MEMORANDUM FROM THE EUROPEAN COAL AND STEEL COMMUNITY (ECSC) CONSULTATIVE COMMITTEE on the future of ECSC financial activities (94/C 116/05)

(Unanimously adopted at the 312th Session of 24 March 1994)

1. Since the Consultative Committee memorandum of 20 November 1992, a number of documents on the future of the ECSC Treaty have been published by the competent European institutions:

- a communication from the Commission to the Council on the future of the ECSC Treaty - Financial activities (Doc. SEC(92) 1889 final of 18 November 1992),

- the conclusions of the Council meeting of 24 November 1992: ECSC Treaty and financial activities,

- a communication from the Commission to the Council on borrowing/lending activity (Doc. COM(93) 512 final of 20 October 1993),

- a Commission working document updating the communication to the Council of 18 November 1992 on the future of the ECSC Treaty - Financial activities (Doc. SEC(93) 1596 final of 20 October 1993),

- the resolution adopted by the European Parliament on 15 December 1993, on the 1994 draft ECSC operating budget.

2. Although it has already expressed its views on a number of occasions on the following points (particularly in its memorandum of 20 November 1992 (1) and in its resolution of 17 December 1993 on certain aspects of ECSC financial activities (2)), the Consultative Committee felt it should look more closely at the Commission's most recent proposals on the following:

- the transfer of certain ECSC lending activities to the EIB,

- the financing of social measures connected with the restructuring of the coal and steel industries,

- the financing of ECSC research activities.

The Committee, keen to see a proper balance between all aspects of 'phasing-in' and 'phasing-out', also reserves the right to return in the near future to points raised in the first two chapters of its memorandum of 20 November 1992: Specific responsibilities of the Commission in the field of coal and steel - public aid.

3. The Committee wishes first of all to restate the opinion from which it has never departed, namely that ECSC reserves must be used primarily to assist enterprises and their workers, who have since 1952 provided most of the funds enabling these reserves to be formed.

Thus the transfer of certain ECSC borrowing/lending activities should make it possible to release as soon as possible the maximum amount of reserves, more necessary than ever in view of the current situation of the coal and steel industries

- so that they can be allocated as a first priority to the process of restructuring the coal and steel industries and mitigating the social and industrial costs involved,

- while at the same time creating the right conditions for further reducing the rate of the levy.

4. Comparison of the successive documents published by the Commission reveals that, one year on, the Commission's proposals have fundamentally changed.

In its communication of 18 November 1992, the Commission stated that it might be possible:

- to reduce ECSC lending activities, which could be taken over by the EIB, from 1993,

- to finance interest-rate subsidies for conversion loans by the ERDF, from 1988,

- to have the European Social Fund take-over part of the readaptation aid, in accordance with the objectives of this fund, from 1994,

- to incorporate in two phases, from 1994, ECSC research into the fourth and fifth framework programmes for EC research.

The scenario annexed to this communication put forward, for the five years 1993 to 1997, a reduction in reserves of ECU 373 million, of which in particular 160 million for conversion loans and 187 million for loans for investments to encourage consumption of ECSC products.

In its documents SEC(93) 1596 and COM(93) 512 of 20 October 1993, the Commission no longer provides for any release of reserves before 1997.

The reasons why the Commission has postponed the date are not only that it is wishes to earmark part of ECSC reserves for guaranteeing the loans it proposes to grant to assist the restructuring of the European steel industry, but also and above all that:

- it lays down the principle that the transfer to the EIB can only apply to new loan applications,

- it proposes that the only loans to be transferred immediately should be for the consumption of Community steel in major infrastructure projects,

- it postpones the transfer of conversion loans to 1996,

- it states that certain 'consumption' loans and the ECU 200 million 'ECSC facility' for the countries of central and eastern Europe cannot be transferred.

5. The Consultative Committee:

5.1. naturally approves the Commission's intention to allocate part of ECSC financial resources to pre-financing voluntary mechanisms for restructuring the steel industry (although this only represents, according to its own figures, a maximum of a fifth of all future ECSC loans);

5.2. but considers that it should transfer 'consumption' loans and conversion loans to the EIB sooner than planned. This is furthermore in line with that institution's task as set out in Article 198e of the Treaty on European Union.

Alongside the transfer to the EIB of ECSC conversion loans, systematic use of the possibilities offered by the ERDF seems possible.

In addition, aid in the form of interest-rate subsidies for conversion loans currently financed by the ECSC budget could be transferred to the general budget, as was decided for the temporary mechanism to assist SMEs.

On this point, the Committee supports the request expressed by the European Parliament in its resolution of 15 December 1993;

5.3. recommends more particularly that the Commission should, with immediate effect, no longer grant ECSC loans falling within these two categories (conversion loans and 'consumption' loans), which are of general interest, and that it should transfer to the EIB the task of examining, on the basis of its own criteria, any loan requests submitted to the Commission;

5.4. requests an immediate and more thorough study of the possibility of directly using the EC guarantee for loans falling within the categories mentioned in 5.3 and already granted;

5.5. considers that the Commission should now review its position on ECSC loans to the countries of central and eastern Europe, which it regards from experience as falling clearly within the field of competence of the general financial instruments of the European Union or of the EBRD;

5.6. requests the Commission to study the future ECSC social housing policy, which the Committee considers important, together with the financial implications of this policy;

5.7. requests the Commission to provide it with all appropriate explanations on the state of the reserves and on the risks associated with 'off-balance-sheet' committments and to specify the financial obligations that these are likely to incur for the Guarantee Fund.

6. Social measures

The Committee insists that the Commission should clarify as soon as possible the way in which the European Social Fund and the general budget can contribute to the social measures for the coal and steel industries, which will have to be considerably increased since the initial estimates of the social consequences of the restructuring of these industries have already been greatly exceeded.

7. Financing of research

The Consultative Committee:

7.1. requests that the methods of organizing ECSC research, technical as well as social, that have proved successful during 40 years of Community practice should be maintained;

7.2. considers that, in contrast to the cuts in the funding of ECSC research that figure in the 1994 budget, sufficient funds must be allocated to ECSC research until the Treaty expires, in order to prepare the way for a smooth transition from ECSC funding to EC funding;

7.3. would like the Commission to specify without delay what actual possibilities exist for incorporating ECSC research activities into EC general research programmes.

8. Conclusions

On the whole, the Committee considers that, until the Treaty expires, ECSC financial resources must be concentrated on the urgent and priority needs of the coal and steel industries, which the Commission itself is urging to carry out fundamental structural adjustments.

This concentration of ECSC financial resources is only possible if borrowing/lending activities are transferred more quickly and to a greater extent than currently intended by the Commission and if, at the same time, the coal and steel industries are brought, also to a greater extent, within the sphere of financial responsibility of the European Union and its inter-sectoral instruments.

The Consultative Committee stresses that bringing these industries into the abovementioned sphere of financial responsibility is justified by the fact that it will put them on the same footing as the other economic activities of the European Union. It considers that this should find practical expression, as soon as possible and as a matter of priority, in the granting of the EC guarantee to loans of general interest.

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

(2) OJ No C 8, 12. 1. 1994, p. 3.