Geneva: The World Trade Organization (WTO) called on Wednesday on the European Union (EU) to phase out state aid to the private sector during the financial crises, so as not to hinder long-term restructuring.
In its review of Brussels’ trade policies, the WTO said the extraordinary intervention given by EU states were mainly targetted at the financial sector.
Nevertheless, the automobile, construction and tourism sectors also received a helping hand.
“It is important to persevere with ongoing initiatives at EU level to phase out crisis support once the economic recovery has taken hold,” the WTO said.
“This would ensure that support measures do not hinder long-term adjustment and restructuring in the targeted sectors,” it added.
Between October 2008 and October 2010, the EU approved state aid totalling some €4.59 trillion for the financial sector, with about three-quarters in the form of bank guarantees, said the WTO.
“Denmark, France, Germany, Ireland, and the United Kingdom accounted for nearly 70 percent of approved state aid for the financial sector,” it noted.
In addition, the EU allowed member states to provide help to companies that had difficulties getting financing until the end of 2010. Between mid-December 2008 and October 2010, 73 schemes were approved, reaching €82.5 billion.
The automobile sector, together with tourism and construction, obtained the largest share of support.