Service Subsidy Agreements

10 To ensure that planned expenditures are verifiable by an appropriate person, it may be considered appropriate for a public authority to formally approve its projected expenditures in the form of a certificate from its CFO. This would provide solid evidence of the reliability of the expenses provided by a duly qualified person. The certificate could then also be made available to bus and coach companies to assure them that they are not parties to an illegal contract. Impact of EU law 8. Local authorities should bear in mind that the changes introduced by these regulations do not change the position in which existing EU rules can apply, as they affect the granting of subsidies for buses. 3 What are Amendments 5? The 2004 Service Grant Agreements (Tender) (England) (Amendment Regulation) came into force on 1 April 2004. They introduced the following general changes to the de minimis rules for different categories of powers: guidelines for the new de minimis rules for animated subsidy contracts 2 bis. A new percentage approach of local authorities or passenger/executive transport authorities with forecast expenditures (see below) for subsidies for bus and coach services for one year from 600,000 years can spend up to 25% on de minimis contracts; within this 25%, there is no limitation of expenses in one year that can be linked to an individual de minimis contract or the amount of contractual de minimis expenses in one year with a single operator. Substantive Rules A member cannot impose a countervailing measure unless he finds that there are subsidized imports, harm to a domestic industry and a causal link between subsidized imports and the injury suffered. As noted above, the existence of a specific subsidy must be determined on the basis of the criteria of the first part of the agreement. However, the criteria for injuries and causes are in Part V.

One of the main developments of the new SCM Convention in this area is the explicit authorisation to combine the effects of subsidised imports from more than one Member State if certain criteria are met. In addition, Part V contains rules for determining the existence and amount of a benefit. Under the grant agreement, a WTO member government, if it believes that a prohibited or applicable subsidy is granted or maintained by another member government, may request consultations with that government as part of WTO dispute settlement procedures. In the case of prohibited subsidies, the complaining country does not have to show any adverse effects on its own industrial sector (the exceptions apply to developing countries). For achievable grants, the complaining country must demonstrate that it has a negative effect. 6 Currently, some municipalities make extensive use of de minimis provisions, while others use very little or do not use them at all. As a result of the amendments, there is no doubt that some authorities will want to consider whether these amendments offer the possibility of making greater use of de minimis provisions in the future. Impact of the changes on the major authorities. Interpretation of “forecast expenditures” For local authorities to which the percentage option (600k of additional expenditures) is applicable in point 5 (a), the regulation contains a definition of forecast expenditures – “the amount that a public authority intends to spend on service subsidies in a fiscal year.”