6 Notification of agricultural state
aids to small and medium-sized enterprises
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| Draft Commission Regulation on the application of Articles 87 and 88 of the EC Treaty to state aid to small and medium-sized enterprises active in the production, processing and marketing of agricultural products.
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| Legal base | Article 89 EC |
| Department | Environment, Food and Rural Affairs
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| Basis of consideration | EM of 15 April 2003
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| Previous Committee Report | None
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| To be discussed in Council | Not applicable: see paragraph 6.5 below
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| Committee's assessment | Politically important
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| Committee's decision | Cleared
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Background
Under the state aids provisions of the EC Treaty, Member States
are obliged to notify the Commission in advance of all new agricultural
state aid schemes, and cannot implement such schemes until Commission
approval has been received.
The current proposal
Although we have not received an official text, we have been informed
in an Explanatory Memorandum of 15 April 2003 from the Parliamentary
Under-Secretary of State (Farming, Foods and Sustainable Energy)
at the Department of Environment, Food and Rural Affairs (Lord
Whitty) of a proposed Commission Regulation which would
exempt from the prior notification process certain categories
of state aid aimed at small and medium-sized enterprises.[14]
Instead, Member States would have to report details of each scheme
within 20 days of implementation, publish full details on the
internet, submit an annual report, and keep detailed records of
all aid paid.
The Minister stresses that measures such as environmental
aid, advertising schemes, and schemes for testing transmissible
spongiform encephalopathies (TSEs) which do not fall within the
categories listed will need to be notified to the Commission in
the same way as at present. Also, the Commission will still be
able to investigate any scheme, declare it incompatible with the
single market, and demand recovery of the aid. In addition, it
proposes to retain the right to withdraw the provisions of the
new Regulation from any Member State which has not met its obligations.
The Government's view
In his Explanatory Memorandum, the Minister says
that the current process is bureaucratic and time-consuming, and
that it usually takes at least six months before schemes are approved.
He believes that the proposal will allow Member States to react
more quickly in circumstances where paying aid is compatible with
the single market. He also points out that the proposal would
not increase the amount of aid or increase the list of circumstances
in which aid may be paid, its main effect being to shift the administrative
burden from the Commission to the Member States. As a result,
he suggests that the Commission is likely to devote more time
to investigating dubious schemes.
The Minister says that, as state aid is an area of
Commission competence, the measure will not be voted upon in the
Council, but that Member States' reactions are being sought at
a working group meeting to be held in May 2003. He adds that
the Commission intends that the Regulation should come into force
in January 2004.
Conclusion
Since this proposal relates to a Commission Regulation,
it is not one which we would normally have the chance to consider.
Having done so, we think that, in clearing it, we should draw
it to the attention of the House, given the strong interest there
is in ensuring that state aids are adequately controlled. We also
note the general welcome given by the Government to the proposal,
and the suggestion that the changes proposed would be unlikely
to lead to any increase in aid payable, and indeed might give
the Commission more time to scrutinise this whole area. If that
indeed turns out to be the case, it would no doubt be welcomed
by most interested parties in the UK.
14 These include investment in agricultural holding;
conservation of traditional landscapes and buildings; relocation
of farm buildings in the public interest; investment in the processing
and marketing of agricultural products; setting up of young farmers;
early retirement; producer groups; insurance premiums; land reparcelling;
encouragement of the production and marketing of quality agricultural
products; technical support; certain support for the livestock
sector. Back
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