MEMORANDUM OF THE ECSC

Consultative Committe on matters connected with the expiry of the ECSC Treaty in 2002

(95/C 206/06)

(Text with EEA relevance)

(Adopted at the 320th Session of 28 June 1995 with one vote against)

The Consultative Committee of the European Coal and Steel Community recalls the positions it has previously adopted in the light of the expiry of the ECSC Treaty, in particular:

- its memorandum on the future of the ECSC Treaty, adopted on 20 November 1992 (1),

- its memorandum on the future of the ECSC financial activities, adopted on 24 March 1994 (2).

These two memorandums, which were adopted unanimously, took account of the documents known at the time, which came from the European Parliament, the Council and the Commission, and more specifically with regard to the Memorandum of 24 March 1994, the Commission working document of 20 October 1993 updating the communication to the Council on the future of the ECSC Treaty - financial activities (1).

The Consultative Committee has taken note of the documents on the same subject which have been published since then by the competent European institutions, namely:

- the conclusions of the Council meeting of 22 April 1994 on the future of the ECSC Treaty (2),

- the resolution adopted by the European Parliament on 26 October 1994 on the 1995 draft ECSC operating budget (3),

- the opinion adopted by the Committee on research, technological development and energy of the European Parliament on 23 February 1995 on the functioning of the Treaty on European Union with regard to the 1996 Intergovernmental Conference (4),

- the report adopted by the Committee on Budgetary Control of the European Parliament on 22 March 1995 on granting a discharge to the Commission for the management of the ECSC for 1993 (5),

- the annual reports of the European Court of Auditors on the management of the accounts and the financial management of the European Coal and Steel Community, the most recent of which relates to 1993 (6)

Aware, like the European Parliament, of the present need for a more political and more global approach to the various aspects associated with the expiry of the ECSC Treaty, the Consultative Committee considers that now is the time to update and coordinate its positions on the subject, since:

- from 1992 to 1994 a grave crisis once again shook the steel industry and highlighted the permanent need for structural adaptions, which entail major industrial, social and regional consequences,

- the publication by the Commission of a Green Paper entitled 'For a European Union energy policy` (7) launched a fundamental debate on the long-term future of the coal industry,

- the recent enlargement of the European Union to 15 Member States and its extension in the medium term to include other countries, in particular those of central and eastern Europe, has had and will continue to have a significant impact on the coal and steel industries.

Set up under the ECSC Treaty as a forum for dialogue between those involved in the coal and steel industries (producers, workers, consumers and dealers) and the Commission and for cross-border dialogue between these groups, the Consultative Committee regards itself as particularly qualified and competent to express an opinion on the provisions of the ECSC Treaty and application of these provisions. It is in a position to assess what effect these provisions provided for by the ECSC Treaty have had on the profound structural changes in the ECSC industries over the past 40 years and more and the cyclical trends affecting the steel industry in particular.

1. GENERAL REMARKS

The Consultative Committee reaffirms its previous positions of principal, namely:

1.1. that the ECSC Treaty should remain in force until 2002 as an autonomous legal instrument and should be implemented normally until that date, account being taken of the specific remarks below,

1.2. that certain rules in the ECSC Treaty which have proved their worth should be transposed to the EC Treaty, as provided for in the Commission communication to the Council of 15 March 1991 (8),

1.3. that the Commission should continue to involve the Consultative Committee closely in drawing up the Union's coal and steel policy and in any discussions on the various aspects associated with the expiry of the ECSC Treaty in 2002.

2. SPECIFIC REMARKS

The Consultative Committee sets out below its remarks and comments on certain specific provisions of the ECSC Treaty:

2.1. The Consultative Committee states that the statistical instruments of the ECSC as developed by the Statistical Office in the industrial, economic, commercial and social fields have proved successful from the point of view of all the parties involved.

In particular, the advance notification of investment programmes and the information on production capacities make for increased transparency in decisions on investments without any problems of competition law arising. On the contrary, this transparency is an important aspect of normal competition, benefits producers, dealers and consumers and is useful for monitoring competition.

Drawing up not only short-term but also long-term forecasts and regularly revising them promotes overall competitiveness and makes it easier to make adjustments to the workforce in a socially acceptable way in the event ot structural crises.

All the statistical instruments and the obligations of undertakings and the Commission to provide information should be retained not only until the expiry of the ECSC Treaty but also beyond it.

2.2. The Consultative Committee is in favour of a European authority, in this case, the Commission, with exclusive responsibility for competition, as laid down in the ECSC Treaty.

The range of powers and, in particular, the a priori supervision in consultation with the undertakings concerned, which give those undertakings more legal security, are arrangements which have proved their worth.

If the supranational powers that have hitherto been combined in a single competition authority, i.e. the Commission, were to be split up, this would be a retrograde step in the context of an existing common European market. Even after the Treaty has expired, the Commission's powers and the proven arrangements should be retained.

2.3. The Consultative Committee regards as an extremely useful instrument of the ECSC Treaty the flexibility with which the European Commission is able to react to crises and thereby, in particular, to mitigate the consequences for the steel market of setbacks such as falling demand. There is no need to make any changes in this respect until the Treaty expires.

Since the ECSC was set up, the European steel industry has had to survive a number of distinct economic cycles and will also be subject to marked cyclical fluctuations in future. For such exceptional situations, an appropriate range of instruments, which should not be used without the prior consultation of all interested parties, must remain available.

Exceptional situations of this kind must also be catered for after the expiry of the ECSC Treaty, and the means to do so as a Community approach should be retained.

2.4. The Consultative Committee is keen to reaffirm that the principles governing State aid for the ECSC sectors must continue to be applied.

2.4.1. For the steel industry, this means that the strict ban on aid, in particular investment and operating subsidies leading to distortions of competition, should be retained even after the expiry of the Treaty, while at the same time account should be taken of the current aid code, which permits Sate aid only in specific exceptional cases.

After repeated infringements of the ban, the European Commission and the Council have undertaken not to approve any new exemptions from the ban on subsidies. In this situation it would be incomprehensible to the Consultative Committee if the present regulatory framework of the ECSC Treaty in conjunction with the aid code were to be relaxed.

The strict ban on subsidies should definitely be retained as a protection from the distorting effects of favourable treatment for individual undertakings and should also apply to branches of industry which are in competition with the steel sector.

2.4.2. The situation ragarding coal mining is different. At present, part of European Union coal production cannot compete with imported coal, and there is no significant intra-Community trade in coal. The aid granted by the Member States does not therefore effect the operation of the Common Market. The current rules on aid, stated in Decision No 3632/93/ECSC, are considered to be an adequate instrument for energy policy beyond their social and regional impact.

The Consultative Committee considers that, after the expiry of the ECSC Treaty, this type of aid by Member States should be expressly permitted.

2.5. The Consultative Committee recalls that the coal and steel sector, and in this connection mainly coal mining, is the only sector of the energy economy for which specific objectives are laid down in a European treaty. The Consultative Committee draws particular attention to provisions of the Treaty in which its opjectives are individually laid down, including the avoidance of fundamental economic disturbances, regular supply of the Community energy market and improvement of the Community's production potential, whilst avoiding wasteful mining methods. The Consultative Committee considers that these very objectives demonstrate that energy policy measures must never be judged in isolation from the economy as a whole and that they have implications for regional and social policy.

The Consultative Committee stresses that even after the expiry of the ECSC Treaty the Community will have to take account of these principles, adjusting them to varying backgrounds, particularly in view of the importance of domestic resources for the Community's regular supplies of energy. In this connection, application of the principle of subsidiarity will probably play an important role, with due account being taken of all important interests at Community level. It is also important for the creation of the new efficient and transparent decision-making structures in the Union that there should be joint consultations between all parties concerned. After the expiry of the Treaty, other sectors of the energy economy and the interests of the energy-consuming industries, particularly the steel sector, should also continue to be taken into consideration.

The Consultative Committee wishes to point out that, with its Green Paper on energy policy, the Commission has ushered in a new approach to European Community energy policy.

On 28 June 1995, the Consultative Committee adopted a resolution on this Green Paper. It will express its opinion on the White Paper as soon as this has been finalized by the Commission.

2.6. The Consultative Committee has no objections to the transfer to the Commission of responsibility for external trade policy for ECSC products, in accordance with the rules laid down for this purpose in the EC Treaty.

The Committee draws attention to the fact that the Commission should exercise this responsibility after thorough consultation of the interested parties and taking particular account of the areas of the European Union which are more sensitive than others to trade with third countries.

2.7. The Consultative Committee recalls that the social dimension of the ECSC Treaty is clearly laid down. The Treaty stipulates that the Community institutions must work towards improving worker's living and working conditions.

The redundancy aid provided for in the Treaty is particularly important. In the event of exceptional disturbances resulting in difficulties in re-employing redundant workers, the Community may grant non-repayable aid in order to help to overcome structural crises (indemnities paid until re-employment or retirement; retraining of workers, including wage assistance during the retraining phase).

Finally, the Consultative Committee would like particularly to stress that the Community measure, funded from the ECSC budget, to promote social housing is unique in the Community.

Until the expiry of the Treaty in 2002, its provisions should continue to operate in full. To this end, adequate financial means should be made available each year, as indicated under point 2.9.2, first indent, below. Initial attempts to phase the redeployment measures, in particular vocational training, into the EC Treaty have shown that it has not been possible to offer equivalent arrangements. The Consultative Committee wishes to see a study conducted of the problems encountered, with a view to finding a suitable solution.

After the expiry of the Treaty, the spirit of social policy embodied in the ECSC Treaty must be transferred to the EC Treaty. The difficult situation on the European employment markets, especially in the coal and steel regions, which are often dependent on a single industry, makes it absolutely essential to apply proven instruments of social policy.

2.8. The Consultative Committee recalls that ECSC promotion of research in specific sectors has produced excellent results in the context of sectoral research pooled between undertakings and countries. The investments made on this basis have yielded many times more than the initial outlay, along with a substantial improvement in working conditions.

Social research in all its forms (ergonomics, steel-industry environment, health in mining, safety and industrial medicine) is unique in the EU. The ergonomics programmes in particular have brought benefits to many branches. Appropriate consultation procedures ensure that, in the field of both social and technical research, all the groups concerned are involved in the planning and development of the research and demonstration programmes. This should continue, with appropriate consultation in each case of workers' representatives.

The Consultative Committee stresses that, in view of the special technical features of small and medium-sized undertakings, until the ECSC Treaty expires in 2002:

(a) ECSC research should be given maximum support in the Community's technical and social framework programmes;

(b) in line with indications under point 2.9.2, first indent, below, appropriate funds should be earmarked annually in the ECSC operating budget for the various research areas, in order to support those ECSC research activities which cannot be incorporated into the Community framework programmes.

The promotion of Community sectoral research to improve the manufacture and use of steel, the extraction and use of coal, working conditions and occupational safety must, in the opinion of the Consultative Committee, be continued after the expiry of the ECSC Treaty.

A financial mechanism (e.g. a foundation) should be set up in order to permit the continuation of this research. This institution should be financed, in accordance with point 2.9.5 below, by transferring unused ECSC reserves.

The size of the reduction in the levy which the Consultative Committee wanted is in direct relation to the expenditure to be financed and the gradual release of reserves (see point 2.9.4 below).

2.9. With regard to the financial aspects:

2.9.1. The Consultative Committee confirms its position, expressed on a number of occasions, on the ECSC levy. It notes that this specific and supplementary tax rests only on coal and steel undertakings in the European Union and does not in any way affect imported ECSC products.

The Consultative Committee notes that in the abovementioned Commission working document of 20 October 1993 updating the communication to the Council on the future of the ECSC Treaty - financial activities, the Commission includes in its illustrative scenario the continued, gradual reduction of the levy starting in 1991 and its final phasing-out as from 1999.

2.9.2. The Consultative Committee

- would like to see, until the expiry of the Treaty in 2002, adequate resources provided for by the ECSC operating budget to finance the desired social measures, in accordance with point 2.7 above, and to assist technical and social research in accordance with 2.8,

- emphasizes that conversion loans should be financed as quickly as possible under the EC Treaty,

- trusts that the Commission will consult it, as in the past, before drawing up future operating budgets.

2.9.3. With regard to reserves, the Consultative Committee reiterates the position it has always adopted, namely that they must be used primarily for the benefit of the undertakings and their workers, since it is they who, since 1952, have provided the bulk of the funds enabling the reserves to be constituted.

Consequently, the Consultative Committee is of the opinion that the reserves constituted as part of the financial activities of the ECSC, namely:

- the guarantee fund,

- the special reserve,

- the former pension fund

should be released in step with the reduction and ultimate phasing-out of the financial activities for which they were constituted and are now being temporarily maintained.

The Consultative Committee notes that this development is, moreover, provided for in the Commission working document referred to in point 2.9.1 above.

2.9.4. The Consultative Committee is in favour of the Commission's illustrative scenario, whereby the reserves released up to the expiry of the ECSC Treaty in 2002 should contribute to the financing of the operating budget, the amount of such contribution being determined each year as a function of the resources available and limited to the priority needs of the workers and undertakings of the coal and steel sector, on which the Consultative Committee wishes to be regularly consulted at a sufficiently early stage in the budget preparation process.

2.9.5. The Consultative Committee proposes that the balances of the reserves released until 2002 and not used to finance the operating budget, in accordance with point 2.9.4 above, and the reserves released later in connection with the progressive reduction and ultimate phasing-out of the financial activities which justify them, should be allocated to a financial mechanism (e.g. a foundation), in a form to be determined, the Commission being duly involved in the management of this mechanism and in the use of its funds. The purpose of this financial mechanism should be to provide support for the activities which the Consultative Committee regards as being of overriding importance, even after the expiry of the ECSC Treaty, namely technical coal and steel research and social research.

2.10. The Consultative Committee considers that the rules, procedures and institutions which require and make possible, in the sectoral domains, the dialogue between producers, workers, consumers and dealers on the one hand, and the Commission on the other, have yielded very satisfactory results. Most particularly, the simultaneous presence of the three categories of interest represented in the ECSC Consultative Committee has proved very useful.

The Consultative Committee would therefore like to see the procedures and institutions provided for by the ECSC Treaty for the purposes of consultation continuing to be normally applied until the expiry of the Treaty in 2002.

The Consultative Committee also stresses the political importance of these dialogues and their economic and social effects during the phases of structural readjustment.

Consequently, the joint, simultaneous, transparent and sturctured consultation of all interested parties in the coal and steel sectors must be guaranteed even after the expiry of the ECSC Treaty.

(1) OJ No C 14, 20. 1. 1993, p. 5.

(2) OJ No C 116, 27. 4. 1994, p. 4.

(1) Doc. SEC(93) 1596 final.

(2) Council Doc. 6442/94 (Presse 76).

(3) OJ No C 323, 21. 11. 1994, p. 66.

(4) Doc. EP 211.254/final.

(5) Doc. EP 211.584/final.

(6) OJ No C 346, 7. 12. 1994, p. 1.

(7) Doc. COM(94) 659 final of 11. 1. 1995.

(8) Doc. SEC(91) 407 final.