ARCHIVESHISTORIQUES
DELACOMMISSION
COLLECTION RELIEEDES
DOCUMENTS "COM"
COM(73)1846
Vol.1973/0320

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COMMISSION GIFTHEEUE.OE5AN GOMMUNEIIES
COM(73)1346 final
Brussels,7November1973
AIDE-MEMOIRE OHTHE
FIXINGO?THEECSCLEVIES
MDOPERATING BUDGET
FOR1974
COM(73)181-6final

XIX/504/73-3
i
> A3DS-mroiRE .
enthefixingoftheBC?Cleviesandoperatingbudgetfor1974
Articles49and50oftheTreatyestablishing theEuropeanCoal
andSteelCommunityempowertheCommissiontoobtainthefundsneededto
financetheactivitiesprovidedforintheTreatybyimposinglevieson
theproductionofcoalandsteel.Theseleviesareassessedannuallyon
thevariousproductsaccordingtotheir"averagevalue",butthe"rate"
oftheleviesmcynotexceed1>ofthis"averagevalue"unlesspreviously
authorisedbytheCouncilunderArticle50.
Incalculatingtherateoftheleviesseveralfactorsmustbe
takrnintoaccount.First,requirements mustbescrutinized .Thenitis
necessarytoassesshowfartheycanbefinancedbytherevenuesarising
fromtheinvestmentoftheCommunity *sownfundsandothersourcesofin­
come(repayments,cancellationofcommitments...).Inthiswayitis
possibletocalculatethesumtobeprovidedthroughthelevies.taking
accountoftheaveragevalueofthevariousproductsandtheestimated
productionduringtheyear,therateoflevyneededtoyieldthesum
concernedcanbeworkedout.Calculation oftheratethusdependson
estimatesofproduction :theseestimatesaredifficulttomakebecause
theindustriesconcernedreactverysensitivelytothebehaviourofthe
r
economiccycle.
Followingtheusualpractice,theviewsofthefourcompetent
committeesoftheEuropeanParliamentarerequestedand-astheParliament
indicatedinitsresolution "ontheECSCfsoperatingbudgetandlevies
for1971"-itisinfacttheEuropeanParliament "asawhole"thatwill
pronounceontheleviesandtheoperatingbudgetoftheECSC.

-2-XIX/504/73-S
/
Thisaide-memoire formsthebasisfortheconsultation ofthe
Parliament ..
Itshallbenotedthatthisinitialdraftoftheoperatingbudget
isbasedonexistingmonetaryconversionratesandnotonthosewhichwould
resultfromtheadoptionoftheCommissions draftdecisionbasedonreal
exchangerates.Thedepartments concernedconsideratpresentthatit
wouldbeahighlyhazardousprocesstoforecastthepreciseconsequences of
thenewsystem,giventhatneedsandresourcesmust,inglobalterns,
representthesameamountinunitsofaccount.
*
**
I.EXIiCUTICNOPTHE1973OPERATIONAL BUDGET(AnnexI)
A.Rescurces
84.5KUAinplaceof74®
Thefavourabledevelopment oftheeconomicsituationhascontinued
inthesteelsectorandhasallowedayieldfromtheleviesinexcessof
theoriginalestimates,whichwereadmittedlycautious,(i.e.66MUA
insteadof63.8MUA).
Thiscautionwasbasicallyduetotheuncertaintyofthe
-economicoutlooklinkedwiththemonetarycrisis.Itcan.alsobeexplained

-3- XIX/504/73-E
"byreferencetotheoutturnofpreviousyears(particularly 1971)>when
incomefromtheleviesfailed ,toreachtheamountestimated.
Thesrmeconsiderations affectedtheestimatesofintereston
investments andonloansfromnon-borrowed funds,andexpectedincomefrom
thesesourcesiswellabovetheestimate(11.8MUAinsteadof10MUA).
Lastly,thereisacreditof6,5MUAagainsttheheading
"Cancellation ofcommitments whichwillnotnowbeimplemented".
B.Fbcpcndituro forecasts
84.5MUAinsteadof74MUA.
Theexpectedresourcesshouldprovidefullcoverforneeds,for
whichtheforecasts,amendedasnecessary,areasfollows:
1.Administrative costs :18MUA
2.Aidtoresettlement :38MUAinsteadof40MUA
3.Aidtoresearch :18.5HUAinsteadof16MUA
4.tocckin"?coal :4MUAfollowingtheECSC
Commission (O.J.259/36of
15Sept.1973).
5.Interestrebates :6MUAinsteadof0(articles
54and.56).
■Indrawingupthe1973budget,itwasforeseenthatthoseneedswouldbo
1metbymixedfundloansvdrawingontheamountspayablebythenew
membercountries,bywayofcontribution totheSCSC'sreserves.Thepay­
mentofthesecontributions havingbeendelayed,ithasbeennecessaryto
usepartoftheincomefromtheCommunity's'ownfunds'tomeetthe
requirements forinterestrebates.
0.Workershouaing:10MUAasforecast
mThissystemallowsthegrantingofreducedinterestloans,bymixing
fundsborrowedatmarketrates(Article49)withthe3CSC*sownfunds.
Each1MUAofECSCfundsiscombinedwith1.5MUAofborrowedfundsto
constituteanixedloanof2.5MUA:thisallowsaSfiinterestrate
rebatefor5years.

-4- m/504/73-E
II.INITIALDRAFTOFTHE1974OPIIRATINCBUDGET(AnnexII)
The1974.operatingbudgetisthefirsttotakeproperstockof
theenlargementoftheECSC.Atthesametime,theinfluenceofinflation
throughouttheCommunity,alongv;iththeneedtoimplementthepolicies
incumbentontheECSCinboththeindustrialandthesocialfields,have
hadsignificanteffectsontheECSC'soperatingbudgetfor1974«Require­
mentsforfundshaveincreased.
A.Requirements reportedfor1974
1.Administrative expenditure
Thetotalof18MUAintheMergerTreatyisstillvalid.
2.Aidtoresettlement
Foreseenrequirements foraidtoresettlement exceedthosefor
1973:41MUAasagainst38MUA.
Severalfactorshavecontributed tothisincrease :
-theFederalRepublicofGermanyhasspeededupitsprogrammeofclosures
for1974andsubsequentyears?
-submissionoftheapplications foreshadowed bytheUnitedKingdom
for1973hasbeenholdback.Asaresultofthisdelay,therewill
bomorerevestsin197-5;
-inflationary increaseshaveaffectedcertaincategoriesofexpenditure .
Thoc:rpcctedbreakdownisshowninthefollowingtable:
Steel Coal Total
Germany ; ,.0.5 10.0 10,5
Belgium : 0.5 -4.0 4.5
Denmark
France 1.0 5.5 6.5
Ireland
Italy* * *
Netherlands# *
Luxembourg* *
UnitedKingdom .5.0 T9-5
7.0 34.0 p.0
*Notsignificant

-5- XIX/504/7>E
3.Md torcsoarch
Thepromotion ofresearch laid upon theECSC byArticle 55°f
theTreaty ,calls foranincrease infinancial aidtoenable theCommunity
toface uptothedemands putforward ,both forthepurpose ofmaintaining
the competitive position ofEuropean products inthe steel sector
(production andtesting )andenergy sector ,andinorder toimprove
occupational safety andeffectively combat industrial pollution intheareas
affected bytheECSC Treaty .
Forthevarious fields ofresearch ,theoverall aidrequested ,
calculated ontheassumption that theECSC contributes 6Cffoofthetotal
cost ofthe research amounts to :,
these applications andallocate priorities toeach within the limits ofthe
funds available .
Theaidtocoking coal (5?IUA)wasthesubject oftheCommission 2s
Decision No.73/287ECSC of25July 1573 (0.J.259/36of15September 1973).
This Decision established asystem ofsubsidies during theperiod
1973-72 forcoking coal andcoke intended fortheCommunity 'ssteel
industry ,ofwhich some 55^will bocontributed bythesteel industry ,
25$ "^iecountries cncerned and 20>cbytheECSC .TheECSC'scontribution
amounts to4MUAin1973 >5MUAin1974 and'6MUAayear from 1975-78 *
5.Interest rate rebates
Requirements forsubsidised loans ,under theECSC Treaty ,Articles
54(investment )andArticle 5'5(redevelopment ),arc .estimated toamount to
133KUA .FortheCommission ,asubsidised loan isonewhich benefits from
a3/ainterest rebate for a,period of5years ,thesubsidy thus representing
approximately 15^ofthetotal loan .
Thus 20MUA ofnon-recoverable funds would beneeded toback up
the issue ofthe 133MUA ofsubsidised loans .Thebreakdown is :research into steel technology
research into coal technology
Social research24 MUA
13.5 MUA
7-5 MUA
45
Asmthepast ,thevarious committees ofexperts will examine
4.Aid tocc:cin f'Ccoal

-6- X!X/504/7>--
-Article54:8HUA
-Article56 :12MUA
.20MUA
Underthesystemofnixed,fundloansalreadyoutlined,itwould
"benecessarytomakeavailable53MUAoftheJilCSC'sownfundstosupport
thetotalof133MUAofloans.
ThoCommissionthinksitpreferableinthismatternottousethe
techniqueofmixedfundloans,since,intheevent,thisapproachonlysolve
theproblemforthG3years(1973I1974»1975)duringwhichthenewMember
Statesareduetopaytheircontributions tothoECSCfsreserves,andhas
noimpactontheproblemofsubsidizedloansfrom197oonwards,whenthese
contributions willcease.Moreover,theCommissionconsidersthatitwould
beunsoundtotieuppartofitscapitalresourcesinthistypeofoperation
forthewholeperiodinvolved(asmuchas15years,asarule).Itwould
accordinglyprefertoinvestthesefundstobestadvantageandhaveextra
incomeatitsdisposalintheformoftheadditionalinterestearned.
'6.Specialreserveappropriation (workers'housing)
TheCommissiondecidedon22December1972toallocate20MUA
towardstheimplementation ofthesecondstageoftheSCSG'sseventh
financialaidprogrammeforhousingconstruction .Thisstagecoverstho
financialyears1973and1974andas10MUAhavobeenallocatedin1973a
further10MUAshouldboprovidedinthe1974budget.
Forecastresourcesfor1974
Thoyieldoftholeviesfor1974willbeinfluencedby:
-adropofaround5$i*1coalproductionbycomparisonwith1973?
anincreaseofaround2f/oinsteelproductionbycomparisonwith1973?
-aslightincreaseinthoaveragevaluesofironandsteelproducts.
1)Coallevies(coalandlignite)
-In1974thetotalproductiononwhichleviesarecalculatedmightreach
235millionmetrictonsofcoal
4millionmetrictonsoflignite

-7- XIX/504/73-E
–Theaverage value stobeapplied are :
18.52 u.a .forcoal
12.98 u.a .forlignite
r
-The "unit yield "ofthelevy -'i.e .theyield atarate of0.10 /o-
will amount to :
4.35 million u.a .oncoal
0.05 million u.a .onlignite
Inround terms ,levies onforecast coal production for1974 would yield
12.76 IOTAatarate of0.Zrfl°
13.20 MUAatarate of0.30$
13-o4 IOTAatarate of0.31$
Steel levies
–Estimates indicate that theproduction onwhich thelevies are
calculated could reach thefollowing levels ,allowing ,fora3$
increase ontheproduction forecast for 1973 :
Pig iron and cast iron :5«5million metric tons
'Bcssener steel : 15million metric tons
'Steel other than Bessemer steel :140million metric tons
Finished products :113million metric tons
–Theaverage values tobeapplied -have been assessed atsome6%above
these for 1973 »since theCommission departments concerned have not
yetreceived allthenecessary information .
-Theunit yield ofthe levy will probably reach :
0.33 IOTA onpig and cast iron -
1.08MUA onBessemer steel
13.86 IOTA onsteel other than Bessemer steel
4.23 IOTA onfinished products
Inround terms ,levies oniron andsteel products for1974 ..would yield
56.55 MUAatarate of0.29$
58.50 IOTA atarate of0.30$
60.45 IOTAatarate of0.31$ '

-8- xix/504/73-:.:
3)Theremainingresourcesaremainlyinterestoninvestmentsand
loansfromnon-borrowed ,funds,whichtheDirectorate-General for
CreditandInvestmentsestimatedat12.4MUAfor1974.
However,ontheassumptionthatthenewMemberStates'contribution
totheECSC'sreservesareinvestedandnotusedformixedfund
loans(seepage3»IB5andnote(l)),additionincomeofsome
3.3MUAcanbeassumed.
4)Themiscellaneous headingincludespenaltypaymentsandinterestand
finesforarrearsofpayment...
5)Cancellationofcommitmentswhichwillnotbeimplementedrelatesto
creditbalancesonsuccessfully completedoperations.Theyare
estimatedat5*5for1974-
6)Lastlythetableofresourcesincludes2itemsrepresenting lion-
■borrowedfunds:
-repayments onloansmadefromthespecialreserveandconstituting
theSCSC'scontribution totheconstruction ofworkers *housing;
-anelementoftheformerECSCpensionfund,usedincombination
'withtheserepaymentstomakeuptheallocationof10MUAneeded
toimplementthe2ndinstalement ofthe7thworkers*housing
construction programme ;
C.Thebalancebetweenrequirements andresources
Simpleadditionoftherequirements putforwardwouldgivea
totalof129MUA,withouttakingintoaccountthe"workers'housing"
schemewhichrelatestoloans,nottotheuseofnon-recoverable funds.To
meetalltheserequirements ,therateofthelevywouldhavetobefixed
at0.45
Sinceaccountmustbetakenof,thepracticalpossibilityof
implementing thelevelofoperationspresupposed bysuchanamount,as
wellasthe"abilitytopay"ofthecoalandsteelindustries ,itwould
notbeatallappropriatetoraisetherateofthelevytothislevel.
Areviewofprioritiesisthereforenecessary.
\

-9- XIX/504/73-E
Theallocationforthreeoftherequirements tobemetfrom
currentresourceshasalreadybeenfixed:
-thecontribution toadministrative costsmustbeheldat18MUA
-theamountstobeallocatedas"aidtoresettlement "-anobligatory -
itemofexpenditure-total4-1MUA
-aidtocokingcoal,setat5MUA
i.e.atotalof04MUA.
Inaddition,theCommissionisunderconsiderable pressurefrom
thefirmsconcerned,fromtheCommunity'sresearchinstitutions ,and
1indeedfromtheParliamentitselfv,togivegreaterencouragement to
research.TheCommissionsharestheseconvictions .Initsview,anex­
ceptionaleffort,shouldbeappliedbothinordertomaintainthecompetitive
positionofEuropeanproductsandinordertoimproveoccupational safety.
Expenditurein1973havingbeon18.5MUA,thesamelevelofaid,allowing
forpayandpriceincreases,impliesabout20to20.5MUAin1974«A
7.57-increaseinthelevelofaidwouldthusraisetheappropriation to
215MUA.Thisappearsreasonableifitisrememberedthat,in1973»the
Communityonlymet40^ofrequestsforaidtotalling46MUA,andthat
requestsforthecomingyearamountto45MUA.Anappropriation of21.5MUA
wouldmeetA&/cofthedemand,Itshouldbenotedinadditionthatthe
ECSC'sresearchaidinthesteelandcoalsectorsdoesnotaccountfor
morethan5--10/*-ofthetotalresearcheffortinthesefields.
Inconsequence,irreduciblerequirementstotal85»5MUA(64MUA
plus21.5MUA).Theamountleftavailableforinterestsubsidieswould
thus,withalevyrateof0.2J?o,amounttoonly5-11MUA(yieldingaloan
totalof34MUA).TheCommissionconsidersthatasaminimumitshouldbe
abletoappropriate 10MUAforthispurpose,yielding
1
v'Resolutionof19January1971»Paragraph4

-10- ΠΧ/504Λ3-ϋί
some67IiUAofsubsidizedloans.However,beingawareofthedifficulty
ofincreasingthelevyrateof0.31/-*aswouldbenecessaryinorderto
appropriate 10MUAforthispurpose,the Commissionispreparedtolimit
theratetoO.3O/0.Thiswouldallow7«5MUAtobeallocatedforinterest
subsidiesin1974»(yieldingsome50KU*-ofsubsidizedloans).
#
**
TheCommissionthereforeaskstheParliamenttoagreethatthe
levybefixedat0.30/a.

FORECASTOUTTURNOFOPERATINGBUDGETFOR1973(inMUA) ANNEXI
REQUIREMENTSOriginal
estimateForecast
O'atturnRESOURCESIOriginal
estivuateIForsc-ast
joutturn
I «
OPERATIONS TOBEFINANCED
FROMORDINARYRESOURCES
(NON-RSCOVERAELE )
1)Administrative expenditure
2)Aidtoresettlement (art.56)
3)Aidtoresearch(art.55)
a,"Steel
bjCoalc)Social
4)Aidtocokingcoal(art.95)
> /
:51.lireerestrebates
a)Art.54-Investment
b)Art.56-Redevelopment
i18
40
16
8
*
4
1 !– 1
18
33
18,5
8,1
5,9
4,5
4
6
131
ORDINARY RESOURCES
l)Levyyield
2)Interestoninvestmentsand
onloansfromnon-borrowed
funds
3)Miscellaneous !
I
I
4;Cancellation ofcommitments
whichwillnotnowbe
implemented63,8
10
0,266
11,8
0,2
6,5
74 !I34,5j74[84,5
1 _
OPERATIONS FINANCED WITHLOANS
FROMNON-BORROWED FUNDS
o)Mixedfundloans
(art.54sndart.56)
J)Specialreserveappropriation j
(workers'housing) <
')Transfertorenervos
___ I19,2
10I
10
19,2 !I .
ORIGINOFNON-BORROWED FUNDS J
5)Repaymentsonloansfor j
workers'housing
6)PartoftheformerECSC
pensionfuni
7)Contributions bytheacceding
StatestoSCSCreserves4,8 ,
5,2 'j
I
19,2jI
4,8
5,2
19,2

INITIALDRAFTOPTHEECSCOPERATINGBUDGETFOR1974(inMUA) ANNEXII
REQUIREMENTS
OPERATIONS TOBEFINANCED
FROMORDINARY RESOURCES
(NON-RECOVERABLE )
1)Administrative expenditure
2)Aidtoresettlement (art.56)
3)Aidtoresearch(art.55)
Steel
Coal
Social
4)Aidtocokingcoal(art.95)
5)Interestrebates
alArt„54-Investment
b)Art.56-Redevelopment
OPERATIONS FINANCED WITHLOANS
FROMNON-BORROWED FUNDS
6)Specialreserveappropriation
(workers'housing)Requests
0,45%
18
41
45
2b
13,5
7,5
5
20
12
12Q
10Proposai
0,301o
18
41
21,5
10
6,S
5
7,5
3
4,5
93
100.31$ RESOURCES
18
41
21,5
)10li
11
11
11
5,5
Α11ΟII
5 11.i9,89|
)3.95j
)5>j
α
95,3939|
3.95j
51#!
10ORDINARY RESOURCES
l)Levyyield
2)a-Interestoninvestments
andonloansfromnon-
borrowedfunds
b-Interestonacceding
States'contributions
3)Miscellaneous
4)Cancellation ofcommitments
whichwillnotnowbe
implemented
ORIGINOFNON-BORROKED FUNDS
5)Repaymentsonloansfor
workers'housing
6)PartoftheformerSCSC
pensionfundRequests
0,451oProposai
0,30%0,31%
1
J107,771,7■1i
74,09
12,412,412,4
3,33,33,3
0,10,1j
I0,1
5,5I
5,55,5
129
'Lîl95,39
j5,5:
5,5 15,5
4,54,5
,14,5