Download EU Commission consultation on Draft Guidelines for the

EU Commission consultation on
Draft Guidelines for the Examination of State Aid to
the Fishery and Aquaculture Sector
Opening presentation to the Joint Committee on
Agriculture, Food & the Marine 16th December 2014
Presented by Marine Agencies and Programmes
Division, Department of Agriculture, Food & the
Marine- Paschal Hayes, Principal Officer and
Damien Clarke Assistant Principal Officer
1.
Introduction

Good afternoon Chairman, Deputies and Senators.

As you know, the European Commission, DG MARE, has launched a public consultation on its draft new
Guidelines for the Examination of State Aid to the Fishery and Aquaculture Sector.

The consultation runs until 20 January 2015.

The objective of the consultation is to collect stakeholder views on the draft Guidelines.

The Commission has previously sought Member State views earlier this Autumn through its Advisory
Committee on State Aid, on which the Department of Agriculture, Food and Marine was represented.

The new Guidelines are intended to replace the present Guidelines of the same title, which have been in
force since 2007.

Under the Treaties, the Commission is responsible for considering State Aid notifications and as such, the
Commission will make the final decision on the wording of these Guidelines and on how they will perform
that task.

The new Guidelines will set out the principles that the Commission will apply when assessing whether
proposed aid to the fishery and aquaculture sector can be considered to be compatible with the internal
market.
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
The Guidelines apply to all State aid granted by Member States to the fishery and aquaculture sector that
has been notified, or should have been notified, to the Commission in accordance with the Treaties.

The Commission is moving to update the present Guidelines in order to regularise references to legal acts
mentioned in the Guidelines, thereby aligning them with the Commission’s State Aid Modernisation
initiative, with the reformed Common Fisheries Policy and with the European Maritime and Fisheries Fund
Regulation.
2.
State Aid Framework for Fisheries and Aquaculture
State Aid rules for the fisheries and aquaculture sector differ from the rules applying generally to other areas
of the food industry.

The Commission’s proposed new Guidelines should be viewed as part of a broader legal framework for
State Aid to the fisheries and aquaculture sector.

That broader legal framework includes 4 elements, namely:
1) The European Maritime and Fisheries Fund Regulation (508/2014)
2) The De Minimis Regulation for the Fisheries and Aquaculture Sector (717/2014)
3) The Fisheries Block Exemption Regulation, and
4) These Guidelines for the Examination of State Aid to the Fishery and Aquaculture Sector.

It is important to note that these are essentially a form of cascade, where a proposed support measures
for the seafood sector will generally only be notified to the Commission through a State Aid Notification if
it is not possible, legally, to implement that measure through one of the other 3 options.

By way of example, during the last EU funding round from 2007 to the present, it has not been necessary
to submit a State Aid notification to the Commission for any of the many schemes implemented in Ireland
to support the development of the seafood sector.

The Guidelines come into play only when it is necessary to submit a State Aid notification.
I will very briefly explain the nature of each of the 4 instruments.
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3.

Firstly the EMFF Regulation
The EMFF Regulation or European Maritime and Fisheries Fund Regulation is undoubtedly the most
important.

The EMFF is one of the 4 European Structural and Investment Funds, together with the European Regional
Development Fund (ERDF), the European Social Fund (ESF) and the European Agricultural Fund for Rural
Development (EAFRD).

Together, these European Structural and Investment Funds (ESI) are intended to support measures to
address the EU 2020 Strategy.

The EMFF is intended in particular to support the new Common Fisheries Policy (CFP) and is considered
the financial instrument of the CFP.

The EMFF is solely concerned with measures that are co-funded by the EU. It does not have anything to
say about measures funded solely by the Irish Exchequer.

The vast majority of measures implemented through the EMFF do not require State Aid notification. They
are considered to automatically comply with State Aid rules. There are two exceptions which are not
covered by this exemption - that is, support to Fishery Local Action Groups (FLAG’s) and supports under
the Integrated Maritime Policy (IMP), both of which are provided for in the EMFF Regulation. These 2
measures are excluded from the State Aid notification exemption that generally applies to EMFF measures
as they are outside the CFP.
However, they may potentially be covered by non-fisheries block
exemptions. That remains to be examined, but in any case those measures are also outside the scope of
these Guidelines, again for the same reason that they are not covered by the CFP.

The Minister is preparing a new Seafood Development Programme or SDP for the period 2014 to 2020, to
implement investment in the seafood sector with co-funding from the EMFF.

The Committee will have seen previous announcements from the Minister as part of Budget 2015
announcing that the new SDP will have total funds of €241 million, of which €146.7 million is from EU
funds and €93.9 million is from the Irish Exchequer.
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
The new SDP will include a range of investment measures to encourage and foster the further sustainable
development and growth of our seafood industry, including aquaculture, processing, the fishing fleet and
coastal communities.

Some €142 million of the SDP funds will go towards this core sectoral development purpose, which is
more than twice the €66 million available under the previous Programme, the European Fisheries Fund
(EFF).

The SDP will also directly fund €46 million in new investments to support our capacity to enforce the rules
of the CFP and a further €41 million to fund the science that supports our fisheries management, together
with €11 million for implementation of the new EU Integrated Maritime Policy and €1.3 million for storage
aid supports.

Government has made available €15 million in 2015 to commence investment measures under the new
SDP and this will rise significantly in following years as the Programme is fully rolled out.
4.
Secondly the De Minimis Regulation

A new De Minimis Regulation for the seafood sector was adopted by the Commission in June 2014.

The so-called fisheries De Minimis Regulation is concerned solely with measures funded by the Exchequer.

Measures implemented through De Minimis are not considered State Aid.

The fisheries De Minimis Regulation provides wide scope to Member States to provide nationally funded
supports to enterprises in the seafood sector, up to a maximum of €30,000 per beneficiary and up to
€20.8 million nationally over a rolling 3-year period, and subject to certain exclusions specified in the
Regulation.

While the €30,000 cap restricts its usefulness somewhat, it is a very useful instrument for smaller
interventions that are not permitted under instruments such as the EMFF or the Fisheries Block Exemption
Regulation.

BIM implements its fleet safety grants through De Minimis as these are not eligible under the EMFF or its
predecessor, the EFF, nor under the block exemption. BIM also implemented the Pot Replacement
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Scheme earlier this year through De Minimis, while Enterprise Ireland uses it to implement its Marketing
Assistance Programme for seafood companies.

A separate general De Minimis Regulation applies to the food sector generally, excluding seafood, and this
has a significantly higher cap of €200,000 per beneficiary.

The significant difference in the cap applying to food companies in different sectors has been highlighted
by Enterprise Ireland and Bord Bia as a difficulty. However, the Commission is not open to increases in the
cap on the fisheries De Minimis.
5.

Thirdly the Fisheries Block Exemption Regulation (FIBER)
The Fisheries Block Exemption Regulation or so-called FIBER is concerned solely with measures funded by
the Exchequer.

Like the Guidelines at present and the fisheries De Minimis Regulation earlier this year, the FIBER is being
revised by the Commission and the new instrument is expected to be adopted before end 2014.

The draft new FIBER closely mirrors the EMFF Regulation.

It allows Member States to provide supports to the seafood sector based on the measures included in the
EMFF and subject to the rules specified in the EMFF, without EU co-funding. This is useful where a
Member State wishes to implement particular EMFF measures, but has insufficient EU co-funding to cover
all of the measures it may wish to implement.

Measures implemented through FIBER generally do not require State Aid notification. I say generally
because there is an exception where aid exceeds €1 million to an individual beneficiary.

In a departure from the previous FIBER, the draft new FIBER allows block exemption of measures to assist
the seafood sector with the impacts of natural disasters. The draft Regulation defines ‘natural disaster’
inter alia as floods, tornadoes and hurricanes. The Commission’s definition is taken from the existing EU
legal definition of natural disasters, so while it is a useful addition, it is questionable whether it would
have applied to the storm events we experienced earlier this year.

However, the draft FIBER does mirror the EMFF provision which allows for a State contribution to a
mutual fund for adverse climatic events. That provision is broad in nature and would cover similar storm
events as we experienced this year.
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6.

Fourthly the Guidelines for the Examination of State Aid to the Fishery and Aquaculture Sector
It is when a proposed measure is not covered by the other 3 instruments that a State Aid notification is
required.

Only in that situation do we need to have regard to the new proposed Commission Guidelines in designing
a proposed new scheme and in drafting the State Aid notification for it.

The Guidelines set out the principles by which the Commission will assess such State Aid notifications.

While the Guidelines are quite detailed, they can be summarised as setting out certain principles that are
common to all economic sectors and additional principles that are specific to the seafood sector.


The General principles common to all sectors include:

Contribution to a well-defined objective of common interest;

Need for State intervention;

Appropriateness of the aid measure;

Incentive effect;

Proportionality of the aid;

Avoidance of undue negative effects on competition and trade between Member States; and

Transparency of the aid.
The additional principles specific to the seafood sector relate to the CFP and EMFF. These include:

Exclusion of operators who have infringed CFP rules. A similar rule exists in the EMFF Regulation. A
Commission delegated act will specify the waiting periods appropriate to particular types of
infringements.

A requirement to repay aid if an infringement of CFP rules happens after payment of aid;

Any aid measure similar to one described in the EMFF Regulation must comply with the rules applying
under the EMFF;

Measures ineligible under the EMFF Regulation will not be permitted;
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
And lastly, a proposed aid measure must identify how exactly it will contribute to the general and
specific objectives of the CFP.

Aside from these principles, which are the core of the Guidelines document, the remaining notable
element of the proposed new Guidelines is the specific recognition they give to natural disasters, to so
called ‘exceptional occurrences’ and to so-called ‘adverse climatic events’.

Natural disasters or exceptional occurrences must have been formally recognised as such by the Member
State.

Natural disasters are defined somewhat to include exceptionally severe storms and floods, tornadoes and
hurricanes among other things.

Exceptional occurrences are defined somewhat to include war, internal disturbances, strikes (with certain
reservations and depending on their extent), major industrial and nuclear accidents, and fires resulting in
widespread loss.

The very widespread outbreak of a new animal disease may be accepted by the Commission as an
exceptional occurrence.

Aid related to these natural disasters or exceptional occurrences must relate to the costs of the damage
incurred to assets or loss of income arising from destruction of production, or means of production.

Separately, the Guidelines indicate that the Commission may accept as compatible with the Treaties aid to
make good the damage caused by ‘adverse climatic events’.

This separate classification is somewhat defined as including storms, gusts of wind causing exceptionally
high waves, heavy and persistent rainfall, floods, and elevated water temperatures over a long period.

The bar is set higher in relation to these types of events in terms of eligible costs. The damage caused
must amount to more than 30% of the average annual turnover of the operator concerned in the
preceding 3 years.

These provisions appear to be useful, particularly that relating to adverse climatic events. Given our
experiences earlier this year with a series of exceptionally severe storms, we may potentially need to
make use of them in the future.
7.
Next Steps
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
The Commission proposes to apply the new Guidelines from 1 April 2015.

The Commission will be requesting that each Member State adapt its existing aid schemes to these
Guidelines by 30 September 2015 and to give its agreement to this adaptation process within 2 months of
the publication of these Guidelines.

At present we cannot foresee any difficulty with giving such an agreement, or in adapting our schemes to
the Guidelines.

All existing measures are covered by either the European Fisheries Fund Regulation, the fisheries De
Minimis Regulation or the FIBER Regulation.

The EMFF, De Minimis and FIBER Regulations provide sufficient scope for foreseen future measures, with
the exception of the measures concerning Fisheries Local Action Groups and Integrated Maritime Policy,
which I alluded to earlier.

We will be examining the State Aid situations of measures relating to FLAG’s and IMP in the coming
months with regard to other non-fisheries block exemptions and if necessary will submit a State Aid
notification.

We do not foresee those measures having any difficulty in securing Commission State Aid approval, given
that they are provided for in the EMFF Regulation and will likely be implemented in all Member States.

Thank you Chairman. We will be happy to answer any questions.
ENDS
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