Dáil Éireann - Volume 609 - 02 November, 2005

Priority Questions. - EU Funding.

  102. Mr. Eamon Ryan asked the Minister for Enterprise, Trade and Employment the grounds on which he has made an application to the European Commission for grant aid to Centocor; the amount of Government funding already committed to the project and the consequences for the ongoing construction of the plant should grant aid be refused. [32015/05]

3 o’clock

  Mr. Martin: Member states are obliged to notify for approval all projects which exceed the threshold provided for in the multisectoral framework for large investment projects. The aid in this case exceeded the threshold and accordingly had to be notified to the European Commission, and discussions are ongoing.

The amount of Government funding already committed to the project is a confidential matter between the Government and the company involved. It would be wholly wrong of me to breach this trust. Construction of the plant has already commenced.

  Mr. Eamon Ryan: I thank the Leas-Cheann Comhairle and apologise to the Minister for being slightly late to ask the question.

I want to broaden the matter. We have been remarkably successful as a location for foreign direct investment. I am querying whether the success of that policy is possibly being threatened by [12] a different perception of it, specifically within the European Commission’s rules. We have seen the difficulties in getting certain projects in Intel and others developed. Is that a signal from the Commission or from the European Union of a change of policy on Ireland’s policy in this area? Given the failure of other countries to attract similar levels of foreign direct investment and given the concern about our lower tax rate, even though I would contend that their effective tax rate due to reductions for research and development and other expenditure may be as low, if not lower, than ours, does the Minister sense that there is a political problem for this State in dealing with the European Union or with our European colleagues in terms of attracting support for our policy, particularly for having applications for capital grant support accepted, as in this case?

  Mr. Martin: The issue is as follows. The European Commission and its officials must operate in the context of the regional aid guidelines and multisectoral framework that have been passed by the member states. Ireland entered a number of submissions on that, particularly for large projects. There was a footnote attached to the multisectoral framework which we argued should allow for innovation in terms of large-scale projects, even where the company may have a dominant share of the market. In one previously highly publicised case, that argument did not win through.

The number of projects caught up in this sort of multisectoral framework is few. The majority of projects do not necessitate notification. Notification can be necessary under a range of criteria. Enjoying in excess of 25% of market share is a key one and it is one which affects this case. We are engaged with the Commission at present, answering questions and responding with information on the market share of the company concerned.

The issue the Deputy has raised is more general. It is not a political problem for Ireland vis-à-vis the Commission. It is really about the competitive position of Europe vis-à-vis other trading blocks across the globe and in terms of overall globalisation.

We in Ireland have a view and have made a submission to a review being undertaken of those regional aid guidelines and the new multisectoral framework for large investment projects. We have made the point that Ireland often wins these projects not from European member states but from countries in Asia, South America or elsewhere. We submitted that this point should be taken on board and that Europe as an entity must be competitive and must face up to competition in terms of effective corporation tax rates in the context of the state aid policies of non-EU countries. We have concerns about that overall position.

[13] The good news is that the significant players see Ireland as an attractive location for industry and for high-end activities. The activities plan in this respect is relatively good for 2005. I have accompanied IDA Ireland on a number of trade missions and we are working hard to position Ireland as an attractive location. That continues to be the position.

  Mr. Eamon Ryan: When does the Minister expect to get a decision from the Commission in this regard? Can he indicate whether he expects that decision to be favourable or negative? If there were to be a negative response to it, what would be the implications for the project in question or a similar project? I do not want to go into the specifics of a commercial operation. If grant aid is not allowable, what are the implications for projects such as this when they have already proceeded?

  Mr. Martin: There are two stages to the ongoing engagement with the Commission. As a first stage, the Commission must make a decision as to whether to open the issue to full, formal investigation, in which submissions are received from others who may have an interest in the issue. This is a process that can take some time. We hope it will not be necessary in this case but I do not want to be seen to pre-empt the discussions and the exchange of information which are ongoing between ourselves and the Commission.

  Mr. Hogan: That would be terrible.

  Mr. Eamon Ryan: What if we do not get a decision in our favour?

  Mr. Martin: There is little point going into the realm of speculation. “So far, so good” is how I would term the way we are operating within the multisectoral framework. We have strong relationships with many of the companies which have established in Ireland and which may be establishing new phases to their development here. We want to maintain that relationship. I cannot speculate in terms of what may happen. However, it is important that, at a pan-European level, we take a more competitive approach to Europe’s global competitors in terms of the attraction of mobile international investment.