Hewitt Launches Protest Over Proposed EU State Aid Reforms

by Robin Pilgrim, LawAndTax-News.com, London

03 February 2005

It emerged this week that the UK's Secretary of State for Trade and Industry, Patricia Hewitt has written to the European Commission to protest proposals put forward by Competition Commissioner, Neelie Kroes for the reform of state aid rules.

In an interview last month with FT Deutschland, the competition chief told the German business daily that she plans to shift the emphasis of the state aid permitted by the EC towards industries which establish in the less wealthy areas of the EU.

However, she warned that poor regions in the larger member states may miss out under the new rules, explaining that: "We have to ask ourselves whether we continue to support poor areas in a rich country."

She went on to add: "We have to talk tough. That will sometimes hurt member states used to the old state aid."

The letter sent to the EC by Ms Hewitt, and seen by the Independent, constitutes part of a joint initiative between the UK, France, Germany and Austria, all of which will be adversely affected by the proposed reforms.

In it, the UK Trade and Industry Secretary reportedly observed that while it may be appropriate to reserve "the highest rates of assistance to the underdeveloped areas, aid differentials at too high levels between territories of the Union risk serious consequences in terms of employment in many areas by stimulating companies to relocate".

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