HC Deb 02 September 1998 vol 317 cc863-4W
Mr. Brady

To ask the Secretary of State for Trade and Industry what proposals his Department has to take action in respect of the subsidies given to German and Spanish coal producers by their Governments. [54238]

Mr. Bercow

To ask the Secretary of State for Trade and Industry what action he proposes to take in respect of the amount of subsidies given to German and Spanish coal producers by their Governments. [54000]

Mr. Battle

[holding answer 31 July 1998]: In the case of Spain we have formally complained to the European Commission about discriminatory application of limits on the sulphur content of coals from different ECSC resources, and have received assurances that UK coal will be treated on the same basis as Spanish coal. This should open the Spanish market to a range of English deep-mined coals.

We have also laid a formal complaint against Spanish state aid for coal questioning whether the required criteria of ultimate viability has been fulfilled for all those producers receiving operating aid under the ECSC Coal State Aid code. We are pressing for confirmation from the Spanish authorities that a subsidy of 1 peseta per kilowatt/hour available to Spanish power-station operators burning Spanish coal is equally available in respect of UK coal.

In the case of Germany, we conveyed a complaint to the European Commission on behalf of Celtic Energy Ltd. setting out how state aid provided to Sophia Jacoba and Ibbenburen mines led to a distortion in the anthracite market in the ECSC and particularly in the UK. Following an investigation the Commission found there had been abuse of state aid and reached a decision on 29 July requiring repayment of nearly DM 20 million state aid by the German producers. This decision provides UK producers with an assurance that such unfair practices will not recur and should help to open up continental markets for competitive UK exports of anthracite.

We made representations to the Commission in March 1998 on the proposed merger of the three remaining German hard coal producers, urging the need for full transparency of future state aid, and for further consideration to be given of the assets being acquired by Ruhrkohle. The Commission approved the structure of the merger of the three companies on 29 July but subject to conditions on divestment and segregation of the company's import activities.

Formal complaints against German state aid for power station anthracite have been submitted by Consolidated Coal and Evans and Reid (the agents for Tower Colliery) and RJB Mining in respect of state aids for German coal production more generally. In June 1998 the Commission approved state aid of DM 10.4 billion for German coal production and 438 billion pesetas for Spanish coal production. I understand that RJB Mining is lodging an appeal to the European Court against these Decisions.

The Government are monitoring closely the commercial negotiations UK producers are conducting on the export of power-station coal and briquettes to the German market in competition with state-aided German coal.

It is important that the Commission interprets the Coal State Aids Code strictly and we will continue to press for an open and competitive coal market in Europe.