Jan O'Sullivan (Limerick East, Labour)
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Question 130: To ask the Minister for Enterprise, Trade and Employment the implications for State aid for Irish firms of new EU rules that State aid can only be provided in areas that cover 75% of the country's population from 2007; if these areas have been designated; the way in which it is intended to designated same; and if he will make a statement on the matter. [4103/06]

Micheál Martin (Cork South Central, Fianna Fail)
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On 21 December 2005, the European Commission adopted new regional aid guidelines for 2007-2013. The regional aid guidelines govern the areas in which member states may grant regional aid, more commonly known as investment aid. Investment aid is intended to promote the economic development of certain disadvantaged areas within the European Union to redress regional disparities. The guidelines specify rules for the selection of regions which are eligible for regional aid and define the maximum permitted levels of this aid. In line with EU cohesion policy and European Council requests for less and better targeted State aid, the new guidelines refocus regional aid on the most deprived regions of the enlarged Union.

Under Ireland's current regional aid map, which defines the areas where regional aid may be granted until the end of 2006, all parts of the country currently qualify for some level of aid. Given Ireland's economic performance since the current regional aid map was approved by the European Commission in 1999, it was to be expected that our scope to designate areas for regional aid for 2007-2013 would be significantly reduced. Nevertheless, Ireland has secured entitlement under the new guidelines to maintain regional aid qualification for areas accounting for 50% of the country's population for the period 2007-2013 and for a further 25% of population on a transitional basis for 2007-2008.

In accordance with the guidelines, the Border, midlands and west region — 26.5% of national population — will be classed as an "economic development region" and will continue to qualify for regional aid throughout 2007-2013 on a phasing-out basis. Ireland will be permitted to designate a further 23.5% of population to qualify for regional aid for 2007-2013. The south east sub-region would also qualify on the basis of unemployment criteria specified in the guidelines. The remaining areas which could qualify for designation for 2007-2013 under the 50% population threshold must meet the strict requirement in the guidelines that they are relatively more in need of economic development than other areas on the basis of recognised economic indicators. Following the selection of areas up to the 50% population threshold for 2007-2013, areas representing an additional 25% of population may be designated for 2007-2008.

No decision on designation has been taken yet, pending detailed analysis of the guidelines and economic indicators for the areas concerned. Member states have to submit proposals for designation to the European Commission for approval. Any area no longer entitled to regional aid would continue to qualify for other forms of State aid, including aid for research and development, aid for SMEs, training aid, employment aid and aid for environmental protection.