Breaking news: Greece ordered to recover aid from China’s Cosco

On 23 March 2015, the European Commission (‘Commission’) found that Greek government tax advantages and preferential accounting treatment granted to the Chinese group Cosco (the world’s fourth largest container shipping firm) and its subsidiary Piraeus Container Terminal S.A. (PCT), are in breach of EU state aid law. PCT manages the port of Piraeus, and is currently expanding operations with the construction of a third pier.

Greece will therefore have to terminate the measures to keep from disadvantaging competitors. It is also ordered to recover the illegal aid. The Commission has not made public the amount of the aid concerned at this stage. Following the Commission Decision, the planned agreement under which Cosco would acquire 67% of the port of Piraeus’ capital is suspended, but the 35-­‐year concession granted a few years earlier to Cosco and PCT for the exploitation of the two container terminals at Piraeus remains valid.

Greece has now a two-­‐month period to decide whether to challenge the legality of the Commission Decision before the European Court of Justice in Luxembourg.

Breaking news: EU Commission asks Germany to improve its port security

On 26 March 2015, the European Commission issued  a  reasoned  opinion  asking  Germany  to correctly apply the EU port security rules 1 in North Rhine – Westphalia. The reasoned opinion at issue comes following an inspection performed by the Commission, which revealed that some of the requirements  were  not  being  adequately implemented, notably the port security assessments. These rules are one of the cornerstones of maritime security policy and aim to guarantee a high-­‐level of security in all European ports.

Germany has two months to notify the Commission the measures taken in order to fully apply the rules. Otherwise, the Commission may decide to refer the case to the European Court of Justice.

Consultation on Maritime Transport Strategy

The EU Commission has opened a public consultation in relation to the mid term review of the EU’s  Maritime Transport  Strategy. Any  one interested in the issue can submit responses. Details at:­‐mts-­‐review_en.htm. The consultation closes on 22 April. Press reports suggest that the Commission is particularly interested in passenger safety given the recent fires on the Normal Atlantic and the MSC Flaminia. However the consultation is much broader than this and concerns the whole maritime strategy of the EU.

What’s happening with Juncker’s Euro 300 billion?

Commission President Juncker has put much emphasis on his plan to invest Euro 300 billion in a new European Fund for Strategic Investment. Problems are arising everywhere. The main problem is where the money comes from. Members of the European Parliament do not want the money to be taken from established programmes.   It   should   be   new   money.   In particular they are fighting to cordon off the Horizon 2020 money as well as the Connecting Europe Facility. This is the same concern of ESPO, the European Sea  Ports  Organisation. They  are concerned that the Euro 2.7 billion will go out the window only to come back in another window but subject to different project selection criteria. It is probably a measure of the effectiveness of ESPO’s lobby that the MEPs are making noise about the same issue. The other big problem that Juncker faces is that many Member States, including Italy, don’t like the project and seem more interested in backing the new Asian Infrastructure Investment Bank. This new bank is China’s answer to the World Bank.

State Aids in France

Shipping News  has  made  various  references  to French aid to the shipping sector. The Commission competition watch dog has recently closed an enquiry into French tax rules for maritime companies. Closing an enquiry is politically correct way of saying that the Commission does not think that France is infringing the rules. France has committed to ensure that French tonnage tax payers flag at least 25% of their tonnage in the EEA. However, don’t expect this to be the last state aid enquiry into shipping in France.

European Shipping Week in Brussels

The first European Shipping Week seems to have been a great success. It brought together all the main stakeholders in the shipping business at the highest level. It also caught the eye of the Commission and the Parliament, the main object of the event. Transport Commissioner Violetta Bulc made a wide ranging speech emphasising that the Member States must ensure that the IMO is in line with EU policies (the Commission does not have a seat), that tax breaks are necessary but that they shouldn’t distort competition (see previous piece), that the EU will continue to push maritime transport services as part of the bilateral negotiations on trade, that efficient ports are  essential  to  the  future  success  of  maritime transport and to this end hopes for a decision by the Council and Parliament on the Port’s Regulation (even if, as we have seen, it is a heavily watered down text from the Commission’s original proposal), that there is a need for better skills in the industry. She ended by saying that the shipping sector is much more than an industry. It is a community.

But what does the shipping industry really think?

Less than 40% of EU trade is carried by maritime transport. 45% are transported by road. Rail and River accounts for the rest. Eric Banel of the French Ship owners Association observes that this is regrettable. Jean-­‐Marie Millour of the Short Sea Promotion Centre observes that the has not been much improvement of the percentage over the last 15 years despite promotion by the EU institutions. But, he says, the fact that shipping has kept its relative percentage can also be seen as a success given that the EU is more and more a landlocked Community. The hope is that maritime transport is best able to benefit from the need to reduce the environmental import of the transport of goods. The problem says the vice-­‐head of the European Parliament’s Transport Committee, Dominique Riquet is that road transport is favoured rather than maritime transports being discouraged. Finally, Millout points out that transporting goods by sea from one member state to another is as administratively complex as sending goods from the EU to China.

What about Milk?

The Brussels team in NCTM is not only a transport team. We are active in a wide range of activities from Trade law to Competition Law to Litigation in the EU Courts and to the Regulation of a wide variety of economic sectors. One of our particular interests is in Food and Agriculture. And we watch with quiet desperation how Italy is, step by step, getting into deeper trouble over allowing farmers not to pay the penalties for having produced too much milk. The latest step is that the EU  Commission  is taking Italy  to Court for failure to recover nearly Euro 1.3 billion in fines from mainly northern Italian milk farmers. Smart accounting has gotten the amount down from Euro 2.3 billion. If Italy fails to make the farmers pay then the Court will be able to fine Italy. This is a mess left by the presence of the Northern League in various Italian governments during the 1990s.

And what about VAT?

In 2012 France and Luxembourg introduced a rate of VAT on ebooks lower than the rate on books in paper format. Italy followed suit last year with a tax rate of 4% on the same books while the VAT rate on paper books is 22%. In the meantime however, the EU Commission took France and Luxembourg to Court for failure to comply with the EU’s VAT Directive. The question was whether Member States were allowed to apply lower VAT rates to ebooks. The Court said no. On 5 March the Court found that France and Luxembourg could not discriminate in this way. Will Italy just pretend nothing has happened and go on with its VAT system. Or will it change the rules so as to prevent Court action. Will we have to watch, like we watch for Milk, a slow but steady arrival of the inevitable. Maybe there is a lesson from shipping: it takes a long time to turn a tanker.