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COM (85) 382 
 
 
 
Vol. 1985/0148 
  
 
Disclaimer  
Conformém ent au règlement (CEE, Euratom) n° 354/83 du Conseil du 1er février 1983 
concernant l'ouverture au public des archives historiques de la Communauté économique 
européenne et de la Communauté européenne de l'énergie atomique (JO L 43 du 15.2.1983, 
p. 1), tel que modifié par le règlement (CE, Euratom) n° 1700/2003 du 22 septembre 2003 
(JO L 243 du 27.9.2003, p. 1), ce dossier est ouvert au public. Le cas échéant, les documents 
classifiés présents dans ce dossier ont été déclassifiés conformément à l'article 5 dudit 
règlem ent. 
In accordance with Council Regulation (EEC, Euratom) No 354/83 of 1 February 1983 
concerning the openi ng to the public of the historical archives of the European Econom ic 
Community and the European Atomic Energy Communit y (OJ L 43, 15.2.1983, p. 1), as 
amended by Regulation (EC, Euratom) No 1700/2003 of 22 September 2003 (OJ L 243, 
27.9.2003, p. 1), this f ile is open to the public. Where necessary, classified documents in this 
file have been declassified in conformity with Article 5 of the aforementioned regulation.  
In Übereinstimmung mit der Verordnung (EWG, Euratom) Nr. 354/83 des Rates vom  1. 
Februar 198 3 über die Freigabe der historischen Archive der Europäischen  
Wirtschaftsgemeinschaft und der Europäischen Atomgem einschaft (ABI. L 43 vom  15.2.1983,  
S. 1), geändert durch die Verordnung (EG, Euratom) Nr. 1700/2003 vom 22. Septem ber 2003  
(ABI. L 243 vom 27 .9.2003, S. 1), ist diese Datei der Öffentlichkeit zugänglich. Soweit  
erforderlich, wurden die Verschlusssachen in dieser Datei in Übereinstimmung mit Artikel 5  
der genannten Verordnung freigegeben.  
COMMISSION OF THE EUROPEAN COMMUNITIES
COM(85) 382 f in a l
B ru s s e ls , 16 J u ly  1985
ORGANIZATION O F THE STEEL MARKET AFTER 1985
(Communication from  th e  Commission to  the C o u n cil)
COM(85) 382 f in a l

ORGANIZATION OF THE STEEL HARKET AFTER 1985
(Communication from the Commission to  the C o un cil)
I .  The most acute phase o f the s te e l c r is is  is  coming to  an end ; by 
the end o f the year the ca p a city red uctio ns in  the h o t- r o lle d  
products s e c to r w i l l  be in  lin e  w ith  the 30 to  35 m illio n  tonnes 
o b je c tiv e  set by the C ouncil at E ls in o re . On 26 March 1985, when 
ta k in g  note o f t h is  achievem ent, the C ouncil confirm ed th a t 1985 
would a lso  be the la s t year in  which Member S tates would be 
a u th o riz e d  to  make a id  payments to  the s te e l in d u s try , a uth orised  
in  accordance w ith  Commission D ecision 2320/81/ECSC o f 7 August 
1981 and 1018/85/ECSC o f 19 A p r il 1985 .
However, the C ouncil had to  conclude th a t the very poor economic 
s itu a tio n  in  1983 had slowed down the progress towards re s tru c ­
tu r in g  and, conse q ue ntly, agreed th a t a d d itio n a l a id  could be 
granted in  c e rta in  circum stances u n t i l  the end o f 1985.
M oreover, the re s tru c tu rin g  o f the Community s te e l in d u s try  is  
not complete : the General O b je ctive s S teel 1990 in d ic a te  th a t
even on the o p tim is tic  assum ption th a t the s te e l tra d e  balance is  
m aintained at i t s  present le v e l, the re  w i l l  s t i l l  be excess 
c a p a c ity  o f the o rd e r o f 25 m illio n  tonnes, i f  one considers th a t 
the average p la n t u t i l i s a t i o n  ra te  should be around 80%.
E ffo r ts  towards re s tru c tu rin g  are being a c tiv e ly  undertaken in  
the s te e l in d u s try  in  a l l  the in d u s tr ia liz e d  c o u n trie s , because 
th e re  is  enormous o v e r-c a p a c ity  w o rld w id e , and the measures being 
taken at the moment, in  p a r tic u la r  by the U nited S ta te s , may lead 
to  s ig n ific a n t changes in  tra d e  p a tte rn s . I t  w i l l  take several 
years fo r  the s itu a tio n  to  s t a b iliz e .
(1) 0J N° L 228 o f 13 August 1981.
(2) 0J N° L 110 o f 19 May 1985.

2 .-
I I .  The Commission th e re fo re  considers th a t the Community s te e l 
in d u s try  needs a s t r i c t l y  lim ite d  p e rio d  o f tr a n s itio n  in  order 
to  get ira d y  fo r  o re tu rn  to  a com petition-based m arket. This 
p e rio d  o f tr a n s itio n  w i l l  make i t  p o s s ib le  to  L if t  the c o n tro ls  
p ro g re s s iv e ly , s ta r tin g  on 1  January 1986.
The tr a n s itio n  p e rio d  should la s t fo r  a maximum o f th re e  ye ars, 
in  two stages, the f i r s t  la s tin g  18 months to  two y e a rs , and 
a lre ad y re p re s e n tin g  a marked re la x a tio n  o f the ru le s  in  fo rc e , 
and the second, in  which th e re  would be even fewer ru le s ,
a llo w in g  o n ly  the maintenance o f the Last few c o n tro ls  p r io r  to  
the removal o f a l l  c o n s tra in ts .
This gradual re la x a tio n  should a p p ly , at d if fe r e n t  in te r v a ls , to 
a l l  the ca te g o rie s  o f products covered by the quota system . The 
d e c is io n  to  re la x  the c o n s tra in ts  must th e re fo re  take in to  
account the s itu a tio n  o f firm s  in  the se cto rs concerned, and the 
e ffe c t which the  removal o f c o n tro ls  w i l l  have on the recovery of 
the s te e l in d u s try  as a whole from  the c r is is .
The changes to  be made to  the regime c u rre n tly  in  fo rc e  w i l l  be 
p r in c ip a lly  made up o f d e re g u la tio n  of c e rta in  ca te g o rie s  or 
s u b -c a te g o rie s , p o s s ib le  regrouping o f c e rta in  c a te g o rie s , 
adjustm ent of companies' re fe re n c e s , and more elements o f 
f l e x i b i l i t y  under the D e cisio n.
W h ils t they are being brought in to  o p e ra tio n , as elsewhere d uring  
the whole p e rio d  o f t r a n s it io n ,  the Commission w i l l  m aintain 
close co nta ct w ith  a l l  in te re s te d  p a r tie s , and in  p a r tic u la r  w ith  
s te e l pro du cers, who must take an a c tiv e  p a rt in  the process o f 
d e re g u la tio n  o f the system.
I I I .  The s itu a tio n  v a rie s  from one product category to  another. In 
the case o f lig h t  long p ro d u c ts , a s tr u c tu r a l change has taken 
place in  recent years : as a r e s u lt ,  the e le c t r ic  m ill s e c to r
which comprises f le x ib le  sm all and medium-sized u n its  whose cost 
p ric e s  are lower than those o f in te g ra te d  p la n ts , has acquired a 
co n sid e ra ble  p ro p o rtio n  o f the market fo r  concrete re in fo rc in g  
bars (ca teg o ry V ), merchant bars (ca teg o ry V I) and w ire rod 
(ca teg o ry IV ).
Most o f these firm s  are approaching or have already achieved a 
s itu a tio n  of balance. D espite the rem aining o v e rc a p a c ity  (which 
is  in fa c t p ro p o r tio n a lly  lowest in  the w ire  rod s e c to r), the 
Commission co nsid e rs th a t i t  is  in  t h is  area th a t the se cto rs 
which can be dereg ulate d  from  1  January 1986 should f i r s t  o f a l l  
be sought.
In ta k in g  th is  approach, the Commission is  aware th a t th is  may 
u ltim a te ly  have a knock-on e ffe c t : e .g . i f  the d e re g u la tio n  of
merchant s te e ls  occurs on 1  January 1936, i t  is  h a rd ly  con­
c e iv a b le  th a t the sm all beams in  category I I I ,  which are in 
d ir e c t c o m p e titio n  w ith  c e rta in  category VI p ro d u c ts , car, fc? ' ept 
s u b je c t to  quota fo r  two ye ars.

For a l l  ca te g o rie s rem aining su b je ct to  quota, the Commission 
w i l l  decide as q u ic k ly  as p o s s ib le  a re tu rn  to  a c o m p e titio n - 
based m arket.
The major fa c to rs  which w i l l  in flu e n c e  the Commission on it s  
choice o f the moment when, fo r  each category or su b-cate go ry, 
th is  d e re g u la tio n  may be a p p lie d , w i l l  correspond re s p e c tiv e ly  to  
th re e  needs :
-  to  promote re s tru c tu rin g , and in  p a r tic u la r  to  reduce su rp lus 
c a p a c ity ;
-  to  avoid s e rio u s s o c ia l consequences;
-  to  avoid a market c o lla p s e .
The Commission's o b je c tiv e  is  th a t, in  the f in a l phase o f the 
t r a n s itio n  p e rio d , o nly a lim ite d  number o f products in  Category ' 
la  should remain su b je ct to  quota, and th a t even fo r  these 
p ro d u c ts , the c o n s tra in ts  w i l l  have been c o n sid e ra b ly eased 
compared w ith  the present ru le s .
For th is  reason, the Commission is  at present exam ining the 
p o s s ib ilit y  o f fre e in g  from the quota system products processed 
in to  o th e r products which are them selves s u b je c t to  the quota 
system (e .g . products fo r  r e - r o llin g ) .
The Commission is  a lso  exam ining whether c e rta in  ca te g o rie s o f 
c o ld - ro lle d  sheet should be deregulated com pletely or regrouped 
in  a more general way, thus easing the c o n s tra in ts  which the 
system imposes on producers.
An adjustm ent to  the references would seem to  be e s s e n tia l, 
because unless the e x is tin g  references are c o n sid e ra b ly changed 
the abatement ra te s w i l l  be c a lc u la te d  on the basis o f a t o t a l 
amount which is  q u ite  d iffe r e n t from the re a l s itu a tio n ; in  
se veral cases, th e re  are s im ila r  d iffe re n c e s  at company le v e l. 
In c o n ju n c tio n  w ith  the tra d e  o rg a n iz a tio n s  and the companies, 
the Commission th e re fo re  proposes to  re c a lc u la te  the companies' 
references ta k in g  the most recent p o s s ib le  r e a lis t ic  base.
This re v is io n  should cover both d e liv e ry  and p ro du ction  
s tru c tu re s  : since the system came in to  b e in g , e x te rn a l markets 
have developed ( e .g ., the European s ta te -tra d in g  c o u n trie s  have 
become net e x p o rte rs  w h ile  the U nited S tates has taken in ­
c re a s in g ly  fo r c e fu l measures w ith  regard to  im p o rts ).
I t  is  necessary to  c o rre c t at le a s t to  some e x te n t the abnormal 
s itu a tio n s  which the development o f the p a tte rn s  o f tra de  has 
created.

4 .-
V I. The Commission considers necessary p ro v is io n s  to  encourage 
companies to  a c tiv e ly  pursue the r a tio n a lis a tio n  o f t h e ir  
p ro d u c tio n , and to  e ffe c t re d uctio ns o f su rp lus c a p a c ity . In th is  
re s p e c t, i t  envisages the in tro d u c tio n  o f an a r t ic le  to  perm it 
companies which close a p a rt o f t h e ir  p la n t -  beyond what the 
Commission has or w i l l  re q u ire , whether in  the context o f 
D ecisions 2320/81/ECSC and 1018/85/ECSC or o f favo u ra ble  opinions 
given under A r t ic le  54 EC SC  -  not o nly to  keep the references o f 
th is  p la n t, but a lso  to  re ce ive  supplem entary quota p ro p o rtio n a l 
to  the closures e ffe c te d .
In th is  context i t  w i l l  be necessary to  take account o f the 
s itu a tio n  o f those e n te rp ris e s  w hich, at the end o f 1985, w i l l  
have e ffe c te d  clo sures going beyond the requirem ents o f the 
Commission as c o u n te rp a rt fo r  a ids g ra nte d.
B ut, more g e n e ra lly , the amendments envisaged w i l l  lead to  a re ­
ca s tin g  o f the d e c is io n  in  fo rc e ; n e v e rth e le s s , i t  is  a p p ro p ria te  
to  keep an a r t ic le  to  perm it the Commission to  a lle v ia te  
e x c e p tio n a l d i f f i c u l t i e s ,  which a company m ight face due to  the 
fa c t th a t the system is  being m a in tain e d, and another a r t ic le  
a llo w in g  a firm  to  meet e x c e p tio n a l orders fo r  t h ir d  country 
e x p o rt.
L a s tly , in  o rd e r to  make progress towards d e re g u la tio n  g e n e ra lly , 
the Commission is  exam ining how the e x is tin g  elements of 
f l e x i b i l i t y  (tra n s fe rs  between c a te g o rie s , c a rry o v e rs , advance 
use o f quotas e t c . . . )  m ight be increased.
V II. The Commission does not in te n d  to  in c lu d e  in  the next D ecision 
the p ro v is io n s  o f A r t ic le  15 B  o f the present D ecisio n. This 
p ro v is io n  was o n ly  j u s t if ie d  d u rin g  a p e rio d  o f p a r tic u la r  
p re s s u re , when the s u rv iv a l o f the Common Market was at r is k  : i t  
has no place in  a regime o f tr a n s itio n  towards the normal regime 
o f the T re a ty . I t  must be p o in te d  out t h a t, in  the case brought 
by EISA a ga in st the Commission, the Court s p e c if ic a lly  reserved 
i t s  p o s itio n  on the exam ination o f the c o m p a tib ility  o f A r tic le  
15 B, and o n ly  re je c te d  EISA's demand a fte r  having taken note o f 
the Commission's u ndertaking to  o nly re s o rt to  the sanctions 
provided fo r  in  A r t ic le  15B a fte r  having exhausted a l l  recourse 
fo r  v io la tio n s  on the ru le s  on p ric e s , quotas, c o m p e titio n , and 
s ta te  a id s .
O n the o th e r hand, i t  does in te n d  to  c o n tin u e , d u rin g  the f i r s t  
phase o f the p e rio d  o f t r a n s itio n  w ith  the s t a t is t ic a l m o n itoring  
of flo w s o f s te e l products between Member S tates on the  basis o f 
the e x is tin g  p ro d u c tio n  c e r t if ic a te s  and accompanying documents. 
These documents, which w i l l  also apply to  Spanish and Portugese 
producers, wi l l  make i t  p o s s ib le  to  check whether d e liv e r ie s  from 
the s te e l in d u s try  in  the new Member S tates are in  lin e  w ith  the 
commitments entered in to  by t h e ir  governments under the Accession 
T re a ty . They w i l l  a lso  make i t  p o s s ib le  to  re ta in  a modicum o f 
c o n tro l over tra n s a c tio n s  c a rrie d  out by d e a le rs .

V I I I .  In the p r i e n t  c o n d itio n s , the Commission considers chat i t  is  no 
longer e s s e n t i ^  to  keep in  fo rc e  the minimum p ric e s  imposed in  
December 1983 and amended se veral tim es since then; i t  
th e re fo re  envisages suspending t h is  D ecision s h o r tly , w h ile  
re ta in in g  the r ig h t to  re in tro d u c e  i t  i f  s ig n ific a n t  disturba nce s 
should occur once again in  t h is  area.
The Commission is  concerned to  ensure th a t the p ric e s  charged by 
firm s  a llo w  the necessary a m o rtiz a tio n  and a normal re tu rn  on 
in ve ste d  c a p ita l. That is  why i t  intends to  c o n tin u e , on the 
basis o f A r t ic le  60 and subsequent a r t ic le s  o f the EC SC  T re a ty , 
w ith  a p o lic y  o f c o n tr o llin g  market p ric e s  as s t r i c t l y  as 
p o s ib le , where both firm s  and dea le rs are concerned : i t  w i l l
continue w ith  i t s  fre q u e n t in s p e c tio n s  on fir m s ' premises and 
w i l l  attem pt to  make these in s p e c tio n s  even more e ffe c tiv e . I I  
w i l l  a lso  request the  Member S tates to  continue w ith  the measures 
concerning d e a le rs , as the la t t e r  are very much in vo lve d  in  the 
d is t r ib u t io n  o f s te e l products and they sh o u ld , lik e  the
stee lm ake rs, be s u b je c t to  c e rta in  ru le s , e .g . the  requirem ent to  
subm it a p ric e  l i s t .
In o rd e r to  m a in ta in  s t r i c t  c o n tro l over companies' a b id in g  by 
the p ro v is io n s  o f the D ecision the Commission a lso  intends to  
m a in ta in  the c u rre n t s e c u r ity  system , which w i l l  continue to  be 
a p p lie d  to  the quota re g u la tio n s  fo r  products in  ca te g o rie s la ,  
lb ,  I I  and I I I . .
IX . The Commission has not yet worked out the terms of reference 
which i t  w i l l  propose to  the C ouncil in  September w ith  regard to  
the e x te rn a l elem ents o f the s te e l c r is is  measures ; these
elem ents e x is te d  before the quota system was in tro du ced  and t h e ir  
development does not n e c e s s a rily  need to  be p a r a lle l to  the 
development o f the quota system . However, i t  would be u nd e sira ble  
fo r  the Member S tates and the s te e l in d u s try  to  get
used to  the idea o f a v i r t u a l l y  autom atic renewal o f measures on 
im p o rts . The s te e l in d u s try  must be made c o m p e titiv e  w ith  
companies in  the t h ir d  w o rld . As i t s  com petitiveness develops, i t  
w i l l  be less necessary to  m a in tain  r e s t r ic t iv e  e x te rn a l
p ro te c tio n  measures, a lth o u g h , here a ls o , any development must be 
p ro g re s s iv e  : the Commission must remain v ig ila n t  w ith  regard to
the ru le s  o f in te r n a tio n a l business being respected by i t s  
p a rtn e rs .
(1) D ecision 3715/83/ECSC o f 23 December 1983 C O J N° 373 o f 31 
December 1983).

The Commission has thought i t  e s s e n tia l -  in  order to  avoid 
u n c e rta in ty  which would be dangerous fo r  the market in  the  second 
h a lf o f 1985 -  to  make known now i t s  p o s itio n  on the broad lin e s  
o f what the market c o n tro l system should be in  the years ahead.
I f  the C ouncil is  w illin g  to  accept t h is  approach, the Commission 
w i l l  request i t  in  O ctober, a fte r  c o n ta c tin g  the re p re s e n ta tiv e  
Community a s s o c ia tio n s , fo r  i t s  assent under A r t ic le  58 o f the 
EC SC  T re a ty on the  maintenance o f a p ro d u c tio n  quota system based 
on the broad lin e s  set out in  th is  document. At p re s e n t,
however, the Commission th in k s  i t  s u f f ic ie n t  th a t the C ouncil 
should :
-  approve th e  Commission's th in k in g , p a r t ic u la r ly  on the  need to  
re tu rn  as q u ic k ly  as p o s s ib le , by means o f a t r a n s itio n a l 
p e rio d  lim ite d  to  th re e  y e a rs , to  a market o f fre e  co m p e titio n  
between Community companies
-  take note o f the  Commission's in te n tio n  to  put to g e th e r, in  
lin e  w ith  t h is  th in k in g , a more d e ta ile d  document, on which i t  
undertakes to  g iv e  i t s  assent under the  p ro v is io n s  o f A r t ic le  
58 o f the ECSC T re a ty , w ith  the aim o f pursuing a market 
s u rv e illa n c e  regim e, which must end on 31st December 1988 at 
the  la te s t.