Opinion of the Economic and Social Committee on:

- the "Proposal for a Council Directive amending Directive 91/440/EEC on the development of the Community's railways",

- the "Proposal for a Council Directive amending Directive 95/18/EC on the licensing of railway undertakings", and

- the "Proposal for a Council Directive relating to the allocation of railway infrastructure capacity and the levying of charges for the use of railway infrastructure and safety certification"(1)

(1999/C 209/07)

On 19 October 1998 the Council decided to consult the Economic and Social Committee, under Article 71 of the Treaty establishing the European Community, on the above-mentioned proposals.

The Section for Transport, Energy, Infrastructure and the Information Society, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 19 May 1999. The rapporteur was Mr Decaillon.

At its 364th plenary session (meeting of 26 May 1999) the Committee adopted the following opinion by 80 votes to 15, with 14 abstentions.

1. Preliminary remarks

1.1. These proposals constitute a package of legislative measures and ideas on the use of rail infrastructure.

1.2. They should be viewed:

- in the context of all the different texts and proposals on rail transport;

- in the context of all the different texts and proposals on transport policy in general;

- in the context of all the different texts and proposals on services of general interest;

- in the wider context, given the special role played by transport in the matter, of the EU's approach to growth, competitiveness and employment, sustainable development and the enlargement process.

1.3. The proposals represent a step forward and will speed up the restructuring of Europe's railways.

1.4. The purpose of the proposals is to develop the single market further and provide for greater competition.

2. Summary of the Commission proposals

2.1. Amendment of Directive 91/440/EEC

2.1.1. The proposal requires that the accounts for the management of infrastructure be kept completely separate from the accounts for the operation of railway undertakings (profit and loss accounts and balance sheets). The keeping of these accounts must reflect the fact that it is forbidden to transfer public funds between these two areas of activity. In addition, the proposal requires the separation, in the organization of railway undertakings, of functions which could lead to discrimination with regard to the use of access rights.

2.1.2. The terms "railway undertaking" and "infrastructure manager" are defined more precisely. In particular, it is specified that:

a) the railway undertaking "must ensure traction";

b) the infrastructure manager can be any public or private body or undertaking.

2.1.3. "Bodies" or "undertakings" which are independent of transport service providers are to be given responsibility for safety rules.

2.1.4. Infrastructure managers must be independent of the state and enjoy managerial freedom; they must draw up their own "business plans".

2.1.5. Separate profit and loss accounts and balance sheets must be kept for passenger and freight transport services. Public funds paid to either of these activities must be shown separately and may not be transferred from one activity to the other.

2.1.6. There is to be a one-year deadline for the transposition of the directive into national law.

2.2. Amendment of Directive 95/18/EC

2.2.1. Channel Tunnel shuttle services and the transport of passengers on local stand-alone networks or by tram or light rail are to be excluded from the scope of the directive.

2.2.2. Licences for railway undertakings are to be issued by a state-designated body which itself does not provide rail transport services and is independent of all bodies providing such services.

2.2.3. The amendments to the directive do not seek to create new access or transit rights or alter the scope of Directive 91/440/EEC.

2.2.4. There is to be a one-year deadline for the transposition of the directive into national legislation.

2.3. Proposal for a directive replacing the provisions of Directive 95/19/EC

2.3.1. The directive is to apply to "main-line railway infrastructure used for domestic or international rail services."

2.3.2. It provides a number of conceptual and functional definitions and introduces new categories.

2.3.3. The directive defines the principles and rules governing allocation of capacity and the procedures for fixing and levying charges for the use of rail infrastructure, and specifies that the bodies responsible for allocating this capacity must be separate from integrated railway undertakings.

2.3.4. These principles, rules and procedures must enable the infrastructure manager to optimize the use of capacity and avoid all discrimination.

2.3.5. The directive calls for the separation of freight and passenger accounts.

2.3.6. Among the principles of charging, the directive mentions the concept of marginal social costs and the integration of external costs.

2.3.7. The directive delimits the role of the state and other public authorities in defining, consolidating and financing infrastructure, and in determining the principles of access and certification, safety rules, compensation systems for external costs and the scope of public service obligations.

2.3.8. The annex to the directive stipulates what "rail transport services" are to comprise.

2.3.9. The deadline for implementation of the directive is to be 1 January 2000.

3. General remarks on the package as a whole

3.1. The changes to the three directives (91/440, 95/18 and 95/19) represent a coherent package for fostering and speeding up the restructuring of Europe's rail system.

3.2. Bearing in mind:

- various studies relating to the transposition, application and effects of the three directives in the fifteen countries of the European Union (Directive 95/19/EC, for example, has only been transposed recently and even then not in all Member States),

- updated facts and figures about the rail and other transport sectors in the Member States, in the EU's partner countries (especially Norway and Switzerland) and in the countries seeking to accede to the EU in the near future,

- the rail networks' slowness and problems in adapting to developments in transport,

the Committee calls for a thorough review involving networks, transport operators, users and the social partners, which will allow the Member States to make an accurate assessment of:

- the current state of railway undertakings (financial rehabilitation, market shares, development potential, agreements, partnerships, cooperation, social conditions, bottlenecks, infrastructure projects, progress towards interoperability and multimodality, etc);

- the link which should be established between the initial effects of the three directives, the situation in the rail sector in the various Member States and at Union level and the new measures proposed by the Commission;

- the extent to which the guidelines set out in the Commission white paper/green papers have been applied, and their initial effect in relation to the objective of promoting a coherent and well-balanced global policy for the sustainable development of the whole of the transport system.

3.3. Using this review as its basis, the Commission should specify very clearly the objectives, likely results and foreseeable or estimated effects (in economic, commercial, financial social, organizational and functional terms) of its new proposals.

3.4. The Economic and Social Committee has pointed out on several occasions(2) that the restructuring, modernization and revival of rail transport, which is vital for its development and rehabilitation, is conditional on respect for a number of criteria, in particular:

- the need for gradual liberalization in stages;

- the specific nature of the transport market, which is intermodal and can therefore only be dealt with globally; this supposes the restoration of balance and harmonization of the terms of competition between modes, especially as regards economic, social, working and safety conditions;

- transport's blend of market and non-market aspects, in particular the role played by rail transport in providing services of general interest, and the major distinctions between modes with regard to the generation of external costs and transport safety;

- the need to develop trans-European networks(3), to promote infrastructure of Community interest and to increase rail's share of combined transport;

- the fact that by being networks the railways form a highly developed structure, which plays a decisive part in integration and in strengthening economic and social cohesion. This is true not only of the European Union but also of the candidate countries. A detailed analysis should therefore be made of the relations between enlargement and the liberalization of the railways.

4. Specific remarks

4.1. The method

4.1.1. The Economic and Social Committee calls for the previous directives to be transposed in full by all Member States. Introducing changes prior to the transportation of these directives may well create general legal, regulatory, institutional and organizational uncertainty, which will be detrimental to the restructuring and revival of the railways and to cooperation between railway undertakings.

4.1.2. The extremely detailed, highly complex and often obscure nature of the very precise and binding provisions of the third proposal, for a directive on infrastructure charges, on the one hand, and the numerous questions left unanswered by the proposal's very general objectives, scope and concepts, on the other hand, could be a source of contradiction, ambiguity and confusion and are likely to result in:

- widely varying interpretations,

- major difficulties with regard to transposition and application, as numerous Committee opinions have pointed out(4).

4.1.3. As a result, the new Commission proposals are in grave danger of conflicting with the principles of progressivity, coherence and equilibrium between modes - principles which the ESC has expounded in numerous opinions(5).

4.2. Content

4.2.1. Certain new categories and concepts proposed by the Commission should be justified and explained in more detail so that interpretations do not differ unduly. This is one of the main points to emerge from the various hearings held by the Committee. The following are the main issues involved:

- the definition, status and functions of "authorized applicants", a matter which raises numerous questions on the part of rail operators, workers' representatives and rail users' representatives;

- the definition and scope of "rail services", which by their very nature and in accordance with the objectives set in the white paper and green papers are a highly evolutive concept, both in time and in space, and should not therefore be defined too narrowly or irreversibly;

- the links between the different organizational, regulatory and operating bodies in rail transport and their precise tasks, in particular as regards the definition, implementation and monitoring of safety standards;

- the definition, allocation procedures, transparency, responsibility, and monitoring of "compensation" mechanisms and justifications;

- the more cumbersome instruments, mechanisms, bodies, tasks and forms of organization which may be imposed by the Commission's proposals and which would undermine the declared objectives by making the railways more complex, more opaque and more bureaucratic at Member State level and even more so at Union level.

4.2.2. The rules governing the allocation of train paths and the reservation procedures and charging methods proposed by the Commission should be made clearer and simpler and should more closely reflect the situation in the different rail networks and the principle of subsidiarity.

4.2.3. As they stand at present, the Commission proposals seem to be highly prescriptive and all-embracing and resemble an attempt at unification (which is more the task of a Community regulation) rather than an attempt at harmonization or approximation (which is what a directive sets out to achieve).

4.2.4. As most of the evidence taken at the hearings underlined, the Commission proposals face a number of difficulties:

a) their transposition into Member State legislation;

b) their compatibility with

- the flexibility needed to cope with the segmentation, complexity and trends in demand, the necessary revival and adaptation of various rail services, the twin commercial and public service demands facing railway undertakings, and the need to develop cooperation and partnership at European level,

- the managerial independence of railway undertakings and infrastructure managers, both of whom have been given responsibilities of their own;

- the structural differences between rail networks, in the light of their state and development potential and their geography (peripheral, strictly continental or transit countries);

- the scope and content of the various national transport policies and the authorities determining these policies.

4.2.5. The charging system proposed by the Commission poses special problems. Applying marginal cost charging to the use of rail infrastructure may improve the rail market but will not in itself lead to the optimization of the transport market or other markets, especially as the Commission proposals are aimed at only a part of the infrastructure, that is the "main-line railway infrastructure used for domestic or international rail services". However, the rail system is the sum of all the infrastructure, just as transport as a whole encompasses all modes.

However, the imperfections of the proposed system must not provide a pretext for doing nothing and halt efforts to improve the allocation of rail infrastructure as well as road, port, waterway or even air infrastructure.

4.2.6. There are also other more practical difficulties which make the system proposed by the Commission very difficult to apply in all Member States:

- marginal cost charging is a short-term instrument, which is not designed to incorporate the cost of developing infrastructure in the cost of use or to take account of investment and its funding;

- rail transport has high fixed costs, but its variable costs rise relatively slowly in line with the use made of the fixed installations. The marginal cost for the use of rail infrastructure is therefore relatively low, especially if there is a large stock of infrastructure. The breakdown between fixed costs and the costs involved in using infrastructure therefore varies considerably from mode to mode and creates major distortions of competition.

4.2.7. The hearings revealed certain concerns about the effects of the new Commission proposals, especially on the part of railway undertakings and trade unions:

- the risk of the best routes being "creamed off" for the new authorized applicants;

- "distorted competition" between commercial and public service requirements;

- the risk of the role and functions of the networks being cut back to a point where only traction is provided, at a time when the function of transport organizer is growing in importance;

- the fear that the separation of passenger (main-line and local) and freight accounts will automatically lead to a structural split in activities.

5. Conclusions

5.1. The Economic and Social Committee, drawing heavily on its previous opinions, the results of its hearings and other contributions which it has received, thinks:

- that there is an urgent need to modernize, revitalize and harmonize the activities and management of rail networks by means of:

- the better allocation and use of existing infrastructure and the infrastructure required to build proper trans-European networks,

- the improvement of the railways' position on the market and of their commercial and financial situation,

- greater cooperation between railway undertakings and between railway undertakings and other transport operators (waterway, road, air and sea),

- greater flexibility and transparency and a better service for users and shippers,

- more sustainable development of transport systems (internalization of the external costs incurred by the different modes, and consolidation and development of combined transport),

- more harmonization of the conditions of competition between modes, especially as regards social, working and safety conditions,

- and that the Commission should:

- present a prospective step-by-step assessment of the likely economic, commercial, financial and social impact of the new directives,

- provide better definitions of certain proposed concepts, tasks, structures and responsibilities, and of the interrelations between the various players involved in the railways,

- base all of its proposals more on the objective facts with regard to the railways as well as the progress made and the results obtained,

- simplify its charging system, its system for allocating infrastructure capacity, its management, regulatory and arbitration systems and its system for checking safety and punishing infringements.

Brussels, 26 May 1999.

The President

of the Economic and Social Committee

Beatrice RANGONI MACHIAVELLI

(1) OJ C 321, 20.10.1998, p. 6, 8, 10.

(2) See the ESC opinions on railway licensing (OJ C 393, 31.12.1994), the development of the Community's railways (OJ C 153, 28.5.1996, p. 16) and a strategy for revitalizing the Community's railways (OJ C 206, 7.7.1997, p. 23).

(3) See the ESC opinion on trans-European rail freight freeways (OJ C 95, 30.3.1998, p. 21).

(4) See the ESC opinions on fair payment for infrastructure use (OJ C 101, 12.4.1999) and on a strategy for revitalizing the Community's railways (OJ C 206, 7.7.1997, p. 23).

(5) See the ESC opinions on fair payment for infrastructure use (OJ C 101, 12.4.1999) and on a strategy for revitalizing the Community's railways (OJ C 206, 7.7.1997, p. 23).