Mar 2009 04

A Tale of Two Subsidies1

Santa will not be pleased. The EFTA Surveillance Authority has ruled that €910,000 worth of support to the Norwegian reindeer slaughter industry is perfectly within the rules. A complainant, elf or otherwise, had claimed that it was state aid.

The reality is likely to be one of the government providing grants to an isolated part of its territory that would make the town of Cicely from the US sitcom Northern Exposure look like the West End on a Friday night.

How very different from another example of state aid that has been authorised. The German government yet again has been given leave by the Commission to directly subsidise its coal industry, by a further €2.378 billion (2009/C 42/02). The decision was made back in June last year, but has now been made official. Why? We are likely never to know, because the justification "will be made public after it is cleared of any business secrets it may contain".

On one level, you can have no quarrel with foreign governments prepared to throw their own tax money into subsidising goods, material and services that we can take advantage of at cheaper rates. That's an issue for their taxpayers, and if they want to fund our coal fires and make us toasty on a frosty night that's up to them. But the cost is of course paid by their more efficient competitors, in countries that have gone through the pain of restructuring (as Britain certainly went through in the '80s) in order to beat the competition on the world market.

The German government has yet again succeeded in twisting the Commission round its little finger on this issue. Continental steel, coal, state airlines, flagged computer industries, banks; the massive subsidy sumps of the last two decades go on. Meanwhile, under the Single Market, Britain can't apply its own tariffs to stop these companies from dumping and undermining Corus or British Coal.

A betting man might put a fiver on one of these cases being the flashpoint for the next Lindsey Refinery.

Related Posts

  • Horatio Nelson

    Being resident here in Germany and seeing the German media reports on such matters as the financial crisis and the associated measures, it has become blatantly clear to me that the “Brussels” commissioner for industry and economic issues, Günther Verheugen, a German and member of the SPD (the German rough equivalent of the Labour party in the United Kingdom), is favouring Germany in many (if not all!) of his decisions. He was instrumental in promoting the German government’s wish to ease the environmental requirements for cars of the larger classes, most of which are constructed and manufactured here in Germany. I’m convinced he’s also making sure that Germany “doesn’t lose out” on any rearrangement of the General Motors, Vauxhall and Opel industries. So much for the “European Union” and “Brussels”..
    Regards
    Horatio Nelson