Opinion of the Economic and Social Committee on the 'Proposal for a Council Regulation (EC) on a Community fleet capacity policy to promote inland waterway transport` () (1999/C 40/15)

On 23 October 1998 the Council decided to consult the Economic and Social Committee, under Article 75 of the Treaty establishing the European Communities, on the above-mentioned proposal.

On 14 October 1998 the ESC Bureau made the Section for Transport, Energy, Infrastructure and the Information Society responsible for preparing the Committee's work on the subject.

At its 359th plenary session held on 2 and 3 December 1998 (meeting of 2 December) the Economic and Social Committee, in view of the urgency of the matter, appointed Mr Ghigonis rapporteur-general and adopted the following opinion by 102 votes to one.

1. Content of the proposal

1.1. Outline

1.1.1. Council Regulation (EEC) No 1101/89 () provided for structural improvements in inland waterway fleets operating on the interlocking networks of Austria, Belgium, France, Germany, Luxembourg and the Netherlands. This regulation sought to reduce overcapacity in the fleets via vessel-scrapping schemes coordinated at Community level. Council Regulation (EC) No 844/94 () extended these arrangements until 28 April 1999 ().

1.1.2. Under the 'old for new` rule, the commissioning of new vessels is contingent (a) on the scrapping of existing capacity under a ratio determined by the Commission, or (b) on payment of a special levy; the Commission is proposing that this rule be retained. The different ratios applicable at present in the various segments of the market will continue to apply, but they must be phased out by 28 April 2004.

1.1.3. After this, the scheme is to become a standby mechanism, which can be reactivated only in the event of a serious market disturbance.

1.1.4. The scrapping funds set up in the participating Member States are to be retained as 'Community Fleets Coordination and Promotion Funds`. Each of these must have a reserve fund comprising the surplus from the structural improvement schemes which are to run until 28 April 1999 and the special levies collected under the 'old for new` rule; scrapping premiums will be paid from this fund in the event of a market disturbance.

1.1.5. Member States can introduce social measures to assist workers leaving the industry and to promote company mergers, acquisition of vocational qualifications by operators and the adaptation of vessels to technical progress.

1.1.6. The regulation is to enter into force on 29 April 1999.

1.2. Background

1.2.1. In order to assess the relevance and likely impact of the draft regulation, it is necessary to highlight its economic, legal and business background.

1.2.2. On the economic front, experience has shown that structural overcapacity - largely the result of the long life of inland waterway vessels (30 to 40 years) and reflected by a growing gap between costs and freight levels - is liable to destroy the real potential of this transport mode.

1.2.2.1. In other words, the advantages which might initially accrue to waterway transport users from constantly falling freight levels very quickly become major handicaps as carriers are unable to harness new investments and to properly maintain existing vessels.

1.2.2.2. Overall, the upshot would inevitably be a marked decline in the quality of waterway transport supply, and competition between transport modes would be confined to road and rail.

1.2.3. In legal terms, the Council has drawn conclusions from the economic situation outlined above and, since 1989, has adopted a series of regulations and directives forming a set of measures designed:

- to implement a capacity-related structural improvement programme designed to keep inland waterway transport economically viable and to secure its long-term future and

- to back up this structural improvement programme by a regulatory policy under the 'old for new` scheme established by Council Regulation No 1101/89 () and extended to 28 April 1999 by Council Regulation No 844/94 () .

1.2.3.1. Since no further scrapping programmes are in the pipeline and the run-up to a fully liberalized market from 1 January 2000, the present draft regulation seeks to safeguard policy achievements secured since 1989 by pursuing an adapted form of the 'old for new` regulatory mechanism on the understanding that after a period of maximum five years, this arrangement will be applicable only in the event of serious disruption of the market.

1.2.4. On the business side, it should be noted that the two European shippers' associations, the ESO and the IUIN, have in principle endorsed this draft regulation without reservation.

1.2.4.1. In this context, it must be borne in mind that the European shipping profession has devoted more than ECU 150 million to trimming overcapacity in its fleet and that, sensibly, it means to consolidate achievements in this area by retaining a mechanism for gearing supply patterns to market developments.

2. General comments

2.1. The Economic and Social Committee, reiterating comments made in previous opinions, including that of 26 January 1994 (), considers that balanced operation is crucial to the inland waterway market and that this is contingent on a policy to control the capacity of Community fleets.

2.2. In this field, the Committee feels that substantial progress has been made under the various structural improvement schemes implemented since the adoption of the Council Regulation of 27 April 1989 (). These have resulted in a significant cutback in structural overcapacity, without blocking productive investments or curbing improvements in productivity. It would be desirable to measure the real effects of this reduction of capacity in relation to trends in transport demand.

2.3. The Economic and Social Committee takes the view that:

- this overall improvement in the supply of inland waterway transport could not have been achieved without the introduction and application of the 'old for new` rule;

- consolidating previous achievements hinges on the retention of this rule, although its provisions are to be adapted to keep them in step with overall market developments and with developments in each market segment (dry cargo, liquid cargo and pusher craft).

2.4. Subject to the specific comments below, the Economic and Social Committee therefore endorses the draft Council regulation. This regulation:

- lays down mandatory conditions for bringing new vessels into service for a period of five years from 28 April 1999,

- provides for the reactivation of the 'old for new` rule or for other improvement measures after that date in the event of serious disturbance of the market as defined in Article 7 of Directive 96/75/EC () , and

- establishes Community Fleets Coordination and Promotion Funds.

3. Specific comments

3.1. The Economic and Social Committee has reservations about the merit of certain exemptions from the proposed regulation, as set out in Article 2(2)(a) and (b).

This would involve exemptions for:

a) vessels operating exclusively on national waterways not linked to other waterways in the Community (e.g. the Po and Adour);

b) vessels where dimensions confine them to certain national waterways (e.g. the Seine and Rhone).

3.1.1. The Committee feels that such exemptions highlight a certain contradiction between:

- the view - shared by the Committee - that fleet capacity regulation measures have to cover the broadest possible swathe of the Community's waterways, above all the Rhine area and

- the absence of any capacity control on closed micro-markets where the risks and adverse impact of overcapacity are, by definition, much greater.

3.1.2. Moreover, the Committee notes that exemptions of this kind may lead to distortions in treatment between

- undertakings operating vessels on the Community network which, by transferring one or more vessels fulfilling the exemption criteria under Article 2(2)(a) and (b), would not have to pay any special levy under the 'old for new` rule, despite the resultant overcapacity on the waterways concerned, and

- undertakings whose vessels fulfil the exemption criteria under (a) and (b) and which would have to pay a special levy in keeping with the ratios and rates in force on the Community network when they were transferred there.

3.1.3. Not least in the light of the full liberalization of the market on 1 January 2000, the Committee is concerned that the draft Regulation has no formal mechanism to cover the legal possibility for countries affected by these exemptions to establish a national 'old for new` rule applicable to their own waterways.

3.1.4. Consequently, the Economic and Social Committee feels that Community capacity policy must take precedence over the unwarranted exemptions set out under Article 2(2)(a) and (b).

3.2. The Economic and Social Committee shares the goal of phasing out the ratios applicable under the 'old for new` rule within five years starting on 28 April 1999. However, the Committee would stress that this can be no more than a publicly-stated objective, and certainly not a requirement, as the wording of Article 4(2) of the draft regulation appears to suggest.

3.2.1. In point of fact, the Committee feels that such an interpretation would be untenable in the event of a serious disturbance of the market within the meaning of Article 7 of Directive 96/75/EC () during, and particularly towards the end of this transitional period, which would warrant the retention and indeed the tightening of the ratios in force at that time.

3.2.2. To do this, the Economic and Social Committee believes it desirable that the Commission, assisted by experts, should constantly observe market developments.

3.3. In order to ensure that the measures set out in the draft regulation operate smoothly and effectively, the Economic and Social Committee would stress the need to include the Swiss fleet from the outset.

Brussels, 2 December 1998.

The President of the Economic and Social Committee

Beatrice RANGONI MACHIAVELLI

() OJ C 320, 17.10.1998, p. 4.

() OJ L 116, 28.4.1989, p. 25; ESC opinion - OJ C 318, 12.12.1989, p. 58.

() OJ L 98, 16.4.1994; two ESC opinions - OJ C 127, 7.5.1994, p.19 and OJ C 301, 13.11.1995, p. 20.

() See the ESC Opinion on support: measures for inland waterway transport - OJ C 39, 12.2.1996, p. 96 and its own-initiative Opinion on inland waterway transport - OJ C 393, 31.12.1994.

() Structural improvements in inland waterway transport, OJ C 127, 7.5 1994.

() OJ L 116, 28.4.1989.

() Council Directive 96/75/EC of 19 November 1996 on the systems of chartering and pricing in waterway transport in the Community, OJ L 304, 27.11.1996.