WRITTEN QUESTION P-1373/00 by Sérgio Marques (PPE-DE) to the Commission. Madeira Free Zone.
Date: 2000-04-26
Institutions: European Parliament, Provisional data
Subjects: Madeira, Portugal, common commercial policy, control of State aid, industrial free zone, regional aid

C 46 E/180

Official Journal of the European Communities

EN

13.2.2001

(2001/C 46 E/211)

WRITTEN QUESTION P-1373/00

by SØrgio Marques (PPE-DE) to the Commission

(26 April 2000)

Subject: Madeira Free Zone

The Madeira Free Zone (MFZ), which was established in the 1980s, was set up in order to further the
island(cid:146)s social and economic development. In order to provide the MFZ with the resources it needed in
order to become fully established on the international markets, a financial and fiscal incentive scheme was
set up to promote and secure new investment over a minimum operating period of 25 years (until 2011)
(cid:129) a length of time which was essential if the MFZ was to be successfully launched on the international
markets through the gradual building up an image of trust and credibility.

The scheme was notified to the Commission in 1986 (pursuant to Community rules on competition) and
was over the years subjected to a number of reviews which always resulted in its being extended. At the
last review the Commission authorised the scheme to continue in operation until 31 December 2000 and
described it on the occasion as one of the most dynamic aspects of the region(cid:146)s economy.

The scheme was recently the subject of an analysis by the Working Party on the code of practice relating
to company taxation (which, without taking due account of paragraph G of the code of practice,
concluded that the tax incentives granted to the MFZ(cid:146)s financial activities were damaging, which could
result in the dismantling of the free zone) and was reviewed in the light of the new Commission guidelines
on state aid for the regions which, where the MFZ is concerned, impose a timelimit on the scheme and
require aid for entities which have been granted a licence since 1 January 2000 to be made degressive. The
future of the scheme is currently uncertain.

Despite the efforts which have been made by the regional, national and Community authorities and which
have resulted in Madeira(cid:146)s moving significantly closer in economic terms to the Community average, the
island continues to be one of the EU(cid:146)s ten most disadvantaged regions and one in which the commercial,
industrial and financial activities carried on in the MFZ play, like tourism, a crucial development role.

In view of this, would the Commission answer the following questions:

1. How compatible are the new measures with Article 299(2) of the EC Treaty, which specifically allows

special treatment for remote regions in areas such as fiscal policy, free zones and state aid?

2. Why, then, is an attempt being made to seriously undermine the type of state aid granted to the MFZ,
which in recent years has provided tangible evidence of the contribution it makes to the region(cid:146)s social
and economic development, in particular by enabling new investment projects to be established, the
manufacturing sector to be diversified, know-how to be acquired and the local workforce to be
trained, jobs to be created and Madeira to be promoted to the outside world?

3. Would the discontinuation of the scheme not drastically affect a focus of activity which is essential to
Madeira(cid:146)s development and place the island at a disadvantage vis-(cid:224)-vis other islands, European regions
and dependent or associate territories of the Member States which, for many years, have had (or still
have) the opportunity to successfully run similar schemes, many of which operate in highly-developed
areas?

4.

Is the Commission aware of the implications in terms of the damage which is being done to the MFZ
by the atmosphere of uncertainty which surrounds it and which is having a detrimental effect on the
image of trust and credibility which took years to create?

Answer given by Mr Bolkestein on behalf of the Commission

(16 June 2000)

The Commission would refer to its report of 14 March 2000 (1) which outlines the measures aimed
1.
at implementing Article 299(2) (formerly Article 227) of the EC Treaty, notably in those areas mentioned
by the Honourable Member. For instance, where state aid is concerned, the Commission indicates that it
will amend its guidelines on regional aid (2) to allow operating aid that is neither degressive and nor limited

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Official Journal of the European Communities

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in time to be granted in the European Union(cid:146)s outermost regions. The conditions are that such aid must be
intended to reduce those additional costs of carrying out an economic activity which arise out of the
disadvantages identified in Article 299(2) of the EC Treaty, taking into account its contribution to the
future development of the region and the particular characteristics of certain economic sectors. Where
direct taxation is concerned, and without prejudice to the Commission(cid:146)s competence to assess the current
aid arrangements, it will be up to the Commission to decide what guidelines to use, inter alia, in the light
of the outcome of work currently being done by the Council(cid:146)s Code of Conduct working party.

The Commission has no intention of undermining the development of the Madeira region. On the
2.
contrary, it has demonstrated repeatedly that it is attentive to the special situation of the Community(cid:146)s
outermost regions. However, it would remind the Honourable Member that, following adoption of the
guidelines on regional state aid,
the Commission proposed to the Member States in its letters of
24 February 1998 as appropriate measures that they alter all regional aid schemes that would still be in
force on 1 January 2000 to bring them into line with the guidelines as from that date. Similarly, the
Commission called on the Member States to communicate within six months any such changes that they
were considering. On the question of the direct tax advantages granted to the Madeira Free Zone, and as
the Honourable Member himself emphasises, the main effect of the changes would be that any operating
subsidies granted after 1 January 2000 are limited in time may be granted and degressive. In addition, such
aid may be granted only where it contributes to regional development and the amount granted is in
proportion to the disadvantages it is intended to palliate. These are all conditions which will have to be
met in any case when operating aid measures are evaluated in the light of Article 299(2) of the EC Treaty.

3.
The Commission can but point out that some of the Member States(cid:146) dependent territories are not
subject to Community surveillance in matters of competition. Nevertheless, in the territories to which
Articles 87 to 89 (formerly Articles 92 to 94) of the EC Treaty apply, discriminatory treatment of any kind
is precluded by the strict and transparent application of the criteria for assessing whether state aids are
compatible with the common market, published by the Commission in the form of notices and guidelines.
It would therefore point out that, although they accepted the Commission(cid:146)s recommendations ((cid:145)appropriate
measures(cid:146)), the Portuguese authorities have not yet adjusted the arrangements applicable to the Madeira
Free Zone to make them compatible with the pertinent provisions of those guidelines.

4.
The Commission regrets that a climate of uncertainty should be affecting the free zone. However, it
would remind the Honourable Member that the Commission authorised application of the arrangements
up to 31 December 2000 only and that any future implementing rules therefore have yet to be notified to,
and examined by, the Commission prior to being implemented.

(1) COM(2000) 147 final.
(2) OJ C 74, 10.3.1998.

(2001/C 46 E/212)

WRITTEN QUESTION P-1374/00

by Luis Berenguer Fuster (PSE) to the Commission

(26 April 2000)

Subject: Confidentiality of the data contained in the file relating to the state aid made available to the

Spanish electricity sector

In reply to numerous questions which I and other MEPs have tabled regarding certain details of the file
relating to the state aid to be granted to the ATCs of Spanish electricity companies, the Commission has
said that the file contains data which are confidential and which cannot therefore be communicated either
to the European Parliament or to the consumers(cid:146) association which is named in the file. The 17 April
2000 edition of the Spanish newspaper El Mundo y Expansi(cid:243)n contains an article concerning the existence
of a technical report which endorses the ATCs and from which that article even quotes paragraphs.