Opinion of the Economic and Social Committee on the 'Proposal for a Council Decision setting up a consultation procedure on relations between Member States and third countries in shipping matters and on action relating to such matters in international organizations and an authorization procedure for agreements concerning maritime transport` () (97/C 355/07)

On 6 May 1997 the Council decided to consult the Economic and Social Committee, under Article 84 (2) of the Treaty establishing the European Community, on the above-mentioned proposal.

The Section for Transport and Communications, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 10 September 1997. The rapporteur was Dr Bredima-Savopoulou.

At its 348th plenary session (meeting of 1 October 1997), the Economic and Social Committee adopted the following opinion by 85 votes for, one vote against and three abstentions.

1. Introduction

On 14 March 1997 the European Commission published the communication on external relations in the field of maritime transport which the Council of Transport Ministers had repeatedly requested (19-20/6/1995, 16/12/1996). This communication aims for a global external maritime policy for the EU, ten years after the adoption of the package of maritime regulations in 1986. It is a follow-up to the communication of March 1996 on a new maritime strategy, which identified the external dimension of maritime policy as a vital sector for future action.

2. Main points of the communication

2.1. Objectives

The central aim of the EU's external action in the shipping sector is to further the Community's maritime and commercial interests by ensuring free access and conditions of fair competition in the world market.

The general objectives of the communication are to:

- consolidate developments towards liberalization (bilaterally and multilaterally) through consultations and negotiations, and obtain further rollback of existing restrictions;

- address specific problems arising with non-member countries, particularly as regards market access;

- address unfair competition and sub-standard shipping arising (mainly but not exclusively) from open registers;

- develop an integrated European transport system for the transition of central and eastern European countries to the market economy with a view to their forthcoming accession.

In the long term (after the year 2000) the above aims will be achieved through the WTO (World Trade Organization), but in the meantime all possible instruments and negotiations will be used to achieve them.

The communication translates the general objectives of the policy into specific objectives in the light of developments in the shipping market, lays down the procedures for Community action, defines the basic components of external Community action, and proposes Community rules to supplement the existing rules.

2.2. Means of action

To achieve the above objectives, the EU has the following means of action at its disposal:

- preemptive action (agreements with third countries, multilateral and bilateral consultations);

- tackling problems which arise from restrictive measures imposed by third countries (démarches, consultations);

- securing fair competitive conditions (action to combat unfair advantages enjoyed by foreign shipowners and ensure compliance with international rules and standards);

- cooperative activities (assistance to third countries).

The Commission takes the view that the present international framework is favourable to such actions. Defensive measures are a last resort, if consultations and negotiations do not bear fruit. Up to now Community practice has followed the above approach.

2.3. Basic components of external Community action

The basic components of external Community action are as follows:

- further development of relations with third countries through:

Community agreements with third countries and consultation procedures;

action to tackle problems arising from restrictive or discriminatory measures imposed by third countries;

action to secure fair competition on a commercial basis;

cooperative actions and technical assistance to third countries;

- development of cooperation in the shipping sector as part of the global approach to transport in Europe (including central and eastern Europe);

- strengthening the role of the EU in the relevant international organizations, and negotiating on behalf of the EU within these organizations (in accordance with Community procedures) in order to consolidate positive developments in shipping policy and the roll-back of existing restrictions.

2.4. Annexes

The communication has four annexes:

2.4.1. Annex I

This annex covers the scope of external action, specific actions and proposals. Within this framework, particular emphasis is placed on consultations, agreements and cooperation; as a last resort, defensive measures are foreseen.

2.4.2. Annex II

This annex contains a proposal for a Council decision to replace Decision 77/587/EEC (). The proposed Council decision would replace the consultation procedure under the former decision with a view to coherence in the actions of the EU and Member States in relations with third countries and the pursuit of Community aims in discussions or negotiations in international bodies. The proposed decision also provides for a consultation and authorization procedure for agreements concerning the maritime relations of Member States with third countries.

2.4.3. Annex III

This annex gives a summary of existing Community legislation and a brief survey of policy initiatives in external maritime relations to date.

2.4.4. Annex IV

This annex comprises a detailed review of the development of maritime relations between the EU and third countries up to the present day.

3. General comments

3.1. Basic objective of external action

3.1.1. The present communication stresses the importance of Community shipping for the EU. For the sake of its exports/imports, and for the sake of its own shipping industry, but also of employment on ships and in ancillary activities, a world shipping market without restrictions is in the EU's interest. To that end, the communication on the new maritime strategy describes external action in the shipping sector as one of the three pillars of shipping policy, the other two pillars being the competitiveness of the Community fleet and safety at sea.

3.1.2. The favourable prospects for world shipping, arising from the continuing growth in world trade and commercial possibilities, have already been stressed in the Communication on a new maritime strategy () and are reaffirmed in the present communication. According to forecasts by the OECD and others, the volume of world seaborne trade will double by the year 2010. It is clear that further liberalization and the maintenance of open maritime markets for the EU are an urgent necessity.

3.1.3. However, given the present structure of world trade and operating conditions of shipping markets, a Community vessel faces considerable problems of access to internationally transported cargoes, while its competitiveness has been eroded.

3.1.4. In view of the above, the ESC agrees entirely with the basic objective of the communication, namely the liberalization of maritime transport. The Committee shares the purposes and objective aims of Community policy in the field of external relations, which should seek to improve the terms of access to third country markets for the Community shipping industry and to create new opportunities for enterprise and jobs both at sea and in ancillary activities ashore.

3.1.5. In a series of opinions, the ESC has unreservedly supported this aim:

- two opinions () and a report on the first stage of the common shipping policy;

- opinion on positive measures for maritime transport ();

- opinion on the new maritime strategy ().

3.1.6. The proposed policy supplementing earlier initiatives to promote policy measures on the two other pillars mentioned above, accompanied by the correct, strict application by Port States (Port State Control) of the international standards laid down in IMO (International Maritime Organization) and ILO (International Labour Organization) conventions, and vocational training in line with international requirements, will act to the benefit of European shipping. It will, in particular, make a decisive contribution to establishing and maintaining an environment of free and fair competition, which is necessary for the development of European shipping.

3.2. Role of the European Union in international organizations

3.2.1. The ESC agrees with the principle that the European Union has sought to play an important role in international organizations. However, it would point out that the decision in force (77/587/EEC) which lays down the consultation procedure has not so far operated as a restraining factor, at least for a number of issues where the EU already has exclusive competence. Yet this also applies to issues for which there is a shared competence between the EU and the Member States.

3.2.2. The present communication inevitably examines the legal problem of the EU's external competence. The European Court of Justice (ECJ) has already given a series of rulings on the subject (). Despite these rulings, the dividing line between exclusive competence of the European Union, competence shared with the Member States and exclusive competence of the Member States continues to be indistinct. However, there is no doubt that in all the above cases the Member States and the Commission should cooperate closely to define their positions. This is underlined by the above rulings of the ECJ; also relevant is the ESC opinion on relations between the EU and the ILO ().

3.2.3. The communication states explicitly that it does not cover the sectors of activity of the IMO and the ILO. Coordination of positions on safety and technical aspects of shipping in the IMO/ILO context is covered by the communication on a common policy on safe seas (1993) on which the ESC issued an extensive opinion ().

3.2.4. The ESC is cautious about the arguments put forward in the communication to justify the proposals for strengthening the EU's role in international organizations through expressing the Community position with a single voice. The EU ought indeed to play a role which befits one of the largest political, economic, commercial and maritime powers in the world. However, what is important for achieving this aim is the way in which the Community position is coordinated and formulated, and the way in which it is expressed in each case, regardless of whether it is expressed with one voice (especially on subjects where the EU does not have exclusive competence). In this context, it is particularly important to improve and strengthen the current consultation system in order to ensure regular, timely information for Member States and full transparency in any steps and initiatives taken under each negotiating mandate, instead of creating new mechanisms. It is equally important that the experience of the individual Member States be put to full use. Moreover, when votes are taken it is certainly more useful to have a total of 15 individual votes than just one collective vote.

3.2.5. The communication maintains that after the year 2000 the basic vehicle for ensuring market access will be the WTO. It appears to ignore the reasons which led to the suspension until 2000 of negotiations in the WTO's Negotiating Group on Maritime Transport Services for commitments which would lead to the elimination of restrictive measures in the maritime services sector. It was due to the fears of the shipping community that such an action would benefit other sectors at the expense of shipping (through trade-offs) and would not achieve further liberalization of maritime transport, but would on the contrary serve to justify existing laws or practices of a protectionist character. At all events, when negotiations are resumed, the basic principles of a standstill on new restrictive measures and of rollback of existing ones must apply, together with the unreserved application of the Most Favoured Nation (MFN) clause by a maximum number ('critical mass`) of states.

3.3. The EU's bilateral maritime agreements

3.3.1. The ESC has no objection to the conclusion of bilateral shipping agreements by the EU subject to authorization by the Council, nor to the inclusion of shipping clauses in other types of agreements which the EU concludes from time to time. However, the conclusion of bilateral shipping agreements will take place under ad hoc authorization, on the basis of a specific negotiating mandate and after the necessary prior consultations have taken place between the European Commission, the Member States and the shipping industry. There will also have to be transparency and full information for all interested parties at all stages of the negotiation.

3.3.2. In its opinion on progress towards a common transport policy - maritime transport (), the ESC thought it useful for maritime clauses on non-discrimination to be included in the EU's trade agreements with third countries. Characteristically, it had proposed that the following article be included in what later became Regulation 4058/86:

'When negotiating trade or other agreements with third countries or groups of countries, the Community shall seek the inclusion of a non-discriminatory provision safeguarding the access of vessels registered in Member States in shipping trades between Member States and the countries in question. In particular, the provision shall include undertakings by the contracting parties not to engage in flag discrimination or cargo reservation.`

3.3.3. It should also be stressed that in its opinion on the new maritime strategy the ESC expressed reservations about the Commission's proposal to begin bilateral shipping negotiations. It stated: 'It should be ensured that the Commission's activity in this area does not conflict with its declared commitment to multilateralism and at the same time supports the efforts of the Member States.`

3.3.4. The ESC regards as positive the approach adopted by the European Commission to solving various shipping problems. It also shares the Commission's view that defensive measures must be seen as a last resort should attempts to find mutually acceptable solutions fail. More generally, the ESC believes that priority must be given to investigating and solving shipping problems through close cooperation between the European Union, the Member States and the shipping industry.

3.3.5. As regards ways of achieving the aims of Community policy, the ESC agrees with the proposed initiatives. However, aid to third countries should concentrate on vocational training and improving technical infrastructure, especially ports and combined transport, rather than going directly to their shipping industry (e.g. financing for acquisition of ships), as the latter would distort conditions of competition. Moreover, the yardstick for provision of aid must be to improve the operating conditions of Community shipping as a whole and not just of the liner shipping sector as stated in the communication. As regards multilateral negotiations under the aegis of the WTO, the ESC agrees that in the interim period until 2000 the European Union must seek further liberalization of international trade through bilateral or other agreements. Moreover, the further liberalization of maritime transport will have to be made a condition for the granting of technical assistance. This tactic is already being used successfully by the World Bank and the European Commission in relations with the countries of West Africa. The recent report by the European Commission on proposed measures to be taken in the European Union's relations with the countries of West Africa also contains similar positive elements.

3.3.6. The above also applies to the inclusion of shipping clauses in other types of agreement concluded by the European Union. In the relevant negotiations there must not be trade-offs at the expense of the shipping industry, and an effort must be made to ensure that substantive shipping provisions are included, instead of leaving the regulation of shipping matters to a future specific agreement or to a simple exchange of letters.

3.4. The Member States' bilateral maritime agreements

3.4.1. The ESC thinks in principle that the Member States are entitled to conclude bilateral shipping agreements with third countries as long as their content does not include matters which are regulated by Community acts. Besides Regulation 4055/86 does not prohibit Member States from concluding bilateral agreements, provided that their content does not conflict with the Regulation and especially with the provisions which forbid cargo-sharing. The entire procedure for granting authorization and negotiating an agreement will need to be transparent, and more flexible so as to reduce red tape to a minimum, taking account of the sovereign rights of Member States. It must be pointed out that in many cases the initiatives are those of the non-Member State, while the shipping policy which a state develops and pursues forms part of its more general policy on relations with third countries.

3.5. Revision of Regulations 4057/86 and 4058/86

3.5.1. The communication proposes a revision of Regulations 4057/86 and 4058/86 (). However, these regulations - which from part of the package of four regulations in the first stage of the common shipping policy - are a product of compromises between the Member States and of very delicate balances which would be disturbed if the package were opened up. Pending cases call for strict application of the regulations and not for their revision.

3.5.2. Characteristically and very recently, the ESC () urged 'caution in any proposed revision of the 1986 package of regulations. There is a danger that their careful balance of compromises and concessions which has contributed to the process of trade liberalization both through direct application and by acting as a deterrent could be undermined in this process. A more rigorous application of the instruments might be a more appropriate course`.

3.5.3. It is not advisable for any revision of Regulation 4058/86 to precede the results of the consultations and negotiations in the WTO context to regulate the procedure for imposition of counter-measures.

3.5.4. As regards Regulation 4055/86 (), what is most urgently needed is to re-examine pending issues concerning the fate of existing bilateral agreements on cargo-sharing, concluded between certain Member States and third countries. Leaving aside the question of possible authorization of the Commission to conclude ad hoc bilateral Community agreements, existing agreements on cargo-sharing should be adapted or phased out in accordance with the requirements and obligations arising from Regulation 4055/86 which, as is rightly stated elsewhere in the Communication, also authorizes the Member States to renegotiate such agreements.

4. Specific comments

4.1. Draft decision to replace Decision 77/587/EEC

4.1.1. The ESC notes that amendment of Decision 77/587/EEC is a firm objective of the Commission. As early as 1985, with the Memorandum on progress towards a common transport policy - maritime transport, the Commission had proposed amending Decision 77/587/EEC so that ex ante consultations could be held on the conclusion of bilateral agreements between Member States and third countries, given that Decision 77/587/EEC concerned a posteriori consultations. In its relevant opinion of 1985, the ESC agreed with ex ante consultation, but stressed the need to prevent the new procedure being abused with a view to avoiding delays in concluding bilateral agreements. In a Reflection Paper of 1993 on external relations in maritime transport, the Commission once again proposed amendment of Decision 77/587/EEC.

4.1.2. Chronologically, Decision 77/587/EEC was the first act of the EC Council of Ministers to have Article 84(2) (on maritime transport) as its legal basis. The ESC agrees with the principle of the proposed draft decision to replace Decision 77/587/EEC. In this context, bureaucratic, time-consuming procedures such as those contained in the proposed draft decision, must be avoided: they do not contribute to the rapid resolution of problems as they arise. Indeed, in certain cases, they could give third countries a distorted image of the EU's capacity to coordinate its efforts and respond to usually rapidly changing circumstances during negotiations. However, for the EU better to fulfil its mission it is essential to improve the consultation and coordination procedure. The proposed committee should operate not under the authority of the European Commission but as a Council body under the presidency of the Member State currently holding the Council presidency. This position flows from the fact that there is a wide range of subjects - both at bilateral level and at international organization level - which do not come under the exclusive competence of the EU. Moreover, the Treaty itself, because of the special characteristics of maritime transport, makes it subject to Article 84(2). A similar precedent regarding the conclusion of bilateral agreements operates successfully in the field of air transport.

4.1.3. The outcome of the recent Intergovernmental Conference on the revision of the EU Treaty fully bears out the ESC's positions, as above, concerning the need for the committee (provided under Article 6 of the proposed decision) to function as a Council body. The Conference did not approve the extension of Treaty Article 113 to the services sector (which includes shipping services) because, in parts, it covers many issues which do not come under the exclusive competence of the EU.

Moreover, when examining its negotiating instructions to the conclusion of bilateral shipping agreements between the EU and China and India, the Council takes account of the procedures used in concluding agreements in the air transport sector. These procedures fit in with the ESC's proposals set out above.

Brussels, 1 October 1997.

The President of the Economic and Social Committee

Tom JENKINS

() OJ C 113, 11. 4. 1997, p. 11.

() Decision 77/587/EEC setting up a consultation procedure on relations between Member States and third countries in shipping matters and on action relating to such matters in international organizations (OJ L 239, 17. 9. 1977, p. 23).

() COM(96) 81 final - ESC Opinion OJ C 56, 24. 2. 1997, p. 9.

() OJ C 344, 31. 12. 1985, p. 31 and OJ C 189, 28. 7. 1986, p. 20.

() OJ C 56, 7. 3. 1990.

() In Case No 22/70 ERTA (Commission versus Council (1971), Reports of Cases 263) the ECJ decided that insofar as the EC lays down common internal rules, it is also competent in the field of external negotiations which can influence those common rules. In Opinion No 1/76 (on the Agreement on a European fund for decommissioning inland waterway vessels, 1976 Reports of Cases), it ruled that if the EC has internal competence to achieve a specific objective, it consequently has exclusive external competence for the matter in question, insofar as such external competence is necessary for achieving that objective. The ECJ's opinion 1/94 tends in the same direction, stating that in the event of shared competence for external negotiations there is an obligation to cooperate closely with the Member States in order to define their position.

() OJ C 102, 24. 4. 1995, p. 7.

() OJ C 34, 2. 2. 1994, p. 47.

() OJ C 207, 18. 8. 1986, p. 31.

() Regulation No 4057/86 on unfair pricing practices in maritime transport (OJ L 378, 31. 12. 1986, p. 14 - ESC Opinion: OJ C 344, 31. 12. 1985, p. 31); Regulation No 4058/86 on coordinated action to safeguard free access to cargoes in ocean trades (OJ L 378, 31. 12. 1986, p. 21 - ESC Opinion: OJ C 344, 31. 12. 1985, p. 31).

() Opinion on a new maritime strategy, OJ C 56, 24. 2. 1997, § 6.2.3.

() Regulation 4055/86 applying the principle of freedom to provide services to maritime transport between Member States and between Member States and third countries (OJ L 378, 31. 12. 1986, p. 1 - ESC Opinion: OJ C 344, 31. 12. 1985, p. 31).