)(iii) and (2) of the Europe Agreement, and Article 9(1)(iii) and (2)

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and (4) of Protocol 2 on European Coal and Steel Community (ECSC) products to the Europe
Agreement;

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

HAS DECIDED AS FOLLOWS:

Article 1

The implementing rules for the application of the provisions on state aid referred to in
Article 64(1)(iii) and (2) pursuant
to Article 64(3) of the Europe Agreement establishing an
association between the European Communities and their Member States, of the one part, and
Romania of the other part, and in Article 9(1)(iii) and (2) of Protocol 2 on European Coal and Steel
Community (ECSC) products to that Agreement as set out in the Annex to this Decision, are hereby
adopted.

Article 2

These Implementing Rules enter into force on the first day of the following month of the adoption
of the rules.

Done at Brussels,

For the Association Council
The President

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IMPLEMENTING RULES FOR THE APPLICATION OF THE PROVISIONS ON
STATE AID REFERRED TO IN ARTICLE 64(1)(iii) and (2) PURSUANT TO
ARTICLE 64(3) OF THE EUROPE AGREEMENT ESTABLISHING AN
ASSOCIATION BETWEEN THE EUROPEAN COMMUNITIES AND THEIR
MEMBER STATES, OF THE ONE PART, AND ROMANIA, OF THE OTHER
PART, AND IN ARTICLE 9(1)(iii) AND (2) OF PROTOCOL 2 ON EUROPEAN
COAL AND STEEL COMMUNITY (ECSC) PRODUCTS TO THAT
AGREEMENT

SURVEILLANCE OF STATE AID BY MONITORING AUTHORITIES

Article 1

Surveillance of state aid by monitoring authorities

to the procedural

Subject
rules in force in the European Community ("the
Community") and Romania, 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 Community and Romania, respectively. The monitoring authority in
the Community shall be the Commission of the European Communities ("the
Commission"), and in Romania the Competition Office and Competition Council.

GUIDANCE FOR DEALING WITH CASES

Article 2

Criteria for compatibility

1.

The assessment of compatibility of individual aid awards and programmes with
the Europe Agreement, as provided for in Article 1 of these Rules, shall be made
on the basis of the criteria arising from the application of the rules of Article 87
of the Treaty establishing the European Community, including the present and
future secondary legislation,
relevant
administrative acts in force in the Community, as well as the case law of the
Court of First Instance and the Court of Justice of the European Communities
and the special guidance to be developed pursuant to Article 4(3).

frameworks, guidelines and other

Insofar as the aid awards or aid programmes are destined for products covered by
Protocol 2 to the Europe Agreement, the first sentence of this paragraph applies
fully with the exception that the assessment shall not be made on the basis of the
criteria arising from the application of the rules of Article 87 of the Treaty
establishing the European Community but on the basis of the criteria arising
from the application of the rules on State aid of the Treaty establishing the
European Coal and Steel Community.

2.

The monitoring authority of Romania shall be informed of any acts relating to
the Community criteria of
the adoption, abolition or modification of
compatibility referred to in paragraph 1, insofar as these are not published but
are specifically brought to the attention of all Member States.

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3. Where such changes do not encounter objections from Romania within three
months from the date of receiving the official information about them, they shall
become criteria of compatibility as provided for in paragraph 1 of this Article.
Where such changes encounter objections from Romania and having regard to
the approximation of legislation as provided for in the Europe Agreement,
consultations shall take place, in accordance with Articles 7 and 8 of these Rules.

4.

The same principles shall apply in respect of other significant changes in
Community policy on state aids.

Article 3

De minimis aid

Aid programmes or individual aid awards which do not involve export aid and which
fall below the threshold applicable in the Community for de minimis aid1 shall be
considered as having only a negligible effect on competition and trade between the
Parties and shall therefore not be treated under these Rules. This Article does not
apply to the industries covered by the Treaty establishing the European Coal and Steel
Community, to shipbuilding, to transport nor to aid towards expenditure in connection
with agriculture or fisheries.

1.

2.

3.

1

Article 4

Derogations

In accordance with and within the limits of Article 64(4)(a) of
the
Europe Agreement, Romania shall be regarded as an area identical to those areas
of the Community referred to in Article 87(3)(a) of the Treaty establishing the
European Community.

The monitoring authorities shall jointly evaluate the maximum aid intensities and
specific regional coverage of areas in Romania eligible for national regional aid.
They shall submit a joint proposal to the Association Committee which shall
establish a decision to this effect.

The Commission and the monitoring authority of Romania shall also work out,
and modify if necessary,
in addition to the types of aid allowed in the
Community, a special guidance on the compatibility of aid designed to combat
the specific problems of Romania as it completes transition to a market
economy.

Currently the Community de minimis threshold according to the Commission Notice on de
minimis aid (OJ C 68, 6.3.1996) is EURO 100 000 of total aid per firm over a three-year
period.

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PROCEDURES FOR CONSULTATION AND PROBLEM SOLVING

Article 5

Examination of certain aid

1. Where the amount of the aid in question amounts to over EURO 3 million, aid
programmes or individual aid awards, whether or not covered by frameworks
and guidelines in the Community, may be referred by the relevant monitoring
authority to the Sub-Committee dealing with competition policy and state aids
for examination. The Sub-Committee may submit a report to the Association
Committee which may adopt appropriate decisions or
recommendations
concerning the compatibility of the aid programme or aid award with the Europe
Agreement and these Rules.

2.

3.

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

The Association Committee may decide to extend further 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 affect important interests of that Party,
it may request information about this from the authority responsible. In any event,
both monitoring 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

1. Whenever the Commission or the monitoring authority of Romania considers
that the award of state aid on the territory for which the other authority is
responsible substantially affects
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 taking 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 authority so addressed, within the framework of the
Europe Agreement.

important

interests,

its

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2.

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.

3. Without prejudice to any of their

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.

rights and obligations,

Article 8

Problem solving

1. Where consultations under Article 7 do not

lead to a mutually acceptable
solution, an exchange of views shall take place within the Sub-Committee
dealing with competition policy and state aids established in the framework of
the Europe Agreement at the request of one Party within three months following
the request.

2. Where this exchange of views does not lead to a mutually acceptable solution, or
after the expiration of the period referred to in paragraph 1, the matter may be
submitted to the Association Committee which may make appropriate
recommendations for the settlement of these cases.

3.

These procedures shall be without prejudice to any action under Article 64(6) of
the Europe Agreement and Article 9(6) of Protocol 2 on European Coal and Steel
Community (ECSC) products to the Europe Agreement. Trade instruments
should however only be used as a last resort.

Article 9

Secrecy and confidentiality of information

1. With respect

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.

2.

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

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TRANSPARENCY

Article 10

Inventory

1. Under

the relevant Community programmes,

the Commission shall assist
Romania to draw up and thereafter update an inventory of its aid programmes
and individual aid awards, established on the same basis as in the Community, in
order to ensure and continuously improve transparency.

2.

The Commission shall provide Romania with regular
information on the
documentation it produces with a similar aim in relation to the Member States of
the Community.

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.

MISCELLANEOUS

Article 12

Administrative assistance (languages)

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

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