CELEX: 52003PC0753
Language: en
Date: 2003-12-04
Title: Proposal for a Council Decision on the position to be taken by the Community within the Association Council established by the Europe Agreement signed on 8 March 1993 between the European Communities and their Member States, of the one part, and the Republic of Bulgaria, of the other part, with regard to amendments to Article 2 and Article 3 of the Additional Protocol to the Europe Agreement

COMMISSION OF THE EUROPEAN COMMUNITIES
                                                    Brussels, 4.12.2003
                                                    COM(2003) 753 final
                                       Proposal for a
                                 COUNCIL DECISION
on the position to be taken by the Community within the Association Council established
 by the Europe Agreement signed on 8 March 1993 between the European Communities
  and their Member States, of the one part, and the Republic of Bulgaria, of the other
part, with regard to amendments to Article 2 and Article 3 of the Additional Protocol to
                                  the Europe Agreement
                              (presented by the Commission)
 ---pagebreak---                                  EXPLANATORY MEMORANDUM
The Europe Agreement (EA), establishing an Association between the European
Communities and their Member States, of the one part, and the Republic of Bulgaria, of the
other part, came into force on 1 February 1995.
Protocol 2 of the Agreement governs ECSC products (i.e. steel and coal), including the issue
of public aid for these sectors. According to Protocol 2, public aid in any form whatsoever –
apart from the derogations allowed pursuant to the ECSC Treaty – is incompatible with the
Europe Agreement. Consequently, Bulgaria can grant public aid only for the following
purposes: (i) environmental improvements; (ii) research and development; (iii) permanent
closure of capacity.
Protocol 2 of this Agreement, however, exceptionally also permitted Bulgaria to grant public
aid in order to allow the Bulgarian steel industry to restructure during the five years following
the entry into force of the Agreement (the so-called grace period), which expired on 31st of
December 1997. In any event, aid granted for such a restructuring would be authorised if it
respected certain criteria1.
The Bulgarian authorities have requested and signed up on 21 November 2002 an Additional
Protocol with the European Union to provisionally extend the period during which public aid
could exceptionally be granted to steel companies to allow restructuring. The final decision on
the prolongation of the so-called “grace period” remains however conditional to the approval
of the restructuring plans for the Bulgarian steel sector by the Council on the basis of the
assessment done by the Commission.
Taking into account recent changes in the Bulgarian legislation on distribution of functions
between implementing institutions, Bulgaria would like to propose an amendment to Article 2
and Article 3 of the Additional Protocol by replacing the reference to the “Competition
Council” in both Articles with reference to “the Commission on Protection of Competition” in
Article 2 and “the Ministry of Finance” in Article 3 respectively.
The Bulgarian authorities need these changes to be adopted so as to ensure the conformity of
the Europe Agreement, and its subsequent Protocol 2 to Bulgarian institutional organisation.
This conformity will allow the Additional Protocol to enter into force and provide for the
legal basis allowing the adoption of a national restructuring plan for the steel sector.
1
        The restructuring programme was linked to a global reduction and rationalisation involving an overall
        permanent reduction in the overall production capacity for finished products in Bulgaria;
        It led to the viability of the benefiting firm under normal market conditions at the end of the
        restructuring period and,
        The amount and intensity of such aid was strictly limited to what was absolutely necessary in order to
        reach the objective of viability and that such aid was progressively reduced.
                                                         2
 ---pagebreak--- In order to ensure conformity between the Europe Agreement and the Bulgarian legislation,
the Council is invited to adopt the annexed proposal for decision concerning an amendment to
the Additional Protocol signed on 21 November 2002.
                                               3
 ---pagebreak---                                            Proposal for a
                                      COUNCIL DECISION
on the position to be taken by the Community within the Association Council established
  by the Europe Agreement signed on 8 March 1993 between the European Communities
   and their Member States, of the one part, and the Republic of Bulgaria, of the other
 part, with regard to amendments to Article 2 and Article 3 of the Additional Protocol to
                                      the Europe Agreement
THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty establishing the European Community, and in particular
Article 87(3)(e), in conjunction with the first sentence of the first subparagraph of Article
300(2) and the first subparagraph of Article 300(3) thereof,
Having regard to the Council Decision of 14 October 2002 on the Additional Protocol to the
Europe Agreement… with regard to an extension of the period laid down in art 9(4)…
Having regard to the proposal from the Commission,
Whereas:
(1)     A Europe Agreement establishing an association between the European Communities
        and their Member States, of the one part, and the Republic of Bulgaria, of the other
        part2,was signed on 8 March 1993.
(2)     Article 9(4) of Protocol 2 to the above Europe Agreement lays down that during the
        first five years after the entry into force of the Agreement, and by way of derogation
        from paragraph 1(iii) of the said Article, Bulgaria may exceptionally, as regards 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
        restructuring period; that the amount and intensity of such aid is strictly limited to
        what is absolutely necessary in order to restore viability and that aid is progressively
        reduced; and that the restructuring programme is linked to a global rationalisation and
        reduction of overall production capacity in Bulgaria.
(3)     The initial period of five years expired on 31 December 1997.
(4)     The Republic of Bulgaria requested the extension of the above-mentioned period in
        October 1997.
(5)     This period was provisionally extended for an additional eight years starting on 1
        January 1998 or until the date of Bulgaria's accession to the European Union,
        whichever comes first.
2
        OJ L 358, 31.12.1994, p.3
                                                  4
 ---pagebreak--- (6)     The final decision on the extension of the period provided under art 9(4) of the
        Protocol 2 of the Europe Agreement is conditional to the approval of the restructuring
        plans for the Bulgarian steel sector by the Council on the basis of the assessment done
        by the Commission
(7)     To this effect, an Additional Protocol to the Europe Agreement has been agreed and
        signed between the Parties.
(8)     Recent changes in the Bulgarian legislation modified the distribution of functions
        between implementing institutions.
(9)     In order to ensure conformity between the Europe Agreement and the Bulgarian
        institutional organisation, it is appropriate to amend Article 2 and Article 3 of the
        Additional Protocol by replacing the reference to the “Competition Council” in both
        Articles with reference to “the Commission on Protection of Competition” in Article 2
        and “the Ministry of Finance” in Article 3 respectively.
(10)    This conformity is necessary to allow the entry into force in Bulgarian law of the
        Additional Protocol to the Europe Agreement mentioned above.
HAS DECIDED AS FOLLOWS:
                                           Sole Article
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 Bulgaria, of the other part, with regard to amendments to Article 2
and Article 3 of the Additional Protocol 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
                                              The President
                                                 5
 ---pagebreak---                                            ANNEX
  ASSOCIATION BETWEEN THE EUROPEAN UNION AND THE REPUBLIC OF
                            BULGARIA The Association Council
               DECISION No …/2003 OF THE ASSOCIATION COUNCIL
                     BETWEEN THE EUROPEAN COMMUNITIES
                 AND THEIR MEMBER STATES, OF THE ONE PART,
             AND THE REPUBLIC OF BULGARIA, OF THE OTHER PART
    Amending Article 2 and Article 3 of the Additional Protocol of the Europe 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 the Republic of Bulgaria, of the
other part,
Having regard to Protocol 2 of the Europe Agreement and in particular to Article 2 and
Article 3 of the Additional Protocol thereof;
Whereas
(1)      An Additional Protocol, with regard to an extension of the period laid down in
         Article 9(4) of Protocol 2 to the Europe Agreement has been agreed and signed
         between the Parties.
(2)      The Additional Protocol to the Europe Agreement, on behalf of the European
         Community, was subject to a decision 12685 of the Council on 14 October 2002.
(3)      Recent changes in the Bulgarian legislation modified the distribution of functions
         between implementing institutions.
(4)      In order to ensure conformity between the Additional Protocol to the Europe
         Agreement and the Bulgarian institutional changes, it is appropriate to amend Article
         2 and Article 3 of the Additional Protocol by replacing the reference to the
         “Competition Council” in both Articles with reference to “the Commission on
         Protection of Competition” in Article 2 and “the Ministry of Finance” in Article 3
         respectively.
(5)      This conformity is necessary to allow the entry into force in Bulgarian law of the
         Additional Protocol to the Europe Agreement mentioned above.
                                              6
 ---pagebreak--- HAS DECIDED AS FOLLOWS:
                                            Article 1
In Article 2 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
Republic of Bulgaria, of the other part, with regard to an extension of the period laid down in
Article 9(4) of Protocol 2 to the Europe Agreement, the term “Competition Council” is
replaced by “the Commission on Protection of Competition”.
In Article 3 of the Additional Protocol, the term “Competition Council” is replaced by “the
Ministry of Finance”.
The text of the amended Additional Protocols attached to this Decision.
                                            Article 2
This Decision shall enter into force on the day of its adoption by the Association Council.
Done at Brussels,
For the Association Council
The President
                                                7
 ---pagebreak--- Version with the modifications proposed
ADDITIONAL PROTOCOL TO THE EUROPE AGREEMENT ESTABLISHING AN
ASSOCIATIONBETWEEN THE EUROPEAN COMMUNITIES AND THEIR
MEMBER STATES, OF THE ONE PART, AND THE REPUBLIC OF BULGARIA,
OF THE OTHER PART, WITH REGARD TO AN EXTENSION OF THE PERIOD
LAID DOWN IN ARTICLE 9(4) OF PROTOCOL 2 TO THE EUROPE AGREEMENT
THE EUROPEAN COMMUNITY, hereinafter referred to as "the Community",of the one
part, and
THE REPUBLIC OF BULGARIA, of the other part,
HAVING REGARD to the Europe Agreement establishing an association between the
European Communities and their Member States, of the one part, and the Republic of
Bulgaria, of the other part, and in particular Article 9(4) of Protocol 2 thereto,
WHEREAS
(1)       Article 9(4) of Protocol 2 to the Europe Agreement lays down that during the
          first five years after the entry into force of the Agreement, and by way of derogation
          from paragraph 1(iii) of the same Article, Bulgaria may exceptionally, as regards
          ECSC steel products, grant public aid for restructuring purposes, provided that it
          leads 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 are strictly
          limited to what is absolutely necessary in order to restore such viability and are
          progressively reduced; and that the restructuring programme is linked to a global
          rationalisation and reduction of overall production capacity in Bulgaria.
(2)       The initial period of five years expired on 31 December 1997.
(3)       The Republic of Bulgaria requested the extension of the above mentioned period in
          October 1997.
(4)       This extension should be granted for an additional period of eight years starting on
          1 January 1998 or until the date of Bulgaria’s accession to the European Union,
          whichever comes first,
HAVE AGREED AS FOLLOWS:
                                              ARTICLE 1
The period within which the Republic of Bulgaria may exceptionally, as regards steel
products, grant public aid for restructuring purposes under the conditions listed in Article 9(4)
of Protocol 2 shall be extended for a further period of eight years starting on 1 January 1998
or until the date of Bulgaria's accession to the European Union, whichever comes first. The
extension shall be subject to fulfilment of the conditions laid down in Articles 2 and 3.
                                                   8
 ---pagebreak---                                            ARTICLE 2
The Republic of Bulgaria shall submit to the European Commission a restructuring
programme and business plans that meet the requirements listed in Article 9(4) of Protocol 2,
and that have been assessed and agreed by its National State Aid Monitoring Authority (the
Competition Council [to be replaced by:] the Commission on Protection of Competition).
                                           ARTICLE 3
The Commission shall provide a final assessment of whether the restructuring programme and
business plans meet the requirements listed in Article 9(4) of Protocol 2. The Council of the
European Union shall decide whether the programme and the plans are in compliance with the
requirements of the above mentioned Article.
The Commission shall regularly monitor the implementation of the plans on behalf of the
Community, and the National State Aid Monitoring Authority (the Competition Council [to
be replaced by:] the Ministry of Finance) shall do so for the Republic of Bulgaria.
                                           ARTICLE 4
This Protocol may be amended by decision of the Association Council set up by the Europe
Agreement establishing an association between the European Communities and their Member
States, of the one part, and the Republic of Bulgaria, of the other part.
                                           ARTICLE 5
This Protocol shall enter into force on the first day of the month following the date on which
the Parties notify each other of the completion of the internal procedures necessary for that
purpose. It shall apply provisionally from the date of signature.
Done at Brussels,
For the European Community
For the Republic of Bulgaria
                                                9