Proposal for a Council Decision on the fulfilment of the conditions laid down in Article 3 of the Additional Protocol to the Europe Agreement establishing an association between the European Communities and their Member States, of the one part, and the Czech Republic, of the other part, with regard to an extension of the period foreseen in Article 8 (4) of Protocol 2 of the Europe Agreement
Date: 2002-10-31
Institutions: European Commission
Subjects: Czechia, State aid, aid for restructuring, aid to undertakings, association agreement (EU), control of State aid, steel

25.2.2003

EN

Official Journal of the European Union

C 45 E/191

Proposal for a Council Decision on the fulfilment of the conditions laid down in Article 3 of the
Additional Protocol to the Europe Agreement establishing an association between the European
Communities and their Member States, of the one part, and the Czech Republic, of the other part,
with regard to an extension of the period foreseen in Article 8(4) of Protocol 2 of the Europe
Agreement

(2003/C 45 E/21)

COM(2002) 593 final

(Submitted by the Commission on 31 October 2002)

EXPLANATORY MEMORANDUM

1. According to Article 8(4) of Protocol 2 of the Europe Agreement with the Czech Republic, during the
first five years after the entry into force of the Agreement, and by derogation from paragraph 1(iii) of
the same Article, the Czech Republic could exceptionally, as regards steel products, grant public aid
for restructuring purposes, provided that this lead to the viability of the benefiting firms under normal
market conditions at the end of the restructuring period; that the amount and intensity of such aid be
strictly limited to what is absolutely necessary in order to restore viability and that the aid be
progressively reduced; and that the restructuring programme be linked to a global rationalisation
and reduction of overall production capacity.

2. This initial period expired on 31 December 1996 for the Czech Republic.

3. The Czech Republic requested an extension of the above-mentioned period in February 1998.

4. A realistic restructuring programme,

including individual company viability plans, respecting the
criteria set out in Article 8(4) of Protocol 2 of the Europe Agreement, are the necessary basis for
agreeing the requested extension of the period during which the Czech Republic may grant state aid
for restructuring purposes.

5. In May 2002, the Commission proposed an extension of the period during which Bulgaria, the Czech
Republic, Poland and Romania may grant aids to restructure their steel sector, in view of the urgent
need to find an acceptable solution to move forward the steel restructuring process in the candidate
countries concerned, and pave the way for bringing the accession negotiations on the Competition
Chapter to a conclusion.

6. This extension would provide the legal basis for granting restructuring aid in the period before
accession in the framework of the required restructuring plans (i.e. the aid provided should be
limited and proportional to capacity reduction); it would also have the effect of retroactively legalising
aid that may have been granted illegally since the entry into force or the Europe Agreement.

7. The extension will come into effect only after the adoption and assessment of a restructuring plan and

business plans, which fulfil the criteria of Protocol 2 of the Europe Agreements.

8. With a view to achieving this aim, and considering that Protocol 2 of the Europe Agreement with the
Czech Republic does not, as in the case of the Europe Agreement with Poland, grant the authority to
the Association Council to decide on such an extension, an Additional Protocol to the Europe
Agreement with the Czech Republic was drawn up.

9. The Additional Protocol to the Europe Agreement was signed by the Community and the Czech
Republic on 9 October 2002. A provisional application before entry into force, as envisaged by
Article 300(2) of the Treaty establishing the European Community is in place, as foreseen by
Article 1 of Council Decision (EC) No . . ./2002 of 29 July 2002 on the signature and provisional
application of an Additional Protocol to the Europe Agreement.

C 45 E/192

EN

Official Journal of the European Union

25.2.2003

10. The Additional Protocol provides for extension of the period foreseen by Protocol 2 by a further eight
years starting on 1 January 1997, or until the date of the Czech Republic's accession to the European
Union, whichever comes first, subject to the fulfilment of certain conditions.

11. The first condition has been fulfilled by the Czech Republic, by submitting to the Commission a
restructuring programme and business plans, which have been assessed and agreed by its national
State Aid Monitoring Authority (the Office for the Protection of Economic Competition).

12. The second condition is the final assessment of the restructuring programme and business plans by
the Commission, with a view to determining whether the requirements of Article 8(4) of Protocol 2 of
the Europe Agreement are met.

13. The Commission has made a final assessment which concludes that the restructuring programme and
plans submitted by the Czech Republic meet the requirements of Article 8(4) of Protocol 2 of the
Europe Agreement.

14. The Commission is proposing a Council Decision approving the Commission's final assessment, as
foreseen in Article 3 of the Additional Protocol. Once the Council has granted its approval, the
conditions laid down in Articles 2 and 3 of the Additional Protocol will have been met and the
extension of the period foreseen by Protocol 2 will take effect.

15. The Council
is therefore requested to approve the attached draft proposal for a Decision on the
to the Europe
fulfilment of
the conditions laid down in Article 3 of
Agreement establishing an association between the European Communities and their Member
States, of the one part, and the Czech Republic, of the other part, with regard to an extension of
the period foreseen in Article 8(4) of Protocol 2 of the Europe Agreement.

the Additional Protocol

THE COUNCIL OF THE EUROPEAN UNION,

the one part, and the Czech Republic, of the other part (1),
was signed on 4 October 1993;

Having regard to the Treaty Establishing the European
Community;

Having regard to Council Decision (EC) No . . ./2002 of 29 July
2002 on the signature and provisional application of an
Additional Protocol to the Europe Agreement establishing an
association between the European Communities and their
Member States, of the one part, and the Czech Republic, of
the other part, with regard to an extension of the period
the Europe
foreseen in Article 8(4) of Protocol 2 of
Agreement [Council Ref 10752];

Having regard to the Additional Protocol
to the Europe
Agreement establishing an association between the European
Communities and their Member States, of the one part, and the
Czech Republic, of the other part, with regard to an extension
of the period foreseen in Article 8(4) of Protocol 2 of the
Europe Agreement, and in particular Article 3 thereof;

Having regard to the proposal of the Commission;

Whereas:

regards

(2) Article 8(4) of Protocol 2 of the Europe Agreement with
the Czech Republic lays down that during the first five
years after entry into force of the Agreement, and by
derogation from paragraph 1(iii) of the same Article, the
Czech Republic may exceptionally, as
steel
products, grant public aid for restructuring purposes,
provided that this leads to the viability of the benefiting
firms under normal market conditions at the end of the
that the amount and intensity of
restructuring period;
absolutely
strictly limited to what
such aid is
necessary in order to restore viability and that aid is
the
progressively
restructuring
that
and
reduced;
programme is linked to a global
rationalisation and
reduction of overall production capacity in the Czech
Republic;

is

(3) The initial period of five years expired on 31 December

1996;

(4) The Czech Republic requested an extension of the above-

mentioned period in February 1998;

(5) It is appropriate to grant an extension of this period for
an additional period of eight years starting on 1 January
1997 or until the date of the Czech Republic's accession
to the European Union, whichever comes first;

(1) A Europe Agreement establishing an association between
the European Communities and their Member States, of

(1) OJ L 360, 31.12.1994, p. 2.

25.2.2003

EN

Official Journal of the European Union

C 45 E/193

(6) To this effect, an Additional Protocol

to the Europe
Agreement was
signed by the Community and the
Czech Republic on 9 October 2002 and is provisionally
applied from that date;

(7) Under Article 2 of the Additional Protocol, the extension
of the above-mentioned period is made conditional on the
submission by the Czech Republic to the Commission of
a restructuring programme and business plans which
meet the requirements of Article 8(4) of Protocol 2 of
the Europe Agreement and have been assessed and
agreed by its national State Aid Monitoring Authority
(the Office for the Protection of Economic Competition);

(8) In June, July and September 2002, the Czech Republic
to
restructuring
submitted
programme
and business plans which have been
assessed and agreed by the Office for the Protection of
Economic Competition;

Commission

the

a

(9) Under Article 3 of the Additional Protocol, the extension
of the above-mentioned period is made conditional on a
final assessment of
the restructuring programme and
plans by the Commission;

(10) The Commission has made a final assessment which
concludes that the restructuring programme and plans

submitted by the Czech Republic meet the requirements
of Article 8(4) of Protocol 2 of the Europe Agreement;

HAS DECIDED AS FOLLOWS:

Article 1

The restructuring programme and business plans submitted to
the Commission by the Czech Republic pursuant to Article 2
of the Additional Protocol to the Europe Agreement estab-
lishing an association between the European Communities
and their Member States, of
the one part, and the Czech
Republic, of the other part, with regard to an extension of
the period laid down in Article 8(4) of Protocol 2 to the
Europe Agreement are in compliance with the requirements
of Article 8(4) of Protocol 2.

Article 2

The period during which the Czech Republic may excep-
tionally, as regards steel products, grant public aid for restruc-
turing purposes in accordance with the provisions of Article
8(4) of Protocol 2 is hereby extended by an additional period
of eight years starting on 1 January 1997 or until the date of
the Czech Republic's accession to the European Union
whichever comes
the
Additional Protocol.

foreseen by Article 1 of

first, as