Portugal joins northern countries to warn against more state aid | European Union

Two weeks before a European Council in which France and Germany are preparing to defend a more significant easing of State aid rules in the European Union, the Portuguese government joined several small and medium-sized countries in Northern Europe in defending of the single European market and State aid that is only “targeted and temporary”.

The two-page document to which PÚBLICO had access is entitled “The Single Market of the European Union at 30” and is a compliment from the countries that signed it – Belgium, Czech Republic, Denmark, Estonia, Finland, Ireland, Latvia , Lithuania, Luxembourg, Malta, the Netherlands, Slovakia, Slovenia and Portugal – to the advantages brought by the internal market created in 1993.

The 14 subscribers regret that the “last 15 years have brought only small progress” in the objective of completing the single market and reveal that they are concerned about the possibility that the single market could be weakened by the response that will be given by the European Union to protectionist measures announced by the United States. The main reason for alarm is related to the desire expressed by France and Germany to significantly ease the rules that limit State aid to their companies, as a way of responding to public support given by the USA.

The fact that countries like France and Germany have greater budgetary capacity to support their companies makes smaller countries fear a distortion of competition within the EU. The fact that, during the pandemic, almost 80% of State aid granted under temporarily more flexible rules was granted by France and Germany, is seen as proof of the risk that exists for competition.

In the document now published, the 14 signatory governments argue that “targeted and temporary State aid can play an important role”, but only “provided that they ensure fair competition, reduce the innovation differential and avoid the fragmentation of the internal market”. “In any case, increasing the competitiveness of European companies, especially SMEs, by strengthening the single market is essential if we want to maintain a broad industrial base within the EU in the long term”, defends the document.

The Portuguese Executive and the other subscribers also defend the importance of taking into account the “social dimension”, defending the need to “ensure equal opportunities for all and that no one is left behind, investing in qualifications and creating more and better jobs ”.

The capitals are beginning to mark their position in anticipation of the European Council meeting on March 23 and 24, when the heads of state and government of the 27 will discuss the new Green Industrial Plan drawn up by the community executive to respond to the support measures adopted by the United States within the framework of the legislative package of 369 billion dollars to reduce inflation (Inflation Reduction Act or IRA).

This Friday, the President of the European Commission will be in Washington: Ursula von der Leyen will raise the doubts and objections of the 27 to the incentives provided by the North American Administration and which have already led several EU companies to consider relocating their operations, in a meeting with President Joe Biden at the White House.

The Commission’s plan, which could give rise to several legislative acts if it is validated by European leaders, is based, in a first phase, on a greater flexibility of State aid to companies in the so-called clean technology sector, for example through the reorientation of funds from national recovery and resilience plans, or the European InvestEU programme.

In addition, the executive also foresees the creation of a new sovereign fund, which will be a “long-term structural instrument” that Member States will be able to use to finance “multinational and strategic industrial projects in areas of cutting-edge technology”. In presenting the proposal, the President of the European Commission was vague about the financing model and the firepower of this new fund — but made it clear that this will not be the solution claimed by several Member States, including Portugal, concerned with the level playing field in the internal market.

The document now published by the 14 governments, including the Portuguese one, makes no reference to the sovereign wealth fund, an instrument that Portugal welcomes, but which is unlikely to be accepted by countries like the Netherlands or Finland that do not want new common budgetary mechanisms within the EU.

Portugal and Malta are the only two countries in Southern Europe that sign this document.

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