Brussels scotches Sant's EU plans

The European Commission has poured cold water on Labour leader Alfred Sant's assertion that he would re-negotiate aspects of Malta's EU membership package, saying the conditions agreed upon are "a done and closed deal" which cannot be amended.

Dr Sant said at the start of the electoral campaign last Monday that "once elected, a Labour government would go to Brussels and with goodwill negotiate new conditions on the dockyards and agriculture to uphold Malta's national interest."

However, a spokesman for Agriculture Commissioner Marianne Fisher Boel told The Sunday Times it was impossible for the Commission to consider Labour's plans to re-open negotiations on Malta's agriculture package.

"What is agreed in the Accession Treaty is a done deal... Of course, policy changes happen all the time and Malta has the possibility to influence that process. Sometimes, member states can win some little 'sweeteners' in the negotiating process during reform discussions," he said.

The spokesman added that according to the Commission's legal services, the terms and conditions agreed for Malta with respect to its agricultural sector and laid down in the Act of Accession were not subject to re-negotiation.

The spokesman for EU Competition Commissioner Nellie Kroes said that "the conditions applicable to Malta Shipyards - including the maximum aid amounts that can be granted, the prohibition of further restructuring aid after December 31, 2008, and the obligation to implement the restructuring plan - are included in the Accession Treaty. Therefore, this cannot be changed."

However, the spokesman said that the text of the Accession Treaty authorises the Commission to change certain conditions - in particular the prohibition of aid after December 31 - but only in exceptional circumstances and after consultations with the other member states.

It is therefore unlikely that a change would be approved since the term 'exceptional circumstances' is extremely narrow. To date, he said, the Commission was not aware of any such circumstances that had hindered the restructuring process.

During accession talks between the EU and Malta in the run-up to the 2003 referendum, the agriculture and the competition chapters were among the toughest to negotiate. However, one-time transitional measures were agreed.

With regards to agriculture, Malta and the EU had agreed on the implementation of a Special Market Policy Programme intended to enable farmers and food processors to integrate themselves gradually with the workings of the EU's Common Agriculture Policy.

This programme provided for the removal of levies and their replacement with direct income support for farmers and restructuring assistance for the processing industry. Malta had agreed to phase out protective levies completely by membership and streamline assistance starting with a maximum level of assistance upon membership followed by a gradual phasing out by 2014 at the latest.

On the shipyards, the two sides had agreed on a seven-year restructuring plan during which subsidies, which are normally not permitted under EU law, could still be given and gradually phased out so that the shipyards could become commercially viable by the end of this year. The plan envisaged a reduction in the workforce and in capacity during the transitional period.

The Malta-EU deal on the shipyards was also included in the Accession Treaty in which the EU stated that "this unique case can in no way be regarded as a precedent".

The subsidy covered by the agreement until the end of this year amounts to €978.3 million (Lm420 million) including a write-off of the yards' accumulated debt until 2001 and of a further €698.8 million (Lm300 million).

Although most of the restructuring plan has been put in place in recent years, it seems that the yards are still heavily dependent on Government subsidies, which will become illegal by the end of this year.

Figures show that although until the end of 2004 the amount of subsidies granted was lower than those projected in the restructuring plan, both in 2005 and in 2006 subsidies amounted to €1.4 million and €2.3 million more than expected.

Questions sent to the Investments Ministry on the amount of subsidies granted during 2007 remained unanswered.