1. EPRC State aid and the challenges of SME involvement in ETC Programmes Fiona Wishlade Interreg V 2014-20 – Avspark! Kommunal- og Regionaldepartementet conference, Oslo, 23 September 2014

2. EPRC Context EU Cohesion policy 2014-20 cast in terms of ‘smart, sustainable, inclusive growth’ Private partners and innovative programmes potentially have a major role in achieving objectives Historically ETC programmes have mainly involved public sector partners Emphasis on need for focus and results orientation in ETC - may imply more private sector involvement… and more State aid compliance issues… BUT, State aid rules also changed for 2014-20 2 Fiona Wishlade, European Policies Research Centre, University of Strathclyde

3. EPRC ETC and SME involvement 2007-13* Involvement has been limited: –In 55% of programmes, SMEs are eligible as partners Of these 22% have projects with an SME as partner Often restrictions apply (lead partners, eligible expenditure…) – 45% directly or indirectly exclude SMEs from eligibility –Overall, just 10% of programmes have projects with an SME as a partner Eligibility aside, other factors: –Structure of economy in programme area; impact of crisis –Programme strategy –Approach to attracting SMEs (information, publicity, ‘friendly’ procedures) SMEs mainly target group, not active in implementation *Interact study 3 Fiona Wishlade, European Policies Research Centre, University of Strathclyde

4. EPRC Obstacles to SME involvement* 4 Fiona Wishlade, European Policies Research Centre, University of Strathclyde State aid compliance is single biggest obstacle to SME involvement in ETC – even among programmes where SMEs are eligible as partners

5. EPRC State aid background In principle, State aid is prohibited under EEA Treaty: Save as otherwise provided in this Agreement, any aid granted by EC Member States, EFTA States or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Contracting Parties, be incompatible with the functioning of this Agreement (Article 61.1) In essence: –Does the measure give an economic activity an advantage which it would not have had? –If so, can this be compatible with the Treaty because certain policy objectives are met? 5 Fiona Wishlade, European Policies Research Centre, University of Strathclyde

6. EPRC Approaches to compliance 2007-13 Transnational programmes have taken ‘no aid’ approach, by: –Excluding private sector from eligibility (not sufficient by itself) –Attempting to remove ‘advantage’ to beneficiary (watertight?) –Limiting support to de minimis amounts (€200,000 over 3 years) Cross-border ‘more adventurous’ –Some use of General Block Exemption Regulation 6 Fiona Wishlade, European Policies Research Centre, University of Strathclyde

7. EPRC State aid challenges 2007-13 Challenges apply to all Structural Fund and domestic policies: –Conundrum: State aid is banned, but definition of “State aid” elusive –Exceptions in a vast body of rules – difficult to navigate –Penalties of non-compliance can be high But some specific challenges for ETC –Responsibilities ill-adapted to cooperation programmes –De minimis hard to administer in international context –Exceptions to State aid ban do not fit with ETC objectives –ETC programmes complex but small, lacking coordinated support –Asymmetry between likely competition effects (small) and resource needs for compliance Led to an ostensibly cautious ‘no aid’ approach especially in transnational projects 7 Fiona Wishlade, European Policies Research Centre, University of Strathclyde

8. EPRC State aid changes 2014-20 De minimis (new Regulation): –€200,000 is specified as per Member State –Notion of single undertaking clarified General block exemption regulation: –For ETC, lead in reporting and monitoring played by Member State in which Managing Authority is located GBER: new exemption for SMEs participating in ETC (Art 20): –Up to 50% of eligible costs to a maximum of €2 million per undertaking, per project GBER: regional investment aid provisions for ETC (Art 14.15): –Same aid intensity applies across borders Scope of GBER is widened for 2014-20 –Some may be ETC-relevant eg. innovation clusters, culture & heritage 8 Fiona Wishlade, European Policies Research Centre, University of Strathclyde

9. EPRC New opportunities, but challenges remain… De minimis: most widely used mechanism for State aid compliance –Still administratively onerous; does ‘per Member State’ limit confuse? GBER: responsibilities –Numerous practicalities to resolve GBER: SMEs in ETC projects –Aid intensity (50%) is lower than cofinancing rate GBER: regional aid rates –Usefulness in practice? Interface with SME ETC provision? Clarity? Other non-ETC specific GBER developments may also be relevant –Mosaic of award rates and eligibility criteria within projects 9 Fiona Wishlade, European Policies Research Centre, University of Strathclyde

10. EPRC Conclusions Early indications: GBER 2014-20 will be more widely used in ETC than GBER 2008-13 Procedural and administrative aspects remain more complex for ETC than national / subnational measures Single biggest challenge remains identifying whether there is aid at all… 10 Fiona Wishlade, European Policies Research Centre, University of Strathclyde

11. EPRC Thank you! Fiona Wishlade: fiona.wishlade@strath.ac.uk European Policies Research Centre, University of Strathclyde: http://www.eprc.strath.ac.uk/eprc/ 11 Fiona Wishlade, European Policies Research Centre, University of Strathclyde