Michael Lowry (Tipperary North, Independent)
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Question 364: To ask the Minister for Enterprise, Trade and Employment the position regarding the negotiations with the EU Commission regarding changes to the Border, midlands and western region; and if he will make a statement on the matter. [31933/05]

Michael Lowry (Tipperary North, Independent)
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Question 365: To ask the Minister for Enterprise, Trade and Employment the steps he is taking to ensure that north Tipperary will be included in the expanded Border, midlands and western region; and if he will make a statement on the matter. [31935/05]

Micheál Martin (Cork South Central, Fianna Fail)
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I propose to take Questions Nos. 364 and 365 together.

The current regional aid guidelines are due to expire at the end of 2006. Negotiations regarding the revised regional aid guidelines covering the period 2007 to 2013 have been ongoing with the European Commission. Ireland has taken part in two multilateral meetings of state aid experts and also in a bilateral with senior officials of the Commission to discuss the new guidelines. It is expected that the revised regional aid guidelines will be approved by the end of 2005.

As the Deputy is aware, the purpose of regional aid is to assist the development of the most disadvantaged regions by supporting investment and job creation in a sustainable context. It promotes the expansion, rationalisation, modernisation and diversification of the economic activities of enterprises located in the less-favoured regions and encourages firms to set up new establishments there. The new draft regional aid guidelines stress that regional aid should only be used sparingly and proportionately and should be concentrated on the most disadvantaged regions of the European Union. Given Ireland's economic performance in recent years, we can no longer be classed as being among the most disadvantaged regions. Therefore, regional aid is being phased out in the most prosperous regions of the EU, including the BMW area. The new rates being proposed for the BMW are attached. No changes are proposed to the designation of the BMW region.

Under the proposed draft guidelines for regional aid, the southern and eastern region will no longer automatically qualify for regional aid. However, as a result of our negotiations regarding the proposed revised guidelines, the Commission is proposing to retain the safety net whereby no member state will lose more than 50% population coverage. As a consequence, it is likely that we will be able to designate 23.4% of population from the southern and eastern region in addition to the BMW region. In selecting the 23.4%, we must comply with the provisions of the draft guidelines with regard to unemployment rates and GDP. It must be noted that, given the higher GDP and employment rates in the southern and eastern region, aid rates in those additional areas will be much lower than available in the BMW region. No aid will be available for large firms, while small and medium firms can receive aid of up to 30% and 20% respectively.