ARCHIVESHISTORIQUES
DELACOMMISSION
COLLECTION RELIEEDES
DOCUMENTS "COM"
COM(80)586
Vol.1980/0186

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COMMISSION OFTHEEUROPEAN COMMUNITIES
!
COM(80)586final
Brussels.6October1980
STEEL
(RequestfortheCouncil'sassenttotheestablishment ofa
systemofproductionquotasforthesteelindustry)
C0M(80)586final

L
INTRODUCTION
Since June ,particularly attheCouncil meeting inJuly ,the
Commission hasbeen warning theCounoil about thedeterioration ofthe
situation intheiron andsteel industiy .
Three sets offactors have affected theEuropean iron and steel
industry inrecent months ! '
(i)demand hasdropped alarmingly since theendofthesecond quarter ;
(ii)thecorresponding drop inproduction andprices hasledtoa
deterioration inthefirms' financial situation ; .* ,
(iii)thecrisis measures introduced in1977 pursuant toArtiole 57are
nolonger operative ,atleast intheimmediate future *
Unless Community action istaken ,thesituation will continue to
worsen toapoint where certain firms would soon bethreatened andemployment
would soon bejeopardized throughout the sector above andbeyond what is
required byrestructuring *
TheCommission therefore finds that theconditions forapplying
Article 58aresatisfied anditmust ,asaresult ,askfortheCouncil 's
assent totheestablishment ofasystem ofproduction quotas forthe steel
industry® N
This decision must betaken urgently ,firstly toensure that supply
istosome extent adjusted tothedemand onthemarket and ,secondly ,to
support producers' efforts -tore-establish the conditions inwhich thecrisis
measures canonce again operate * ,
Ifmeasures ofthis type aretosucceed ,they need tobesimple ,
quick ,vigorous andshortlived .They will undoubtedly have toachieve their
objectives by30June 1981 *

I.Deterioration oftheeconomic andsocial situation in "theEuropean
steel industry
Demand forsteel hasdropped sharply since thebeginning ofthe
summer ,leading toanoverall drop inproduction varying from product to
product .Therates ofutilization have consequently dropped tothelowest
levels ever recorded intheCommunity .This trend hasteen accompanied by
anincreasingly marked failure tokeep todeliveiy programmes .Theoutcome
hasbeen analarming fall inprices which ,together with thesharp increase
inproduction costs ,hasledtoadeterioration inthefirms' financial
situation .
(a)Reduction indemand
There hasbeen areduction indemand onboth theCommunity and
world markets .
The reduction indemand onthe internal market isdue tothe
downturn intheeconomy#
According totheCommission 'smonthly business survey ,the
production forecasts forthemain steel-using sectors show adistinct
downward trend .
Thefollowing table indicates theextent towhich theunfavourable
replies concerning future production outweigh thefavourable ones .
April May June July
Structural steelwork I -4 -6 -3 -13
Mechanical engineering +4 -2 -9 -14
Electrical engineering +11 .'-1 -6
Motor vehicles andparts 0 -6 -12 -34

-3-
Furtherevidenceof"theredactionindemandisprovidedbytherapid
growthinthestocksofsteel.Comparisonbetweenthesupplyofsteel
andtheutilization thereofshowsanincreaseinstocksofmorethan
3milliontonnesinthefirstsixmonthsof1980(thisquantityis
nowhavinganadverseeffectonthewholesteelmarket). '
!.
Therehasbeenasubstantial dropindemandontheworldmarketbecauseof
theeconomicdownturninalargenumberofsteel-importing countries.-
Thisreductionindemandontheworldmarkethasbeenincreasingly
intensified bythealmosttotaldisappearance ofpurchasesbydeveloping
countriesbecauseofthefinancialdifficulties causedbytheincreased
energyprices.Thistrendisreflectedinthenewordersrecordedbythe
CommunitysteelindustrybothfromtheotherCommunitycountriesand
fromnon-membercountries.
Thefollowingtablecomparesthecurrentsituationwiththecorresponding
monthsfor1979»whichwasitselfafairlypooryear.
Ordersrecorded
1
1-Prom
theEECFrom
non-member
countriesTotal
IMay-14.3$-15.1%-14.5/o
IJune-13.6/0-11.1#-13.0$
IJuly-18.51»-8.5#-16.3$[
Thereductionindemandforflatproductswasparticularly pronounced;
forsometimetherehasalsobeenasharpdropindemandforlongproducts.
ThistrendisreflectedintheCommunity'scrudesteelproduction;
inJuneitwasslightlyhigherthanin1979itherewasadropofHin

-4-
July andofabout 12$inAugust ,compared ,with thesame months in
1979 .Thedrop forSeptember canbeestimated atmore than 14$.
(b)Drop intherates ofutilization
Thesteel industry 'ssurvey ofcrude steel production programmes shows
reductions inthefourth quarter of1980 inalarge number ofundertakings
ofmore than 20% incomparison with thefourth quarter of1979 .
Thisdecline affeSxSySnSlsl'takings located inthetraditional
steel areas .
This drop inproduction has ledtoasubsequent reduction intherates
ofutilization .Therate ofutilization -still ashigh as70$inthe
first quarter of1980-fell toabout 58$after thesummer holidays .
Themore pronounced drop expected inthefourthsuarter will lead toa
subsequent drop inthis rate ofutilization .Insome undertakings the
rate ofutilization isalready lower than 50$ «However ,inother
undertakings ,there hasbeen some increase inproduction .
Adivergent trend inutilization rates onamarket "onwhioh theproduction
required tocover requirements isdropping results inalarge number of
undertakings having tomake sacrifices greater than those which would
result from afair burden-sharing policy .Ofcourse ,fair burden -
sharing presupposes that therestructuring measures canbetaken into
account andthat theactual situation oftheundertakings isnot
falsified bypublic aids which donotcomply with theaidcode .
IntheUnited States ,where therate ofutilization hasalso fallen to
alevel ofaround 50$ *arecovery hasstarted byreason ofacertain
improvement intheinternal economy .Therate ofutilization ofthe
Japanese steel mills remains atasatisfactory level ofaround 75$*

-5-
(c)I3niT>loymentconsequences
Thedropinemploymenthasresultedinarapidincreaseinshort-time
working.Theinformationreceivedfromanumberoffirms,especiallythose
locatedinregions ,whereconsiderablerestructuring isalreadytakingplace,
showsthatshort-timeworkinghasincreasedsignificantly .
Thepersistentworseningofthefinancialsituationisforcingfirmsto
departfromtheirlong-termjob-management programmesandtoinitiate
earlyredundancies .
Thepresentdisorder^makesitimpossibletoworkoutaconsistentpolicy.
Asaresult,Communityste^lworkers areagainuncertainoftheirfuture,
thoughtheobjectiveofrestructuringistorecreatestabilityintheindustry
Inthiscontext,thevariousconversioneffortsneededcannotbeimplemented
aseffectively asisrequired.
(d)Consequences asregardsfirms'financialsituation
Withregardtoprices,therewasacertainamountofstabilityatthe
beginningof1980.Sincethen,thesituationhasworsened,although
fairlyslowlytostartwith.Thefallindemandmentionedaboveandthe
failuretokeeptothedeliveryprogrammeshavecausedafallinprices;in
Septemberthisfallwasroughly13%onaveragecomparedwithpricesatthe
beginningoftheyear.
I;
■ ___. • ».)xi-ActualpricesforsheetshowareductionofDM250*incomparisonwiththe
guidancepricesforcoilsDM140,forconcretereinforcingbarsDM100and
^formerchantbarsDM120.
Ontheother',handmostofthefactorsofproduction
/haveals$>increasedinprice;thisisparticularly true
ofores,coke,certainalloys,labourandoverheads.Theaveragerateof
increaseincoststhroughouttheCommunityis20%forironore,30$forfuel
oilandmorethan10$forelectricity.Theresultisthatproductioncosts
havegoneuponaveragebyabout5%in"theCommunitysincethestartof1980,
"FiguresareexpressedinCM.asisthecustomonthesteelmarket*

-6-
takingintoaccount "theriseinfixedcostsdueto"thereductionin
utilization rates.
Thefallinpricesandtheincreaseincostshasmeantthatthefinancial
situationofsteelfirmshaschangedconsiderably .Atthe"beginningofthe
year,firmsofaveragecompetitiveness wereabletocoverproductioncosts
withthepricestheychargedforsteelproducts,"but,nowsteelfirmsare
losinganaverageofDM100to120pertonne,lossesarealreadyexceeding
thedepreciation costsandnolongerallowallthevariablecoststohe
covered.
Thisdeterioration inthefinancialsituationissoseriousthatthesteel
firmsareonceagainobligedtomakeuseoftheirownreservesinorderto
survive-iftheyhadanyreservesleftafterthefirstcrisisperiod.Where
reservesarealreadycompletelyusedup,indebtednessisforcingthefirms
eithertocutdown,orabandonaltogether,theireffortsatmakingthe
adjustmentsrequiredinordertosurvive.Inparticular,theyarebeing
forcedtoprune,orevenabandon,theirinvestmentprogrammes.Thelatest
investmentsurveyshowsthatexpenditure pertonneofcapacityatconstant
pricesfellin1979to5«6EUAcomparedwith12EUAforthepreviousfive
years.In1980,thedrophasbeensharperstilleInformationreceivedfrom
firmsshowsthat,in1980,expenditurepertonneisgoingtobemuchlowerthan
theresultsrecordedfor1979»
Thistrendrunscountertothepurposeofrestructuring which,inawhole
seriesoffirms,hasbeeninterrupted bythefinancialsituation.The
Community *ssteelfirmsareinasituationinwhichitisimpossibleto
achievetheobjectivessetunderArticle3oftheTreaty:pricesnolongercover
depreciation orimprovements inworkingconditions..
Pursuanttothegeneralobligations whichArticle3imposesontheCommission,
inparticulartoensurethemaintenanceofconditionswhichwillencourage
firmstoexpandandimprovetheirproductionpotential,theCommission'finds
thattheCommunitysteelindustryhasbeenconfrontedwithaperiodofmanifest
crisissincesummer1980*

L-T-
XI.Theunsuitabilit.v atpresentofthecrisismeasuresusedhitherto
UnderitsgeneralsteelpolicytheCommissiondrewupdeliveryprogrammes,
fromJanuary1977on,forsomeECSCproductsinrespectofwhichfirms
enteredintovoluntarycommitments.
Theseprogrammeswereaccepted,atthestartoftheoperation,"byproducersin
theCommunityrepresenting morethan$Qffoofsteelproduction,andthereduction
insupplybroughtaboutbytheprogrammeshelpedtostabilizethemarket
situationandspreadthesacrificesfairlybetweenfirms.
Ithasbecomeincreasinglyapparent,however,that,asthecrisisdeepened,
theprogrammestendedtobeadheredtolessandless*Thetablebelowshows
theextenttowhichtheyhavebeenexceededoverthelastfewquarters,
especiallyinthecaseofflatproducts.
1
Longproducts
(beams,merchantbars,
wirerod)DP IBenelux UK
1ojo t
111/79+18-3-7-1+2
IV/79-4+6+11+4-
1/80+7+2+30+16-67*
11/80+4+5+27+4+10
Platproducts
(hotrolledsteels,
heavysteelplate;111/79+8-2 -5+3-5
IV/79-6+18+2+21+13
1/80+10+9+6+23-83*
11/80+13+4+16+25-3
*Affectedbythestrike.
TheCommissionhastriedseveraltimestoimprovediscipline,andthemeastires
appliedhaveproducedresultstemporarily..Butatthesametime,confidence
1
betweensteelproducershasdeterioratedtosuchanextentthatthedelivery
programmeshavebeendepartedfromtoanincreasingextent.

-8-
InJuly19°0,twomajorproducersrefusedtocommitthemselvestocarrying
outthedeliveryprogrammewhichtheCommissionproposed.Thisledother
producerstoadoptthesameattitude.
Fromthe"beginningofthethirdquarterof1980firmsceasedtoaccept
anycommitmentvi&-&-vistheCommission.Topreventthesituationfrom
worsening,theCommissiontookurgentstepsdesignedtoobtainacoordinated
reductionof10$intheproductionofcrudesteelinthesecondhalfof
1980comparedwiththesecondhalfof19T9•Thediscussions whichthe
Commissionheldwithproducersonthispointwereencouragingtostart
with,butinAugust,andmoreclearlystillinSeptember,anumberoffirms
showedthattheywereunwillingtotaketheimplementing measuresneeded
tocomplywiththeCommission'sinstructions .Itssubsequentattempts,
uptoandincludingFriday,3October,haveledtheCommissiontoconclude,
withregret,thatCommunitysteelproducersarenolongerabletoaccept
voluntarydiscipline,mainlybecausethereisnoconfidence among
themselves.Theresultinguncertainty makesitimpossibleforfirmsto
drawupreasonableproduction programmes.
Forthetimebeing,therefore,theCommissionisunabletoinfluencethe
marketsituationthroughavoluntarycoordination procedure.
Asregardsprices,theCommissionundertooktopublish,fromMay19TT»
guidanceandminimumpricesforcertainsteelproducts.Thesemeasures
hadadefiniteeffectoverafairlylengthyperiod.However,fromthe
checkswhichitcarriedoutinfirms,theCommissionhastoconcedethat
thepriceruleshavebeenincreasingly ignored.
Thecyclicalcrisisinthesteelindustryhascausedapricefallof
unwarrantedsize,becauseproducershaveabandonedthedisciplinewhich
theyshowedpreviously.

-9-
Mostrecently,inviewoftheproducers *inabilitytocountertheabrupt
dropindemandwithareasonablepricingpolicy,theCommissionandthe
producerstogetherhaveeximinedthepossibilityofintroducinga
voluntarysystemofproductionquotasforseveraltypesofproductand
forcrudesteel.
Itwasthenthatthelargemajorityofheadsofsteelundertakings
clearlygavetheCommissiontounderstandthat,becausetheirrecentand
repeatedeffortstoreestablish betweenthemtheclimateofconfidence
necessarytoensurethesuccessofvoluntarymeasureshadfailed,they
nowfeltthatnoinstitutionotherthantheCommunitywasinaposition
toimposethe.measurestheyfelttobeindispensable forrestoringorder.
TheCommissionisthereforeobligedtonotethat,inviewofthe
producers *position,thespiritoftheprovisionsofArticle57ofthe
Treatyisforthemomentnolongeroperative. -
r
III.Introduction ofaproductionquotasystem
TheCommunitymustimmediatelytakeactionunderthepowersassignedby
theTreatyofPariswithregardtotheEuropeansteelindustry.
1 ' '•.
Suchactioncannotbelimitedtoorganizingthemarketbutmustinclude
asubstantial measureofsocialreliefbecauseoftheeffectswhichthe
crisiswillhaveonemployment. .
s
Ontheotherhand,anyactionconsideredmusttakeeffeotonthemarket
asquicklyaspossible;asthisisacrisismeasureitmustbydefinition
beofshortdurationandnotextendbeyond30June1981.

-10-
Finally,itmustalsofitintoacontextofcontinuingthesteelpolicy
pursuedsofarwhileatthesametimereinforcingthatpolicywhere
necessary .
Thesystemunderconsideration is"basedonanumberofprinciples :
–productionquotasmustbeequitablebutshouldhaveasufficiently
markedeffecttoensurethatproductionisadjustedtodemandina
coordinated manner;
–equitablesharingofthequotaswillbeensuredbythenon-discriminatory
application ofstandardratesofreductiontoallundertakings ;
–thequotasystemmustalsoallowformonitoringcapableofdetecting
casesofexcessproductionandprovideforimmediateariddissuading
sanctions .
Althoughpartlybasedonbindingmeasures,thesystemcallsforcooperation
betweenenterprisesatmarketinglevel:forthemainproducts,the
productionquotassettrytheCommissionmustbereflectedinvoluntary
deliveryquotas.Thedeliveryprogrammesfixedbytheproducerswillbe
thedecisivefactorinspeedingupareturntoequilibriuminthevarious
marketsandindetermining whatdecisionstheCommissionhastotake
withregardtoproduction .
IftheCommissionsucceedsbythismeansinlayingthefoundationfor
solidaritybasedonequineojftsharingandthereforelikelytoleadto
asuccessfulvoluntarysystem,itwillimmediatelylifttheobligatory
productionquotas.TheCommissionwillalsoterminatethemeasureif
themarketsituationimprovestotheextentthattherenolongerexists
amanifestcrisis.
Theseconsiderations ledtheCommissiontoenvisagethefollowingmethods
ofapplication ,whichmaybesupplemented andfineddownbeforethefinal
decisionistaken"onthebasisofstudiesmadejointlywithundertakings
andassociations oftindertakings",asprescribedinArticle58.

-11
(a)Productcategories
TheCommissionispreparingproductionquotasforfourcategoriesof
rolledproduct:
1.Coilandstriprolledonspecialmills.
2.Heavyplateanduniversalplate.
3.Heavysections(railwayequipment,sheetpiling,"broad-flanged beams,
otherbeamsandotherseotions).
4.Lightsections(coiledwirerod,concretereinforcingbarsandother
merchantbars).
Thiscoversabout90$ofallrolledproducts.
TothesequotasforrolledproductstheCommissionisaddingonefor
totalcrudesteelproduction.Thiscoversthesteelneededfor
manufacturingthefourgroupsofproductsaswellasthe10%ofproducts
notcoveredbythesegroups.Itshouldbenotedthattheproduction
quotascoverallqualitiesofsteel,i.e.ordinarysteels,
carbonsteelsandalloysteels..
Ontheotherhand,thepossibilityofexoludingheavyplatevisedforthe
manufactureoflarge-diameter weldedpipesforpipelineconstructionis
beingconsidered.
,·ι■' ;
Theproductionquotaswillbedeliveredonthemarkettakingintoaccount
theratiobetweeneachundertaking'ssalesonthe
ECSCmarketanditsexportsalesduringthereferenceperiod.Excess
suppliestotheinternalmarketwillberegardedasexceedingproduction
quotas. ,
(b)Categoriesofundertaking
Themeasureconcernsallsteelundertakingswithagrosssteelproduction .
ofover1000tonnespermonth,i.e.allmanufacturers ofsteelproducts
coveredbytheTreatyofParisexceptverysmallcompanieswhoseproduction
isreallymarginal.Itdoesnotcovercompaniesproducingonlyliquid
steelforcasting.

-12-
Thequotaswillbeappliedtoalltheundertakings orgroupsofundertakings
whichare'concentrated' withinthemeaningofArticle66(2).
(c)Referencebasis
Thereferencebasisselectedmustbeasufficiently longandrecent
period:longtoenableeachundertakingtoproducereferencedatawhich
arenotundulyaffectedbyaccidentsofatechnicalnatureorbystrikes
andrecentinordertoreflectthepresenttechnicalstructureofthe
productionapparatusandthepatternofdemand.
TheCommissionthereforeconsidersthat,giventhepresentstateof
progressofitswork,i.e.beforecompletionofthestudiesprovidedfor
inArticle58(2),thereferenoeperiodshouldbethe36monthsbetween
July1977andJune1980.
Withinthisperiod,theindividualreferencebasisforeachundertaking
willbethe12monthsinwhichithasaohievedthehighestoutput.For
agivenundertakingthismeanstforexample,thatofthe3monthsof
Januarywhichoccurwithinthe36-monthperiod,theJanuarywiththe
highestoutputisrecorded.Thesameprincipleappliestoallthe
othermonthsoftheyear.
Theindividualreferenceperiodisthereforemadeupofaseriesof
non-consecutive monthsv;hj.chreflectthebestoutputfiguresrecorded
inthetotal36-monthperiod.
IJyselectingthemonthswiththebestoutputfigures,theundertakings
aregiventhefullestsafeguardthattheindividualreferenceperiod
willnotreflectcircumstances whichareundulyadversefromtheirpoint
ofview.However,thereferenceperiodforanundertakingisthesame
forallitsproducts.
(d)Rateofreduction
Theratesofreductionaredesignedtoreflectthereductionindemand
whilstensuringasteadyflowofsupplies.Atthesametime,therates
ofreductionareintendedtoensurethat"burdensharing"takesplace
betweentheundertakings .

-13-
PendingcompletionofthestudiesprovidedforinArticle58(2),the
Commissionhasmadeaninitialprovisionedestimateoftheratesof
reduction,brokendownaccordingtoproductcategory:thestudiescarried
outtodateindicatethat|therateofreductioninthefourthquarterof
1980.comparedwiththefourthquarterof1979»willbeasfollows:
Category 1
Category2
Category3
Category416-20%
13-17$
14-.18%
14-18%
Itshouldbepointedoutthatthestatisticsonordersreceivedbythe
steelindustryalsorevealthatconsumersintheCommunityhavecut'by
18%to19%theirordersforthesteelproductscoveredbytheTreaty.
Theproposedratesofreductionthereforemirrorthepurchasingintentions
ofCommunityusers.j
Inthecomingdays,theCommissionwillundertakeanumberofsupplementary
studiesinconjunctionwiththevariousconsumersanddealers.These
consultations willservetomakeitclearthattheobjectivebeing
pursuedisnottocreate/anartificialshortageonthemarketbutto
allowsupplytomatchdemand. ~ ■
Consultations willalsocontinuewiththeproducersandtheunionsto
determinemorepreciselytheratesofreductionappropriatetoeach
productcategory.TheCommissionhastakentheneoessarystepsto
conveneanextraordinary meetingoftheECSCConsultative Committee.
Theratesofreductionforcrudesteelarecalculated onthebasisof
theaverageoftheratesofreductionforthevariousproductcategories ,
weightedbytheoutputinthesecategories.Theproductionofcrude
steelwillthereforeberelatedtothequotasforrolledproducts
providedthatanidenticalaveragerateisappliedtothefewproducts
whicharenotcoveredbythefourabovementioned categories.

13a-
Itshouldbenotedthateachundertakingisallocatedauniformrate
ofreductionforthesamecategory,therebyensuringthattherequisit
"burden–sharing isappliedtoeachproductcategory.

.14
Theproduction quotas forthequarter inquestion will beobtained by -
applying thereduction rates totheactual production inthe corresponding
<quarter of thereference period .
TheCommission ,however ,believes that inpractice there should bea
degree ofelasticity inthequotas ,andthus amargin ,sayof3$»
should begiven toallow undertakings ,ifnecessary ,toincrease one
category byreducing theothers .
Undertakings will beallowed toexchange orsell quotas between
themselves but only with theCommission 'sprior approval .
\
Timetable '
Considerable work hasyettobecarried outbefore thedata canbe
computerized ,including testing ofthecomputer system itself .
Itidhence impossible atthis stage accurately todetermine reference
periods forallthe steel undertakings intheCommunity ,Thus itisnot
possible atthis moment intime togive precise numerical data . ■,
Itwill also take some time tocomplete the studies incollaboration
with theundertakings andassociations ofundertakings provided for
bytheTreaty .
TheCommission will hold anextraordinary consultation with theConsultative
Committee on13October inaccordance with :Article 58andwill endeavour to
finalize thesystem assoon aspossible after that date ,
Thequota system forthefourth quarter ofthis year will thus take
effect on1November atthe latest but anumber ofpreparatory
operations (e.g. training ofinspectors )will have already begun
by15October .

-15-
Because of -therisk ofspeculation theOctober production figures foreach
firm will heincluded inthequota forthefourth quarter .Undertakings
will thus hecalled upon hyacommunication tohepublished immediately
intheOfficial Journal toreduce their crude steel production by15$
oftheir monthly average forthefourth quarter of 1979 •
TV.Monitoring ofmeasures taken pursuant toArticle 58oftheECSC Treaty
Thedifficulties encountered intheapplication oftheprevious contingency
system were clearly duetoalarge extent tothefact that theinadequacy
ofmonitoring anditsapplication created scepticism ,mistrust and ,
eventually ,indiscipline among those participating inthesystem .
Itishence essential that both internal andexternal Community measures
betightened upbefore asystem ofproduction quotas isintroduced .
1.Internal monitoring ofproduction
Thenumber offirms tobegiven quotas isputat350.They must send daily and
weekly production records totheCommission bytelex .Inaddition ,asummary
ofproduction anddeliveries istobeprovided onamonthly basis .These
documents will beused asfollows :
(a)Utilization ofweekly andmonthly production figures
These figures will have tobecentralized bytheStatistical Office and
putoncomputer inorder tomonitor theposition ofeach firm inrelation
toitsquota onamonthly basis ,and -fcocarry outthemonthly andquarterly
audit required todetermine whether anyproduction quotas have been
exceeded orwhether there have been anyshortfalls inproduction .
(b)Utilization ofdaily production telexes
Works andproduction units will berequired tosend this information tothe
Commission each day.Their accuracy will usually b^checked onthespot .
Thetechnical andaccounting documents listed inCommission Decision
74/618/ECSC of4December 1974 must hence bechecked :
(1)thecast record book duly numbered anddated
(2)invoices relating totheconsumption ofelectricity ,gas ,fuel oil
andoxygen
(3)themanpower logbook .

-16-
Stockmovementsanddeliveriesmust,however,also"bemonitored.
ApprovalighencesoughttoextendDecision74/<$l8/ECSCtoinclude
recordsrelatingtotheproductionofmillsandfinishingshops
andtheuseofrawmaterialsinthedocumentstohechecked.
(c)Utilizationofmonthlydeliverytelexes
(&)Penalties
ThepenaltiesprovidedforbyArticles47and58oftheECSCTreaty
willheswiftlyappliedasfollows: .
(i)Article47!ifi^isdiscoveredthatthedailyproductionrecords
areinaccurate,finesamountingtoamaximumof1%ofthefirm's
annualturnoverwillbeimposed;
'(ii)Article58:ifquotasareexceededafineof75ECUwillbe
imposedforeachtonneofexcess.
L
Thefinesmustbepaidwithin-fifteendaysfromthedateonwhichthe
undertakingreceivestheindividualpenaltydecision.
2. Monitorin?ofimports ■
Thesystemofmeasuresdescribedabovetoimprovethemarketobviously
presupposesthatthenecessaryprecautionswillbetakenwithregardto
imports.. .
Sincetheexternalsystemwhichv*aaintroducedearlythisyearseemsto
beworkingfairlywell,jtheredoesnotappeartobeanyreasontoexpect
anymajorproblemsintheimmediatefuture.
Thefollowingmeasuresshould,however,betakenimmediately.

-loa–
Thepublication of
(a)/newbasispricesforironandsteelimportsfrom
non-Conjiii-onitysoArvtriesoTheoaloulationofthesen8Wprices
isalmostcompletedandtheycan"beintroducedassoonasthe
newsystemofmonitoringinternalproductionentersintoforce. a
Γ

(t)with regard "tothearrangements made forthe year -1930 (the
Commission aridtheMember States will have' to -ensure that they areenforced
more strictly until the end oftheyear .
/ has been
Although monitoring onthebasis oflicences / introduced bya
recommendation which isbinding ontheMember States ,ithasbeen observed
that certain Member States donotrespect thedeadlines laid down forthe
forwarding ofinformation .During 1980 ,observance oftherules onindirect
imports hasslackened inmost Member States .
Finally ,with regard totheobservance ofthepricing rules –which directly
affects import volume both inrespect ofthebasis price and intheframework
ofanyarrangements which have been made ,theCommission will address a
Recommendation totheMember States asking thenational authorities
tocarry outchecks ontheCommunity importers .
(c)for1981 .theCommission will asktheCouncil togive itamandate to
negotiate newarrangements sufficiently early forthedanger oftherecurrence
oftheperiods ofuncertainty which have marked the start ofprevious years
tobeavoided .
Apart from anundoubted reduction inquantities inview ofthe falling>-off
inconsumption within theCommunity ,these arrangements maywell besimilar
ingeneral tothose concluded for198O .'
$
x s
Themeasures which theCommission hasproposed inChapters IIIandIVwill
only apply automatically during theperiod under consideration ;this period
will not ,inanyevent ,extend beyond 30June 1981 *
GRTraCK
Asfrom 1January 1981 ,theGreek steel industry will bebound bythe
same rules asare the steel industries ofthe Nine once amanifest crisis
hasbeen declared .Accordingly ,once theCouncil 'sassent hasbeen given ,
theCommission will immediately begin consultations with Greece ;the
Commission will also invite Greek manufacturers ,trade unions andconsumers
togive their opinions onthemeasures tobetaken ,using procedures
similar tothose provided forinArtiole 58(2 ).

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V. Por^lV.c measures onprices
At'this point itwould also "beadvisable togive some guidance onprices .
Thelogical objective would betosecure bymid-19Sl alevel of
.prices corresponding totheguide prices published on31December 1979
plus anincrease ofatleast 4%,mainly tocover theincrease in
production costs .
Aprecondition ofpripe measures however istherestoration ofthose
conditions oforder anddiscipline without which this policy cannot
succeed .
.TheCommission isintouch with thesteel industry tosecure anearly
return tothe usual market conditions but isnot atthe moment ina
position tofixnewguide prices .
Oneofthefirst measures tobecarried outbythesteel industry is
therevision ofprice lists which inmany cases areclearly above the
guide prices andstill further above themarket prices .Inagreat
many cases ,thecurrent list prices aretotally unrealistic andareno
longer avalid basis forsellers torespect therules oftheECSC Treaty
orfortheCommission toiformulate newmeasures forraising prices .
Nevertheless theCommission reserves theright tofixtarget prices again
once the basic conditions for the success ofsuch have been met .

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VI.Theneed,forextensiveadditionalmeasuresofasocialnature
TheCommissionisfullyawareofthemagnitudeofthetaskwhichitis
takingoninproposingtotakenewmeasurestopromotetherecovery
oftheCommunitysteelmarketandtorestoretoittheminimumamount
ofordernecessaryforfirmstosurvive,foremploymentlevelstobe
maintainedandforrestructuring tocontinue.
Ithascalculatedtherisksthatthisapproachinvolvesandaccepts
theminfullawarenessofwhatitisdoing.
Itwould,however,finditunacceptableif,whenworkersagainhaveto
,■-ofthereorganization ofbearthebruntofmeasures •/theEuropeansteelindustry,
theCouncilisunabletoprovideitwiththebudgetaryandotherresources
itrequirestocopewiththemanyadditionalsocialmeasureswhichthis
actionwillimpose.
Thedifficulties onceagainfacingthesteelindustrycouldwellcause
manyworkerstolosetheirjobs,particularly insingle-industry regions.
Inthepastwhentheeconomicclimatewasmorefavourable,workersforced
toleavethesteelindustryfounditnottoodifficulttofindalternative
employmentinothersectorsorregions.Avitalrolewasplayedbythe
"conventional"measuresprovidedforinArticle5^(2)(b)oftheECSCTreaty
anddevelopedinlateryears.
Noweconomiogrowthleavesmuchtobedesired,short-term-andeven

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medium-'term -economic prospects axenolonger favourable ,theCommunity
already hasnearly eight million unemployed and ittakes time to
create neweconomic activities ;many conditions have tobefulfilled
tocomplete theprocess andtofind aviable alternative ,particularly
inregions with amono-industrial structure . •
Inthese circumstances ,wemust notonly devise andimplement new
measures ,astheCommission hasalready proposed ,butalso provide for
sufficient financial resources sothat the conventional measures can
beapplied fully .There isnodenying the fact that large-scale
redundancies andshort-time working mayseriously affect theeconomic
andsocial climate andeven cause severe social conflict ,with deleterious
effects ontherestructuring ofthe steel industry andonsociety asa
whole .
ι