to the Public Consultation on the Paper of the Services of DG Competition Containing Draft Guidelines on Regional State Aid for

Transcription

1 ZVEI Response to the Public Consultation on the Paper of the Services of DG Competition Containing Draft Guidelines on Regional State Aid for March 2013 Information on the Respondent Registration Number in the Register of Representative Bodies: Type: Organisation ZVEI - German Electrical and Electronic Manufacturers Association European Office Rue du Commerce Brussels Belgium Phone: Fax: blank@zvei.org

2 2 1. Introduction The German Electrical and Electronic Manufacturers Association (ZVEI - Zentralverband Elektrotechnik- und Elektronikindustrie) represents one of the largest branches of industry in Germany (12 % of all German industrial production) with domestic employees and employees abroad (2011). With an average export volume of 155 billion euros corresponding to one seventh of all German exports, the sector is highly export-oriented. The German electronics industry is part of an industrial branch that accounts for 11% of industry production world-wide and thereby constitutes one of the largest sectors of industry in the world. The electrical engineering industry is one of the most innovative business sectors in Germany. Annually, roughly 15 billion euros are spent on innovations and 13 billion euros are invested in research and development (R&D). As a supplier of future-oriented and high-tech technology the sector provides a broad product portfolio. The distribution of sales contains 78 percent investment goods, 12 percent electrical components and 10 percent consumer goods. ZVEI welcomes the opportunity to comment on the paper of the services of DG Competition containing draft Regional aid guidelines for ZVEI wishes to express a number of remarks on the proposed draft. 2. Executive Summary ZVEI supports to intensify state aid for key enabling technologies (KET) in the European Union regardless of the size of the company (SME or large enterprise). European regions rely on enterprises of all sizes. ZVEI supports a coherent European industrial policy, which aims to ensure the competitiveness of European industries world-wide. ZVEI understands the urgency to reduce the threshold of State aid among member states. But: European high-tech industries compete on the global market. Therefore, the level of State aid in Asia and in the USA has to be carefully considered at EU level as well. 3. ZVEI s Reply to the Consultation Key enabling technology: Semiconductor industry ZVEI represents manufacturers of key enabling technologies (KET). For instance, the semi- conductor industry has a constantly growing importance as a KET provider in Europe. ZVEI members create innovative solutions for industrial development, contributing to economic growth and responding to major societal challenges (e.g. Smart Industry, Energy Efficiency, E-Mobility ). The Semiconductor industry is ranked as the most R&D intensive sector by the European Commission. One regional size does not fit all The Commission s proposal with respect to Regional aid guidelines needs to differentiate between classic non-tradeable branches (e.g. construction) versus tradeable branches.

3 3 Non-tradeable branches operate principally regionally and target the European internal market. Any investment aid for these sectors will not stimulate overall investments within Europe but will only have an impact on the location where the investment is made. State aid for these sectors is windfall profit for industry. However, at the same time it may accelerate the development of a region and can be justified to some extent. The tradeable sectors compete on the global market and face direct worldwide competition. Electronics belong clearly to the tradeable sector in Europe. Especially semiconductors face fierce international competition and European electronics manufacturers compete with non-european manufacturers that benefit from a large volume of State aid. As a consequence, the State aid regime of the EU has over the last ten years prevented the attraction of large investments in these sectors. Europe is left with the smaller tickets only. Go for the global level playing field ZVEI supports a free and fair global market as well as free and fair competition worldwide. However, one has to consider the current circumstances which European manufactures face world-wide: The WTO agreement on Subsidies and Countervailing Measures has been weakened due to the missing prolongation of articles 6(1), 8 and 9 since the end of In fact, during the last 13 years the WTO State aid regime has recovered globally. Thus, Asian countries and the US government intensively support their national industries. Consequently: Investors for global industries circumvent Europe. Only 5% of global investments for the semiconductor industry are directed to Europe. European policymakers failed to devise a successful approach to reduce such a global market distortion. The EU was neither able to prevent or reduce the stimulus measures adopted by other regions, nor willing to counteract these tendencies by intensifying its own stimulus measures. The Commission s proposal on the draft guidelines on regional State aid should address the global market failure in an appropriate manner: In order to ensure that Europe is an attractive destination for sustainable manufacturing and research with regard to KET, regional state aid for all types of enterprises (large, medium and small) has to be ensured. Mixture is the best growth strategy for Europe: Go for small and large enterprises! Up-front, Points (9,10) on the scope of Regional aid exclude large companies, assuming easy access to capital, a lack of local ties to the concerned region, a too strong bargaining power, and the ability to distort competition. Invoking Art. 107(3)(c) of the TFEU, such potential distortion disqualifies large companies. Today, only few regions in Europe are on a good way through the current financial crisis. These survivors have one feature in common: A regional diversification, e.g. a mixture of SMEs and large enterprises. Especially enterprises that are export-orientated, and are targeting non-eu markets, establish subsequent positive effects for the EU market. Any discrimination of large enterprises to benefit from State aid may save public money but at the same time minimizes the opportunity for regional development. ZVEI therefore strongly recommends the eligibility of SMEs as well as large enterprises without any

4 4 ceiling. If not, the decline of Europe s industrial sector will inevitably advance, especially in the weaker regions. Furthermore, research has shown that large companies tend to build long-term partnerships with smaller firms in order to optimize their production along the supply chain. Hence, large enterprises create positive spillovers; therefore they are a growth engine for SMEs. Firms create jobs, not governments. Europe needs the best possible mix of policies to maximize the opportunities for investment, in particular in disadvantaged areas in the EU. Achieving Europe 2020 strategy objectives The Electronics industry and consequently its semiconductor branch plays a central role in achieving the EU 2020 strategy. According to the EU 2020 strategy scenario, the sectors that are developing in manufacturing KET-based products form a typical case for non-application. In fact, for an industrial sector such as semiconductors operating on the global market the situation is worthwhile considering. Its activities are rooted in several regions throughout Europe. Further, its activities depend on positive measures that support investments, whether this regards large enterprises or is targeted towards inducing activities among a sector specific eco-system of companies and institutes of all sizes. Wanted: R&D&I dimension Point (15) of the scope for the guidelines on regional State aid makes reference to RDI infrastructures, but at the same time leaves the scope of its application open: The definition of compatibility conditions [ ] and the relevant additional conditions for [ ]RDI infrastructure corresponding to some of the key objectives of the [ ] RDI guidelines will be integrated in the draft text of these regional aid guidelines once the discussions on those guidelines are sufficiently advanced. For sectors like Microelectronics- and Nanotechnologies whose profile is among the most knowledgeable and capital-intensive, associated with high research and development (R&D) intensity, rapid and integrated innovation cycles, high capital expenditure and high skilled employment, the reference to specific R&D&I conditions is essential. It cannot be dissociated from the State aid rulings. These characteristics apply to both the large enterprises and the small to mid-sized companies that are part of the sector s ecosystem. More efficient structures The draft proposal of DG Competition implies a comprehensive compatibility assessment of Regional aid. The objective of this assessment is, among others, to determine what level of State aid triggers what kind of potential positive or negative effect on investment, trade and competition. ZVEI fears that this will create even more delays in the decisionmaking process. ZVEI recommends a simplification of the rules. Europe s pillars are regions The draft proposal of DG Competition aims at limiting the ability of national governments to provide State aid to large companies in c areas from 2014 onwards. ZVEI understands the importance of ensuring that aid is proportionate, targeted and that deadweight and displacement is minimized.

5 5 ZVEI supports a proper transition period 2014 till 2020 in order to facilitate stringent conditions for c areas and ex a areas. For these regions a stringent transition period should contain: Investment aid for SMEs for up to 1000 employees, which would make a modification of the current definition of SME necessary: The current definition of SME allows aids only for firms up to 250 employees. The proposed modification of SME up to 1000 employees takes into consideration the importance of medium-sized enterprises in c areas and former a areas. State aid for investment in innovations, which lays the main focus on the innovation content and should therefore, be independent of an enterprises size. State aid difference among NUTS-2 regions should be limited to a maximum of 15 percentage points. Otherwise, the so far achieved regional convergence will be reversed. Thus, the marginal number 25 in DG Competition s proposal has to be revised and a clear cut limitation has to be included. Otherwise, regional divergences will (re-) surface. The relative higher subsidy rates for former a areas have to apply for the whole period 2014 till This contribution may be published under the name given. Contact: Dr. Oliver Blank Director European Affairs ZVEI European Office Rue du Commerce 31 B Bruxelles Phone Fax blank@zvei.org Web