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EU and UK's 'sausage war' sizzles at G7 as Macron and Johnson spar

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Growing tensions between Britain and the European Union threatened to overshadow the Group of Seven summit's conclusion on Sunday (13 June), with London accusing France of "offensive" remarks that Northern Ireland was not part of the United Kingdom, write Michel Rose and Michael Holden.

Ever since the United Kingdom voted to leave the European Union in 2016, the two sides have been trying to work out how to deal with post-Brexit trade and the British province, which has a land border with EU member Ireland.

Ultimately, the talks keep coming back to the delicate patchwork of history, nationalism, religion and geography that intertwine in Northern Ireland, but the latest spat over the Brexit divorce deal is centred on sausages.

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During talks with Emmanuel Macron at the G7 summit, British Prime Minister Johnson queried how the French president would react if Toulouse sausages could not be sold in Paris markets, echoing London's accusation that the EU is preventing sales of British chilled meats in Northern Ireland.

British media reported that Macron responded by inaccurately saying Northern Ireland was not part of the United Kingdom, remarks British foreign minister Dominic Raab described as "offensive".

"Various EU figures here in Carbis Bay, but frankly for months now and years, have characterised Northern Ireland as somehow a separate country and that is wrong," Raab said. Read more.

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"It is a failure to understand the facts. We wouldn't talk about Catalonia and Barcelona, or Corsica in France in those ways," he told the BBC's Andrew Marr programme.

In a move that some worry could provoke a full-scale trade war, Johnson has threatened to invoke emergency measures in the Northern Ireland protocol of the Brexit divorce deal if no solution is found to the so-called "sausage war".

That protocol essentially kept the province in the EU’s customs union and adhering to many of the single market rules, creating a regulatory border in the Irish Sea between the British province and the rest of the United Kingdom.

But Johnson has already delayed the implementation of some of its provisions, including checks on chilled meats moving from the mainland to Northern Ireland, saying it was causing disruption to some supplies to the province.

A French diplomatic source said Macron had been taken aback by Johnson bringing up sausages - which the British leader had said was a crucial issue but one the French regarded as a distraction from the main business at the G7 leaders' gathering.

The president had merely been pointing out the sausage comparison was invalid due to the geographic differences, the source said.

Repeatedly questioned at a news conference about Macron's comments during their talks, Johnson said Brexit had occupied a "vanishingly small proportion of our deliberations" during the summit in Carbis Bay, which ended on Sunday.

"We will do whatever it takes to protect the territorial integrity of the UK but actually what happened at this summit was that there was a colossal amount of work on subjects that had absolutely nothing to do with Brexit," he said.

Macron told reporters at the G7's conclusion the two sides should stop wasting time on disputes about sausages.

"My wish is that we succeed collectively in putting into action what we signed several months ago," he said. "Let's not waste time with controversies that are created in corridors and backrooms."

He said France had never taken "the liberty to question the sovereignty, the territorial integrity of the United Kingdom".

Despite a US-brokered 1998 peace deal that brought an end to three decades of violence, Northern Ireland remains deeply split along sectarian lines: Many Catholic nationalists aspire to unification with Ireland while Protestant unionists want to stay in the UK.

The EU does not want Northern Ireland to be a backdoor into its single market and neither side wants border checks between the province and the Republic of Ireland which could become a target for dissident militants.

Instead, the two sides agreed to the protocol, which provides for checks between the province and the rest of the United Kingdom, though Britain now says these are too cumbersome and divisive. Johnson said on Saturday (12 June) he would do "whatever it takes" to protect the UK's territorial integrity.

"It is time for the government to stop talking about fixes to the protocol and get on with taking the necessary steps to remove it," said Edwin Poots, leader of Democratic Unionist Party, Northern Ireland's largest political party.

coronavirus

Commission authorizes French aid scheme of €3 billion to support, through loans and equity investments, companies affected by the coronavirus pandemic

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The European Commission has cleared, under EU state aid rules, France's plans to set up a € 3 billion fund that will invest through debt instruments and equity and hybrid instruments in companies affected by the pandemic. The measure was authorized under the Temporary State Aid Framework. The scheme will be implemented through a fund, titled 'Transition Fund for Businesses Affected by the COVID-19 Pandemic', with a budget of € 3bn.

Under this scheme, support will take the form of (i) subordinated or participating loans; and (ii) recapitalization measures, in particular hybrid capital instruments and non-voting preferred shares. The measure is open to companies established in France and present in all sectors (except the financial sector), which were viable before the coronavirus pandemic and which have demonstrated the long-term viability of their economic model. Between 50 and 100 companies are expected to benefit from this scheme. The Commission considered that the measures complied with the conditions set out in the temporary framework.

The Commission concluded that the measure was necessary, appropriate and proportionate to remedy a serious disturbance in the economy of France, in accordance with Article 107 (3) (b) TFEU and the conditions set out in the temporary supervision. On this basis, the Commission authorized these schemes under EU state aid rules.

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Executive Vice President Margrethe Vestager (pictured), competition policy, said: “This €3bn recapitalization scheme will allow France to support companies affected by the coronavirus pandemic by facilitating their access funding in these difficult times. We continue to work closely with member states to find practical solutions to mitigate the economic impact of the coronavirus pandemic while respecting EU regulations.”

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One person still missing after floods in southern France

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Wind, hail and rain blow in Rodilhan, Gard, France September 14, 2021, in this screen grab obtained from a social media video. @YLONA91/via REUTERS

One person was still reported missing on Tuesday (14 September) after torrential rain hit the Gard region in southern France, said Interior Minister Gerald Darmanin, who visited the area, write Dominique Vidalon and Benoit Van Overstraeten, Reuters.

Other people who had been reported missing have been found, local authorities said.

"About 60 villages have been partially hit", Darmanin said on BFM TV.

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"The weather situation has improved since mid-afternoon but it will worsen again overnight," the region's prefect said in a statement, adding that schools in the area would be closed on Wednesday (15 September).

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France

Commission approves €3 billion French scheme to provide debt and capital support to companies affected by the coronavirus outbreak

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The European Commission has approved, under EU state aid rules, French plans to set up a €3 billion fund that will invest through debt, hybrid and equity instruments in companies affected by the coronavirus outbreak. The scheme was approved under the State Aid Temporary Framework.

Executive Vice-President Margrethe Vestager (pictured), in charge of competition policy, said: “This €3 billion recapitalization scheme will enable France to support companies affected by the coronavirus outbreak by facilitating their access to finance in these difficult times. We continue working in close cooperation with member states to find workable solutions to mitigate the economic impact of the coronavirus outbreak, in line with EU rules.”

The French support measure

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France notified to the Commission under the Temporary Framework a €3bn scheme to provide debt and capital support to companies affected by the coronavirus outbreak.

The scheme will be implemented through a fund, which goes under the name 'Transition Fund for enterprises affected by the COVID-19 outbreak', with a budget of €3bn. Under the scheme, the aid will take the form of (i) subordinated and participating loans; and (ii) recapitalization measures, in particular hybrid capital instruments and preferred shares without voting rights.

The measure is open to companies established in France and active in all sectors (except the financial one), which were viable prior to the coronavirus outbreak and have demonstrated the long-term sustainability of their business model. Between 50 and 100 companies are expected to benefit from this scheme.

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The Commission found that the measures are in line with the conditions set out in the Temporary Framework. In particular:

  • With respect to aid in the form of recapitalisation measures (i) support is available to companies only if it is needed to maintain operations, no other appropriate solution is available and it is in the common interest to intervene; (ii) support is limited to the amount necessary to ensure the viability of beneficiaries and to restore their capital position to before the coronavirus outbreak; (iii) the scheme provides an adequate remuneration for the state and it incentivises beneficiaries and/or their owners to repay the support as early as possible (including a dividend ban, and a ban on bonus payments to management); (iv) safeguards are in place to ensure that beneficiaries do not unduly benefit from the recapitalisation aid by the State to the detriment of fair competition in the Single Market, such as an acquisition ban to avoid aggressive commercial expansion; and (v) aid to a company above the threshold of €250 million has to be notified separately for individual assessment.
  • With respect to aid in the form of subordinated loans, and given that under the scheme only subordinated loans with a volume exceeding the relevant limits set out in the Temporary Framework will be provided, the aid will have to fully comply with above conditions established for recapitalisation measures, in line with the Temporary Framework.

Support will be granted no later than 31 December 2021. Finally, only companies that were not considered to be in financial difficulty already on 31 December 2019 are eligible for aid under this scheme.

The Commission concluded that the measure is necessary, appropriate and proportionate to remedy a serious disturbance in the economy of France, in line with Article 107(3)(b) TFEU and the conditions set out in the Temporary Framework.

On this basis, the Commission approved the scheme under EU state aid rules.

Background

The Commission has adopted a Temporary Framework to enable member states to use the full flexibility foreseen under state aid rules to support the economy in the context of the coronavirus outbreak. The Temporary Framework, as amended on 3 April, 8 May, 29 June, 13 October 2020 and 28 January 2021, provides for the following types of aid, which can be granted by member states:

(i) Direct grants, equity injections, selective tax advantages and advance payments of up to €225,000 to a company active in the primary agricultural sector, €270,000 to a company active in the fishery and aquaculture sector and €1.8 million to a company active in all other sectors to address its urgent liquidity needs. Member States can also give, up to the nominal value of €1.8 million per company zero-interest loans or guarantees on loans covering 100% of the risk, except in the primary agriculture sector and in the fishery and aquaculture sector, where the limits of €225,000 and €270,000 per company respectively, apply.

(ii) State guarantees for loans taken by companies to ensure banks keep providing loans to the customers who need them. These state guarantees can cover up to 90% of risk on loans to help businesses cover immediate working capital and investment needs.

(iii) Subsidised public loans to companies (senior and subordinated debt) with favourable interest rates to companies. These loans can help businesses cover immediate working capital and investment needs.

(iv) Safeguards for banks that channel State aid to the real economy that such aid is considered as direct aid to the banks' customers, not to the banks themselves, and gives guidance on how to ensure minimal distortion of competition between banks.

(v) Public short-term export credit insurance for all countries, without the need for the Member State in question to demonstrate that the respective country is temporarily “non-marketable”.

(vi) Support for coronavirus related research and development (R&D) to address the current health crisis in the form of direct grants, repayable advances or tax advantages. A bonus may be granted for cross-border cooperation projects between Member States.

(vii) Support for the construction and upscaling of testing facilities to develop and test products (including vaccines, ventilators and protective clothing) useful to tackle the coronavirus outbreak, up to first industrial deployment. This can take the form of direct grants, tax advantages, repayable advances and no-loss guarantees. Companies may benefit from a bonus when their investment is supported by more than one Member State and when the investment is concluded within two months after the granting of the aid.

(viii) Support for the production of products relevant to tackle the coronavirus outbreak in the form of direct grants, tax advantages, repayable advances and no-loss guarantees. Companies may benefit from a bonus when their investment is supported by more than one Member State and when the investment is concluded within two months after the granting of the aid.

(ix) Targeted support in the form of deferral of tax payments and/or suspensions of social security contributions for those sectors, regions or for types of companies that are hit the hardest by the outbreak.

(x) Targeted support in the form of wage subsidies for employees for those companies in sectors or regions that have suffered most from the coronavirus outbreak, and would otherwise have had to lay off personnel.

(xi) Targeted recapitalisation aid to non-financial companies, if no other appropriate solution is available. Safeguards are in place to avoid undue distortions of competition in the Single Market: conditions on the necessity, appropriateness and size of intervention; conditions on the State's entry in the capital of companies and remuneration; conditions regarding the exit of the State from the capital of the companies concerned; conditions regarding governance including dividend ban and remuneration caps for senior management; prohibition of cross-subsidisation and acquisition ban and additional measures to limit competition distortions; transparency and reporting requirements.

(xii) Support for uncovered fixed costs for companies facing a decline in turnover during the eligible period of at least 30% compared to the same period of 2019 in the context of the coronavirus outbreak. The support will contribute to a part of the beneficiaries' fixed costs that are not covered by their revenues, up to a maximum amount of €10 million per undertaking.

The Commission will also enable Member States to convert until 31 December 2022 repayable instruments (e.g. guarantees, loans, repayable advances) granted under the Temporary Framework into other forms of aid, such as direct grants, provided the conditions of the Temporary Framework are met.

The Temporary Framework enables Member States to combine all support measures with each other, except for loans and guarantees for the same loan and exceeding the thresholds foreseen by the Temporary Framework. It also enables Member States to combine all support measures granted under the Temporary Framework with existing possibilities to grant de minimis to a company of up to €25,000 over three fiscal years for companies active in the primary agricultural sector, €30,000 over three fiscal years for companies active in the fishery and aquaculture sector and €200,000 over three fiscal years for companies active in all other sectors. At the same time, Member States have to commit to avoid undue cumulation of support measures for the same companies to limit support to meet their actual needs.

Furthermore, the Temporary Framework complements the many other possibilities already available to Member States to mitigate the socio-economic impact of the coronavirus outbreak, in line with EU State aid rules. On 13 March 2020, the Commission adopted a Communication on a Coordinated economic response to the COVID-19 outbreak setting out these possibilities. For example, Member States can make generally applicable changes in favour of businesses (e.g. deferring taxes, or subsidising short-time work across all sectors), which fall outside State Aid rules. They can also grant compensation to companies for damage suffered due to and directly caused by the coronavirus outbreak.

The Temporary Framework will be in place until the end of December 2021. With a view to ensuring legal certainty, the Commission will assess before this date if it needs to be extended.

The non-confidential version of the decision will be made available under the case number SA.63656 in the State aid register on the Commission's competition website once any confidentiality issues have been resolved. New publications of State aid decisions on the internet and in the Official Journal are listed in the Competition Weekly e-News.

More information on the Temporary Framework and other action the Commission has taken to address the economic impact of the coronavirus pandemic can be found here.

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