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Globalisation, financial crisis, innovation and climate change: challenges for a modern State aid policy Ian Rodgers Chairman, BUSINESSEUROPE State Aid Working Group Director, UK Steel State aid – general principles • Minimise state interference in markets, allowing the most competitive firms to thrive. • Requires consistency of approach across the whole of the EU. • But rules must be clear and predictable for companies; • And transparent in their application. State aid and globalisation - 1 • Europe should not attempt to use aid to compete with low cost economies, apart from: – Rescue & restructuring aid – Regional investment aid • Focus on skills base and innovation. State aid and globalisation - 2 • The EU should make full use of WTO rules to discipline overseas subsidies and other market-distorting practices. • DDA should have been an opportunity to improve their application. • Write additional disciplines into future FTAs. The financial crisis • A return to worldwide subsidisation and protectionism would prolong the crisis. – The EU has an opportunity to lead by example. • Communication on aid to financial institutions strikes the right balance: – Art. 87(3)(b) invocation is justified; – Impacts on competitors are minimised; – Rapidity of response applauded. State aid and innovation • 2006 Framework is an improvement. • But serious concerns that some aspects will deter R&D funding, particularly: – Detailed assessment, and requirement for counter-factual incentive effect analysis. – Rigid categorisation of types of R&D. • Shortcomings perpetuated in block exemption Regulation. State aid and climate change • New guidelines expand the scope for encouraging investment in, and operation of, carbon-efficient technologies: – Negative: incentive test is repeated. – Positive: distortions of competition through energy savings are prevented. • CCS correctly to be considered later. State aid and the EU Emissions Trading Scheme: post-2012 The draft Directive as published by the Commission could drive energy-intensive manufacturing out of the EU. Amendments to correct this are opposed by DG Competition because of their perceived relationship with competition/state aid policy. However, neither articles 81 to 86 nor articles 87 to 89 are applicable. UK Steel Conclusion • The EU’s unique state aid rules are a vital component of a vigorous and enterpriseoriented single market. • We welcome: – The process of continuous appraisal and improvement; – The Commission’s openness to input from stakeholders.