EXPLANATORY MEMORANDUM

1.CONTEXT OF THE PROPOSAL

•Reasons for and objectives of the proposal

On the subject matter

The border regions of Italy and Switzerland are closely integrated. Many Italians commute to work in Switzerland and vice versa and there is vibrant cross-border passenger traffic by road. A number of bus and coach services are offered which cross the border and thus connect the border regions of the two countries.

The two-way carriage of passengers and goods by road between Switzerland and the EU is regulated by the Land Transport Agreement between the EU and Switzerland (hereinafter 'EU Agreement').

According to Article 20(1) of the EU Agreement, "[t]ransport between two points situated on the territory of the same Contracting Party by carriers established in the territory of the other Contracting Party are not authorised under this Agreement". This means that the carriers operating the passenger services which cross the border can only carry passengers across the border or within the territory of the Contracting Party they are established in. Bus and coach operators established in Switzerland may not carry passengers between two points on the Italian side of the border and operators established in the EU may not carry passengers between two points on the Swiss side of the border.

Article 20(2) of the EU Agreement allows pre-existing rights under bilateral agreements concluded between individual EU Member States and Switzerland that were in force at the time of conclusion of the EU Agreement to continue to be exercised, provided there is no discrimination between EU carriers and no distortion of competition. Cabotage in passenger transport by coach and bus may thus be possible in relations with Switzerland in case an agreement between an EU Member State and Switzerland in force on 21 June 1999 had foreseen this. In practice, none of the relevant bilateral agreements between Member States and Switzerland that were in force at that time did foresee cabotage rights for passenger transport by coach and bus.

By letter dated 7 February 2018, Italy informed the Commission that it would like to negotiate and conclude an agreement with Switzerland which authorises cabotage operations during the provision of international passenger transport services by coach and bus in the border regions between the two countries. In the June 2018 meeting of the EU-Switzerland Inland Transport Committee, established by the EU Agreement, Switzerland informed the Commission that it was also interested in concluding such an agreement.

Cabotage in passenger transport by coach and bus can improve the efficiency of transport operations as it allows increasing the load factor of the vehicle. The EU is therefore generally favourable to the opening of the cabotage market, as it has done inside the EU in line with Regulation (EC) No 1073/2009 on common rules for access to the international market for coach and bus services (hereinafter 'Regulation (EC) No 1073/2009'). The authorisation of cabotage operations in the context of the provision of international passenger transport services by coach and bus in the border regions between Italy and Switzerland would allow the carriers involved to become more competitive and efficient.

On the EU competence

Article 3(2) of the Treaty on the Functioning of the European Union (TFEU) establishes that "[t]he Union shall also have exclusive competence for the conclusion of an international agreement when its conclusion is provided for in a legislative act of the Union or is necessary to enable the Union to exercise its internal competence, or in so far as its conclusion may affect common rules or alter their scope".

Under Regulation (EC) No 1073/2009, cabotage operations within the Union may be conducted, under certain conditions, exclusively by carriers holding a Community licence. International commitments permitting other carriers, in particular carriers from third countries, to conduct such operations affect the above mentioned Regulation, within the meaning of Article 3(2) TFEU.

Furthermore, such international commitments also affect the EU Agreement, in particular its Article 20. They are not authorised by paragraph 1 of that Article, except as set out in its paragraph 2.

Consequently, commitments such as those intended by Italy fall within the scope of the Union's exclusive competence. However, in accordance with Article 2(1) TFEU, the Union may empower Member States to act in areas where it has exclusive competence.

The aim of this proposal is to empower Italy to negotiate and conclude an agreement with Switzerland that would authorise cabotage operations in the provision of cross-border road passenger transport services by bus and coach in the respective border regions of the two countries.

On the procedure

Cabotage operations within the Union by third country carriers, not holding a Community licence in accordance with Regulation (EC) No 1073/2009, affect the functioning of the internal market for coach and bus services, as established by the Union legislator through Regulation (EC) No 1073/2009. It is therefore necessary that any empowerment under Article 2(1) TFEU be granted by the Union legislator, in accordance with the legislative procedure referred to in Article 91 TFEU.