WRITTEN QUESTION E-0788/03 by Yvonne Sandberg-Fries (PSE) to the Commission. Investment aid creates unemployment.
Date: 2003-03-14
Institutions: European Parliament, Provisional data
Subjects: EU policy, State aid, control of State aid, industrial restructuring, investment aid, job cuts, support policy, transfer of businesses

C 58 E/28

Official Journal of the European Union

EN

6.3.2004

The Commission intends to remain particularly vigilant on this point, and has thus taken France and
Ireland to the Court of Justice for failure to attain the 25 % inspection threshold.

The Commission considers that, in the light of recent events, there is a legitimate argument for creating a
European Coastguard Service as a means of effectively countering the risks of pollution and ensuring
maritime safety.

The first task of the European Maritime Safety Agency, created under Regulation (EC) No 1406/2002 (5) of
the European Parliament and of the Council of 27 June 2002 and due to become operational in the next
few months, will be technical coordination of the enforcement of Community law. The aim is for the
Agency’s mandate gradually to be extended.

In particular, the organisation will have a major role to play in stepping up cooperation between the
Member States’ coastguard authorities with regard to maritime safety and prevention of pollution.
The question of whether a next stage should be the creation of a European coastguard fleet will need to be
examined in the light of the experience gained by the Agency, and considered by all the parties concerned.

(1) COM(2003) 105 final.
(2) OJ C 192 E, 14.8.2003, p. 127.
(3) COM(2002) 681 final.
(4) Council Directive 95/21/EC of 19 June 1995 concerning the enforcement, in respect of shipping using Community
ports and sailing in the waters under the jurisdiction of the Member States, of international standards for ship
safety, pollution prevention and shipboard living and working conditions (port State control), OJ L 157, 7.7.1995.

(5) OJ L 208, 5.8.2002.

(2004/C 58 E/032)

WRITTEN QUESTION E-0788/03

by Yvonne Sandberg-Fries (PSE) to the Commission

(14 March 2003)

Subject: Investment aid creates unemployment

In February 1996 the EU approved Spanish state aid of close on SEK 57 million (approximately
EUR 6 million) for ‘Outokumpu Kopper’ which was intended for ‘restructuring of the company’. The aid
was conditional on a reduction in production capacity and the creation of 60 new jobs in Spain.

The result of this state aid being approved was that the company chose to shut down its operations at the
Granefors works at Blekinge in southern Sweden in 1998 with the loss of 145 jobs.

This is yet another example of how far public subsidies can fall wide of the mark. An earlier example of a
company in Sweden being forced to shut down operations on account of state aid being approved
elsewhere in the EU is the German tyre manufacturer Continental’s factory in Gislaved.

EU regional aid seeks to even out social inequalities between Member States. Regional aid does not allow
tax subsidies to individual companies in order to attract manufacturing activity from another country and,
yet, this is what is happening.

Does the Commission believe it is right to use EU structural aid in this way? What is it doing to ensure
that there is no repetition of state aid being granted that results in company relocations with the above
consequences?

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Official Journal of the European Union

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Answer given by Mr Monti on behalf of the Commission

(6 May 2003)

The Commission understands that the question of the Honourable Member refers to the consistency of
state aid policy when there are relocations of production facilities within the Union.

The Commission is aware that Community policies, including state aid, may lead, inter alia, to potential
relocation problems and it is the Commission’s concern to ensure that these problems are reduced as
much as possible, while respecting the fundamental principles of the common market. To illustrate this
concern, when the Commission adopted for example its Guidelines on national regional aid in 1998 (1), it
reduced the level of aid authorised across the board in order to minimise the risks of regions attempting to
outbid one another and to limit aid to what is strictly necessary. At the same time, the granting of regional
aid was tied more strictly to conditions of duration in terms of the continuation of investment and job
creation in the region concerned.

In general, as far as relocations are concerned, the Commission would like to underline that these are first
and foremost the result of choices made by the enterprise in order to improve its competitiveness, either
by reducing its overheads (wage costs, transport, raw materials, tax) or by rationalising its production
tools. A number of factors, not only or principally the possibility of obtaining financial support from the
public purse, may thus influence decisions concerning the location of a new investment. Therefore, there is
not always a direct link between the granting of a state aid in a certain region and the closing down of an
establishment in another.

The enterprises which have decided to relocate should take also into account the financial cost for
compensating the social costs of their decision. These social costs have been imposed by social regulations
In particular Council Directive 98/59/CE (2) relative to
in Member States and on Community level.
collective redundancies which includes provisions on the information and the consultation with the
representatives of the workers in the cases where the employer is contemplating such redundancies.
Generally, the Commissison recommends to enterprises, when they are planning their relocation, to
consider the consequences of their decision to employees. This has been stressed in the Communication of
the Commission concerning the Corporate Social Responsibility. A bussiness contribution in sustainable
development (3).

Moreover, the Commission has invited the European social partners to participate in a dialogue, on
anticipating change with a view of adopting a dynamic approach towards the social aspects of
restructuring. The social partners accepted to incorporate this important aspect in their multiannual work
program which has been adopted recently.

When examining the compatibility of an aid with the common market, the Commission should not only
ensure that there is no distortion of competition to an extent contrary to the common interest but also
that the fundamental principles of the common market are respected. The completion of the common
market implies the possibility for firms to establish and carry on an economic activity in any of the
Member States. Freedom of establishment within the common market, enshrined in Article 43 of the EC
Treaty, embodies one of the fundamental principles of the Community (4).

As to the case mentioned by the Honourable Member, the Spanish State aid to ‘Outokumpu Copper’, the
Commission would like to refer the Honourable Member to its answer to Written Question E-0847/03 by
Mr Andersson (5). Concerning the second example provided by the Honourable Member, this is state aid to
‘Continental’, the Commission would like to refer to the answers given by the Commission to Oral
Questions H-0009/02, H-0031/02 and H-0040/02 by Mr Sjöstedt, Mr Gahrton and Mr Schmidt
respectively at the Question Time of the first February 2002 (6) session of Parliament.

(1) Guidelines on national regional aid;

http://europa.eu.int/eur-lex/pri/en/oj/dat/1998/c_074/c_07419980310en00090031.pdf. These Guidelines are appli-
cable from their date of publication in the Official Journal of the European Union onwards, OJ C 74, 10.3.1998.
4.10. Aid for initial
investment must be made conditional, through its method of payment or through the
conditions associated with its acquisition, on the maintenance of the investment in question for a minimum period
of five years.

(2) Council Directive 98/59/CE of 20 July 1998 on the approximation of the laws of the Member States relating to

collective redundancies, OJ L 225, 12.8.1998.

(3) COM(2002) 347 final.
(4) Case C-270/83 Commission versus France [1986] ECR 273, paragraph 13.
(5) See page 30.
(6) Written answer of 5 February 2002.