WRITTEN QUESTION E-0078/03 by Raimon Obiols i Germà (PSE) to the Commission. Relocation of enterprises to central and eastern Europe.
Date: 2003-01-23
Institutions: European Parliament, Provisional data
Subjects: Central and Eastern Europe, State aid, accession to the European Union, competition policy, motor vehicle industry, tax exemption, transfer of businesses

15.1.2004

EN

Official Journal of the European Union

C 11 E/65

Answer given by Mr Lamy on behalf of the Commission

(21 March 2003)

1.
The Temporary Defensive Mechanism (TDM) is an exceptional measure, designed to support WTO
action against Korea. It is limited in scope and time. The Commission has explained on many occasions
that its scope is intentionally narrow and focuses only on those market segments where it has been clearly
demonstrated, in the Trade Barriers Regulation (1) (TBR) Report, over a reasonable period of time, that
Korean practices are causing the most severe adverse effects on Community industry. The Regulation
expires on 31 March 2004, which takes into account the time necessary for the completion of the WTO
procedure.

The Commission will continue to monitor the market and, in particular, the sectors of container
2.
ships, product and chemical tankers, and liquefied Natural Gas (LNG) carriers. The Commission will
continue to reflect on its position in light of this monitoring. However, in view of the exceptional nature
of the TDM, the possibility of granting aid to LNG carriers in particular is subject to confirmation, by the
Commission on the basis of a new investigation under the TBR covering the year 2002.

As regards the further investigations covering 2002, the Commission launched a TBR questionnaire to the
industry in December 2002. On the basis of their replies, the Commission expects to present the result of
this further investigation no later than March 2003.

3.
The Commission is closely monitoring the developments of the world shipbuilding market (especially
as far as the Korean yards are concerned) and reports annually to the Council. Such monitoring covers not
only movements in prices and market shares but also financing aspects such as restructuring operations
financed by state resources. It should be noted, however, that the International Monetary Fund (IMF) has
no mandate to become involved in possible Korean shipyard restructuring operations.

(1) Council Regulation (EC) No 3286/94 of 22 December 1994 laying down Community procedures in the field of the
common commercial policy in order to ensure the exercise of the Community’s rights under international trade
rules, in particular those established under the auspices of the World Trade Organisation, OJ L 349, 31.12.1994.

(2004/C 11 E/069)

WRITTEN QUESTION E-0078/03

by Raimon Obiols i Germà (PSE) to the Commission

(23 January 2003)

Subject: Relocation of enterprises to central and eastern Europe

At a time when the EU is close to completing the negotiations for the accession of the applicant countries,
enterprises located in the Member States are relocating to certain central and eastern European countries,
attracted not only by low wage levels but also by the considerable tax advantages offered to business by
certain countries.

These relocations are likely to result in higher unemployment levels in the Member States, and may also
undermine public support for EU enlargement, given the lack of information and transparency on the
subject of tax exemptions which has characterised the negotiation process.

Can the Commission indicate how many exemptions, and what type of exemptions, it has proposed for
the car industry in the various negotiation processes for the forthcoming enlargement?

C 11 E/66

Official Journal of the European Union

EN

15.1.2004

Has the Commission proposed any measures to alleviate the possible consequences of the relocation of
enterprises from the existing Member States to central and eastern Europe, in the context of the ‘priority
European employment objective’ set by the Commission and the Member States as part of the Lisbon
strategy?

Answer given by Mr Monti on behalf of the Commission

(5 March 2003)

The Commission, has consistently taken the view that the Candidate Countries can be regarded to be ready
for accession only if their companies and public authorities have become accustomed to a competition and
state aid discipline similar to that of the Community well before the date of accession.

In keeping with this strict approach, the Union has put forward three elements that must be in place in a
Candidate Country before the competition negotiations can be closed:

(cid:1) the necessary legislative framework with respect to antitrust and State aid;

(cid:1) an adequate administrative capacity (in particular, well-functioning state aid and competition

authorities); and

(cid:1) a credible enforcement record of the acquis in both state aid and anti-trust policy.

Consequently, Candidate Countries are required to comply with the criteria of the Community state aid
acquis already during the pre-accession period.

The Commission has advocated this strict approach not only to preserve the internal market discipline
after enlargement, but also to keep a level playing field between future and existing Member States in the
enlarged internal market.

This strict approach applies in particular to such a sensitive issue as aid to the motor vehicle industry.
Therefore, the guiding principle remains that lower aid intensities have to be maintained in this sector,
regardless of whether the beneficiary is investing in the current or future Member States.

On the basis of this restrictive approach, the Union has agreed to very limited transitional arrangements
for aid to one or several car companies in three Candidate Countries, namely Hungary, Poland and
Slovakia. The purpose of these arrangements is to ensure that strict maximum ceilings are imposed in
relation to the already previously granted tax exemptions and also to avoid the companies concerned from
unduly benefiting from the tax exemptions during the period after accession.

These guiding principles are also applied in the case of relocation accompanied by public aid. Furthermore,
it is noted that under the Community rules, it is not a condition for granting regional aid that the aid is
necessary for ensuring the viability of the company receiving the aid. The main purpose of regional aid is
to compensate for the regional handicap of the assisted region.

These arrangements were unanimously accepted by the Member States during the negotiations on the
competition chapter with these three countries.

Finally, as for transparency of aid granted in the Candidate Countries, the Commission is pleased to inform
the Honourable Member that the Commission recently published a special edition of its ‘State Aid
Scoreboard’. It is available on the Commission website (1) giving a comprehensive and detailed overview of
all aid measures granted in the Candidate Countries, in similar fashion as is already the case as for the
Member States.

(1) http://europa.eu.int/comm/competition/state_aid/scoreboard/.