European Commission official Eneko Landabru said the EU within a fortnight should come to a deal with the Slovak, Czech and Hungarian governments on state aid those countries have offered to domestic steel firms in conflict with EU policy.
Landabaru said the deal should be reached before a key Commission summit on EU expansion from October 24-25.
In Slovakia, for example, the government promised a 10-year tax holiday to US Steel as the Pittsburgh firm bought into the VSŽ steel maker in 2000, in exchange for US Steel’s promise to invest the money saved on taxes – up to $700 million over 10 years – into restructuring the factory.
The EU forbids direct state aid to the steel and auto sector, and has been fighting to force central European governments to drop similar incentives before their 2004 entry.
US Steel Košice President John Goodish, however, has argued that local steel firms are only now receiving the kind of aid and making the kind of investments that western European steel firms experienced decades ago.
The text of a preliminary deal between the EU and the Czech Republic, published yesterday, indicates Prague will be allowed to continue state aid to its steel firms until the spring of 2004. If the same terms were applied to Slovakia, US Steel Košice would thus lose half of the tax breaks they were promised.
Compiled by Tom Nicholson from press reports.
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