The problem of state aids as a possible source of unfair competition in the EU

Résumé du document

A subvention is a refundable grant granted mostly by the State or a Local authority. It is paid by a public community for activities in which it neither takes the initiative, nor the responsibility. It is granted either to facilitate the execution of a public utility, or as help or support, if it has a character of generosity. All the regularly declared associations may receive subsidies. It can involve: Subsidies in cash i.e. money transfers, Subsidies in kind i.e. loans of premises, grounds or material (equipment) for free, free services, put at the disposal of staff, agents of the community, etc. This free assistance provided by the authorities is mostly accompanied with obligations to beneficiary associations. We can distinguish between the subsidies of investments: the object of which is to help the company to acquire certain equipments, and the subsidies of functioning: these come into the picture to enable the completion of the company's turnover, when the activity pulls additional costs, or cannot be made profitable. This also happens when this activity is recognized by utility for the collectivity.

Extraits

[...] There are also some other indirect help to support the European agriculture competitive such as import tariffs or quotas for some non European agricultural product. The CAP system is currently reformed by reducing import controls and subsidies transfers to land management rather than specific crops production. All EU members do not have an equal repartition of these subsidies. The creation of the CAP was proposed by the European commission to increase the productivity, insure revenue for farmers, stabilize agricultural product market, ensure the supply and to offer reasonable price for customers. Its first objective was to ensure food self sufficiency in the European community. [...]

[...] The United States has sought to include a mutual commitment of this kind in a new bilateral agreement. While the United States remains committed to resolving this matter through the negotiation of a new bilateral agreement, filing a WTO case is necessary to ensure the playing field is leveled. The WTO offers an agreed multilateral forum for resolving trade disputes according to agreed rules. Conclusion Subsidies cause economic damages, but not only when they distort competition. More generally, the grants can distort incentives and are likely to capture interest. [...]

[...] Good subsidy design works with competition generally, not against it. "Market failure" is not a justification of a subsidy. And greater transparency is needed to enable a better assessment of the effectiveness of subsidy to achieve their objectives, and help explain who gets what, how and why. European Commission competition control of subsidies under the state aid rules is of great importance for European competitiveness, and the Commission's plans to enhance the focus, efficiency and state aid transparency and the political process are welcome. [...]

[...] Expected to lead to a progressive reduction of subsidies, the 1992 agreement has instead become an excuse for EU governments to continue subsidizing Airbus. The $ 3.2 billion in launch aid that the EU governments have committed for the new Airbus A380 is the largest amount of funds committed for a single project. The EU has provided further loans and infrastructure that has pushed the total amount of A380 subsidies to approximately $ 6.5 billion. Airbus is now contemplating the launch of another competitor (A350) to the recently- launched Boeing 7E7, and has indicated its intentions to request subsidies for that aircraft as well. [...]

[...] A subsidy can be considered as a way to correct inefficiency of the market. Direct subsidies are considered as more effective than indirect subsidies which are more tolerated but also considered as a source of unfair competition and also deeply combated by the authorities of regulation. Subsidies are mainly issue after a political decision. The European council has declared that the strict control of state aids is an essential element of a functioning domestic market. The European Union has established some common policies in agriculture, fisheries and transport. [...]