Dáil Éireann Debate, Wednesday - 12 July 2023
105. Deputy Brendan Howlin asked the Minister for Enterprise, Trade and Employment the progress made to date in respect of the expansion of the Covid-19 temporary framework with regard to state aid rules; the current view of the European Commission on state aid rules; and if he will make a statement on the matter. [34629/23]
View answerState Aid rules are the EU’s internal subsidy control system. In general, State Aid is prohibited under the Treaty on the Functioning of the EU (TFEU) because of its anti-competitive effects, however, State Aid is allowed in clearly defined circumstances, set out in State Aid rules.
The EU Commission introduced the COVID-19 Temporary State Aid Framework in March 2020 to allow Member States provide State Aid to support businesses during the pandemic. The COVID-19 Temporary Framework expired on 30 June 2022.
In March 2022, the EU Commission adopted the Temporary Crisis Framework to enable Member States to support the economy in the context of Russia's invasion of Ukraine by providing supports for energy and other input costs.
In line with the Green Deal Industrial Plan, and in response to subsidies for green technology sectors offered by the USA as part of the Inflation Reduction Act (IRA), the EU Commission expanded the Temporary Crisis Framework, beyond energy cost measures, to enable Member States to provide subsidies to counter those offered by the USA and support sectors which are key for the transition to a net-zero economy. These new, looser State Aid rules are set out in the Temporary Crisis and Transition Framework (TCTF), which came into force on 10 March 2023.
The energy cost elements of the Temporary Crisis and Transition Framework are set to expire on 31 December 2023 while the transition to a net-zero economy parts of the Framework will continue until 31 December 2025.
The Government has concerns about the impact of a sustained period of looser State Aid rules on the level playing field in the Single Market. The nature of subsidies now permitted under the Temporary Crisis and Transition Framework could distort competition and stifle innovation in the EU.
A competitive market is important in fostering innovation. Subsidies hamper competition, and in doing so, stifle innovation. Therefore, State Aid should be limited to areas of market failure or crisis supports.
It is welcome that the recent Temporary Crisis and Transition Framework measures are temporary and include certain safeguards that restrict the State Aid to specified strategic sectors.
A competitive, enhanced Single Market is key to strengthening Europe’s competitiveness and fostering world class enterprises that can scale up and compete on the global markets. While significant progress has been made in the Single Market, there remains untapped potential, particularly in the Single Market in Services, where regulatory barriers continue to hinder achievement of a fully integrated EU market for services.
Addressing this and accelerating the Capital Markets Union need to be key priorities for the EU.
Furthermore, there should be a robust Impact Assessment of the impact on the Single Market of any further relaxation of State Aid rules on the Single Market.
