31. 12. 85 Official Journal of the European Communities No C 344/11 
data and is able to make more systematic use of 
data-processing in the compilation of statistics. 
14. The Committee feels that, unfortunately, the various 
changes which have been proposed in connection with 
agricultural products (increase in preferential quotas for 
Virginia tobacco and other raw tobacco, canned pineapple, 
soluble coffee and cocoa butter) are unlikely to stimulate 
diversification of production in the developing countries. 
15. The Committee would reiterate its belief that in all 
aspects of external relations the Community should seek to 
improve the social as well as economic situation in the world. 
Recognition of this fact by the Community cannot in any way 
be regarded as interference in the internal affairs of non-EEC 
countries. In this connection the Committee would draw 
attention to the importance which it has always attached in 
its opinions on international trade to respect for human 
rights — and in particular the observance of fair labour 
standards as defined by the International Labour 
Organization. The Committee would draw particular 
attention to the conventions on the right of association (84), 
trade-union freedoms and the protection of trade-union 
rights (87), and the right to organize and engage in collective 
bargaining (98). 
16. The Committee regrets that in its proposals for 1986 
the Commission has not made any reference to these social 
aspects despite having said that it would before publication 
of the guidelines for 1986 to 1990. 
The Chairman 
of the Economic and Social Committee 
Gerd MUHR 
Opinion on the proposal for a Council Directive on the freedom of establishment and the free supply of 
services in the field of mortgage credit (*) 
(85/C 344/08) 
On 11 February 1985 the Council decided, in accordance with Article 198 of the Treaty establishing 
the European Economic Community, to ask the Economic and Social Committee for an opinion on 
the abovementioned proposal. 
The Section for Industry, Commerce, Crafts and Services was instructed to prepare the work on this 
matter and issued its opinion on 6 November 1985. The rapporteur was Mr Pelletier. 
At its 231st plenary session (meeting of 27 November 1985), the Economic and Social Committee 
adopted the following opinion with no votes against and nine abstentions. 10. The Committee believes that a reduction of special 
taxes on the consumption of tropical agricultural products 
(tea, coffee, cocoa, bananas, pepper, etc.) may often be an 
effective way of helping the exports of developing countries. 
Alternatively, the revenue from such special taxes could be 
used, at least in part, to back development operations in the 
exporting countries. 
11. The Committee remains opposed to the creation of a 
GSP Committee with the task of 'advising' the Commission 
on Decisions which the latter is normally required to take in 
any case under the terms of the Treaty. 
12. The creation of such a Committee would make the 
decision-making process more cumbersome, protracted and 
expensive. But, above all, it would remove from certain 
Decisions (e.g. the re-imposition of customs duties) the 
automaticity which, given the imperfect international legal 
framework, is badly needed to ensure the transparency, 
objectivity and reliability of the scheme for both importers 
and suppliers. A 'non-automatic' decision-making process 
opens the door to pressure and perhaps even threats. 
13. The scope for automatic decision-making could be 
extended, and management methods improved, if ceilings 
were gradually replaced by quotas. In this connection the 
Committee would reiterate its earlier comments on the need 
to ensure that the Community has more immediate access to 
Done at Brussels, 28 November 1985. 
(!) OJ No C 42, 14. 2. 1985, p. 4. 
No C 344/12 Official Journal of the European Communities 31. 12. 85 
1. Introduction 
1.1. The Commission's proposal follows the trail blazed 
by the first Council Directive of 12 December 1977 on the 
coordination of laws, regulations and administrative 
provisions relating to the taking-up and pursuit of the 
business of credit institutions (OJ No L 322/77). 
1.2. But the 1977 text was concerned basically with 
banking operations in general and did not really cover 
mortgage credit; indeed, certain institutions were formally 
excluded. Moreover, national laws often prohibit bodies 
which specialize in mortgage credit from operating outside 
their own country. 
1.3. In addition, the first Directive mainly organized the 
freedom of establishment of branches complying with certain 
conditions considered as minimum requirements in all EEC 
Member States. 
1.4. Finally, no provision was made for allowing 
institutions setting up abroad to use their own practices for 
granting credit and providing financing, which might differ 
from those used in the host country. 
1.5. The present proposal, which- was drafted after 
exhaustive surveys by the Commission in liaison with the 
circles concerned, seeks to introduce innovations on these 
three points: 
— firstly, it specifically covers mortgage credit, and obliges 
Member States to permit mortgage credit institutions to 
operate outside their own national boundaries, 
— secondly, it organizes not only the setting-up of branches, 
but also the free provision of services directly from an 
institution's country of origin, without requiring 
establishment in the host country, and 
— thirdly, it authorizes specialist bodies to use their own 
practices for granting credit and providing financing in 
the host country. 
2. General comments 
2.1. The Committee cannot but welcome the 
Commission's intention to liberalize mortgage credit. 
2.2. For several decades, mortgage credit has been geared 
above all to housing. An unprecedented effort has been made 
in the various EEC Member States to help people own 
property, especially new buildings. But some 50 % of the 
population are still not yet property owners (the figure varies 
from country to country), though most of these people would like to be, not only to possess an asset, but also in order to be 
better integrated socially. This especially applies to young 
couples, for whom owning a house often provides greater 
stability and a setting more in keeping with their 
aspirations. 
2.2.1. Housing credit conditions must therefore be 
improved, so that credit is reasonably accessible to this sort 
of property buyer; the act of buying property must not 
become a source of insurmountable difficulties. 
2.2.2. It is therefore certainly in the consumer's interest to 
introduce increased competition into the mortgage credit 
sector in Europe and to bring in changes similar to those 
accomplished in industry, which will lead to the best possible 
credit terms. 
2.3. It is also a good thing to offer Member States' citizens 
a greater variety of schemes by adding those currently 
practised in other EEC countries, whether these concern 
credit or financing; the latter will help bring about an optimal 
distribution of savings. 
2.4. Moreover, one cannot over-emphasize the 
importance of the building industry to the economies of the 
Member States; for many years it has ensured a considerable 
level of activity, both directly and through its effects on 
industry and services. 
As regards jobs in particular, it is generally considered that 
for the same volume of production, the building sector 
employs 30% more labour than the manufacturing 
industries, and that each housing initiative creates two jobs: 
one in the building trade and one in associated sectors. But 
the EEC building industry lost nearly one million jobs in the 
three years from 1981 to 1984, which led to two million 
people becoming unemployed. The EEC countries are 
certainly all aware of the need to get out of the present 
recession in the building trade, and it would be a good thing if 
their common will were clearly expressed on this 
point (*). 
What is more, growth in construction would increase tax 
revenues, which would be particularly appreciated in these 
times of budgetary difficulties. 
2.5. It was for these reasons that the Commission 
included the present proposal in its White Paper 'Completing 
the Internal Market' (COM(85) 310 final) presented to the 
(1) ESC opinion on the situation of the Construction Sector in the 
Community - rapporteur: Mr Evain. (OJ No C 230, 
10. 9. 1981). 
31. 12. 85 Official Journal of the European Communities No C 344/13 
Summit of Heads of State and Government in Milan on 28 
and 29 June 1985. In this document, the Commission 
recommended a number of measures designed to ensure an 
optimal distribution of European savings; in particular, it 
considered that it should be possible to facilitate the 
exchange of financial products at a Community level using a 
minimum coordination of rules as the basis for mutual 
recognition by Member States of what each does to safeguard 
the interests of the public. 
2.6. As these guidelines have been welcomed by the 
Council with a view to achieving a single Community market 
by 1992 at the latest, the Committee can only approve the 
principle behind the present proposal, which applies the rules 
mentioned above to the mortgage credit sector. Moreover, 
this text, which one can say represents a major step towards a 
'people's Europe', is in keeping with the Committee's wishes 
as expressed, in particular, in its opinion of 3 July 1981 on 
the building industry and unemployment in the Community, 
where the Committee called upon the Commission to speed 
up the implementation of more freedom of establishment and 
freedom to provide services, and give highly successful 
mortgage credit schemes a chance to offer their advantages 
throughout the Community. 
3. Further — and necessary — consideration of certain 
technical problems 
3.1. The mortgage credit sector is still a complex and 
sensitive area, and the Committee cannot remain silent about 
certain problems which, although probably not of equal 
importance, must still be tackled if a unified mortgage credit 
market is to be achieved harmoniously and progressively in 
the Member States. 
3.1.1. First of all, a mortgage is, by its very nature, 
territorial. The system of land tenure and the conditions 
under which the right of property may be challenged are 
highly emotive areas governed by traditions which are often 
of long standing. Thus in many Member States there are very 
strict rules concerning, for instance, the advertising and sale 
of landed property, and these rules are designed to protect 
not only creditors but also debtors - who may only 
mortgage or lose their property under certain conditions — 
and third parties, who must know such things as the exact 
situation of any property which is for sale. 
3.1.2. Now in this respect the guarantees offered by the 
different Member States differ to some degree, but this in 
itself does not seem to be an insurmountable barrier to the liberalization of mortgage credit. For instance, to draw up a 
mortgage, some Member States do not require the formality 
of a notarial deed, though this provides considerable security 
for the panties concerned. Similarly, the guarantees provided 
by the landed property advertising laws are not quite the 
same in all cases (e. g. the system of relatively recent — and 
therefore incomplete — publicity, or publicity omitting to 
mention certain privileges likely to limit severely the rights of 
mortgagees). 
The Committee has noted the belief of Commission 
representatives that the mortgage law which would apply 
would be that of the country where the building was 
situated. 
3.1.3. In addition, some Member States h ave introduced 
— often in recent years — some very precise rules on 
borrower protection. But the scope of these rules varies 
widely from country to country, and they are not all equally 
binding (e.g. the amount paid in the event of early 
repayment). 
3.1.4. This is still the case as regards the rules for 
protecting providers of capital/depositors (safety ratios), 
subscribers to bonds or to any other securities — which vary 
from country to country. 
3.1.5. Because of the distortions due to differences in 
legislation on mortgages, consumers' rights and the 
protection of savers, an effort will have to be made to avoid 
people's minds becoming confused by the differences 
between existing rules. It must not be forgotten that 
commitments in this area cover fairly large sums of money for 
long periods. One must therefore be very careful, whatever 
happens, about the information given to the different people 
involved. 
3.1.6. It is also known that tax distortions have often led 
to unfair competition within each Member State. The 
Commission has said that, to its knowledge, there are at 
present no clear distortions of competition from one country 
to another. However, if such distortions do occur when the 
proposed Directive is implemented, the Commission would 
have to take adequate measures. 
3.2. On the purely financial side, one should rapidly 
mention the technical aspects involved: 
3.2.1. The first, which the Commission itself mentions, is 
represented by the texts which at present may hamper the free 
movement of capital between the EEC Member States. The 
explanatory note states that the new Directive 'will be 
accompanied in due course by a special Directive based on 
Article 67 of the Treaty, in order to liberalize those capital 
movements which are related to the operations mentioned in 
the present proposal'. But one should remember that several 
Member States have been authorized very recently to 
No C 344/14 Official Journal of the European Communities 31. 12. 85 
maintain measures restricting investments or capital 
movements for two or three years, with the possibility of 
extending such measures. 
The Committee would stress once more the priority that 
should be given to abolishing exchange controls in the 
EEC. 
3.2.2. One of the major problems is caused by the 
existence, in certain countries, of quantitative limits on 
credit. Logically, the proposed Directive should lead to the 
abolition of such restrictions and the general operation in 
Europe of a self-regulating market (regulated by rates). The 
Economic and Social Committee cannot but encourage such 
a move. It trusts that such liberalization, which will 
encourage the formation of a single capital market in Europe 
and the free play of economic forces, will be carried out by 
the time that the proposed Directive itself is implemented. 
3.2.3. The proposed Directive is not clear on some 
points, for instance, the legal provisions adopted 'on the 
grounds of the general good' (Article 10). Such points should 
be clarified, so as to reduce appeals to the Court of Justice to a 
minimum; it should not normally be up to the Court to lay 
down the field of application of the proposed Directive. 
3.3. In practice, and quite apart from the liberalization of 
capital movements already recommended by the proposed 
Directive, the implementation of the present proposal ought 
to be accompanied by a minimum coordination of laws as 
provided for in the White Paper. 
3.3.1. This should be done in particular for: 
— the guarantees provided to borrowers and providers of 
capital, so that a public which is generally very vulnerable 
(e.g. young house-hunting couples, small bond-holders) 
is not totally confused by unusual and complex 
schemes, 
— the principles for supervising institutions specializing in 
mortgage credit and assessing their solvency 
(remembering that studies on this point are already being 
carried out most actively by the Commission), 
— the procedures for regulating and monitoring credit in the 
EEC, which are incompatible with free competition and 
should be abolished. 
3.4. The Committee also feels that, to avoid distortions 
of competition between firms in the host country and those in 
the country of origin, the host country must delay the use of 
certain mortgage techniques practised in another Member 
State until it can amend its laws or regulations to allow its 
own firms to practise them. However, this period of grace would end at the end of the 
transitional period mentioned in Article 12, i.e. in 1992, (the 
planned date for completing the internal market) when the 
proposed Directive would come into operation fully. 
The Commission should report to the Council each year on 
the application of the Directive and on the amendments to 
laws and regulations carried out by the Member States. 
3.5. Whatever happens, it is vital to extend the principle 
of free establishment laid down in the first Directive to 
mortgage credit institutions as quickly as possible. 
4. Conclusions 
4.1. The Committee has not been insensitive to the 
Commission's new approach, which has taken the famous 
'Cassis de Dijon' judgment of the European Court of Justice 
as the basis for finding a solution for the mortgage credit 
sector. 
4.2. This judgment lays down the principle that a product 
marketed in one EEC country in compliance with that 
country's regulations must be able to circulate without 
restriction in the other EEC countries. 
4.3. The Commission's move is now part of the more 
ambitious approach mapped out by the White Paper on 
completing the internal market. 
4.4. The Committee can therefore only approve such an 
approach, which must lead to a 'people's Europe' allowing 
access to a wider variety of products. 
4.5. But, in view of the nature of mortgage credit, the 
Committee thinks it should draw the Commission's attention 
to: 
— the need to inform consumers, using all appropriate 
means, about these new products and their background, 
and 
— the technical and regulatory problems which should be 
solved as the proposed Directive is being implemented, 
and which it is quite sure that the Commission and the 
Member States will do all in their power to overcome. 
The Committee would also like to make the following 
specific comments: 
5. Specific comments 
Article 1 
5.1. This article lays down the proposed Directive's 
scope. It is worth noting that: 
31. 12. 85 Official Journal of the European Communities No C 344/15 
(a) It is perhaps not obvious that one should take over the 
selection made by the first Directive, which is already an 
old text and is not necessarily suited to the present 
economic situation. 
(b) Although mortgage credit is primarily credit for housing 
and the explanatory note to the proposal refers to credits 
'for the purpose of building or acquiring residential 
property', one might think that the new Directive will 
apply to any operations secured by mortgage, whatever 
their purpose, and that credits for housing not secured 
by mortgage will not be covered. 
(c) One wonders whether the proposed Directive will apply 
to institutions whose activities consist only partially of 
granting mortgage credit; the explanatory note states 
that the proposal 'covers activities consisting essentially 
in the granting of credits secured by mortgage'. The 
Committee feels that the proposed Directive must also 
apply to institutions whose activities consist only 
partially of granting mortgage credit. Any other 
situation would amount to arbitrary discrimination and 
lead to obvious distortions of competition. 
(d) Finally, the proposed Directive should also cover 
institutions which re-finance themselves by issuing 
certificates against the mortgages they hold, or by 
issuing any other securities. 
5.1.2. The Committee wants the remarks made in points 
(b) and (c) above to be taken into account when clarifying the 
legally operative part of Article 1. 
Article 4 
5.2. Subject to the introduction of a transitional period, 
the Committee thinks that this Article should be amplified by 
a text obliging host countries to repeal rules likely to hamper 
the introduction of techniques used by institutions in other 
Member States. But in order to allow everyone to assess the 
real impact of this text and the limits it may encounter when 
put into practice because of domestic rules on public order, 
the new Directive should include an Annex listing the 
techniques approved by the different Member States. This 
work would be greatly facilitated by the analyses which have 
been carried out by the professional interests concerned, and 
could enable the host country to authorize other techniques 
used in other EEC countries. 
Article 5 (2) 
5.3. This lays down that, pending further coordination 
relating to bonds secured by mortgage, such bonds may have to comply with the rules in force in the host country. Such a 
solution seems quite sensible. But if complete harmonization 
is not achieved rapidly, there will be a strong temptation to 
end a rule which, by its very nature, is provisional. The 
guarantees surrounding bonds secured by mortgage vary 
considerably from country to country (especially as regards 
the quality of the mortgage), and the co-existence on the 
financial markets of paper offering totally different 
guarantees would be very dangerous for savers, as 
mortgagors are often people of modest means who should be 
afforded special protection. 
In addition, in some countries there is no legislation at 
present on the issuing of bonds secured by mortgage. 
5.3.1. To clarify the situation and ensure that, whatever 
happens, savings have better protection, minimum 
conditions, with which mortgage bonds should have to 
comply, should be laid down in the Directive itself or in 
another accompanying Directive. 
5.3.2. In addition, one wonders about the status of other 
re-financing instruments (simple debentures or any other 
paper representing mortgage debts). 
Article 6 
5.4. This Article authorizes the host Member State to 
require that both funding and lending transactions be 
expressed in its own currency; this measure seems designed to 
limit any disturbances likely to result from the introduction 
of unaccustomed practices into a country. 
5.4.1. It is also stated that the institution in question may 
always use the ECU as an alternative. One can only approve 
such a provision, which should lead to the ECU being used 
more widely for private transactions. 
5.4.2. Borrowers should have their attention drawn to 
the risks and the advantages which may arise when contracts 
are expressed in ECU or in a currency other than that of their 
own country. 
5.4.3. At any event, there should be some matching of 
lending institutions' resources to their lending. 
Article 7 
5.5. Although one can only approve the principle of 
non-discrimination on grounds of nationality, there will be 
practical difficulties in applying this clause to techniques 
which are unknown in the host country (e.g. interest subsidy 
schemes applicable to certain types of credit and distributed 
No C 344/16 Official Journal of the European Communities 31. 12. 85 
by bodies set up for that purpose or through certain public 
law bodies). But the transitional period provided for must be 
used to resolve these difficulties. 
5.5.1. Similar problems may arise in connection with the 
various State-aided savings schemes for housing, especially 
for migrant workers. 
Article 10 
5.6. The principle of information being exchanged 
between supervisory authorities in the countries concerned 
can only be approved, but it seems that the planned 
supervision and sanctions procedure for dealing with 
violations of the law might be of doubtful effectiveness in the 
event of serious irregularities jeopardizing monetary order in 
the host country. 
Article 11 
5.7. This states that for a maximum period of five years 
after notification of the new Directive, the home Member 
Done at Brussels, 27 November 1985. 
1. Introduction 
1.1. The Economic and Social Committee welcomes the 
Commission's initiative to consolidate the internal market State may limit the volume of transactions carried out by a 
credit institution under this text to 25% of the total 
mortgage lending of the relevant institution. To avoid any 
difficulties in implementation, it would be preferable to 
consider the volume of loans granted during the preceding 
year. 
5.7.1. In the interests of symmetry, the host Member 
State should also be allowed to limit the volume of operations 
during the transitional period. It is hard to imagine a small 
country accepting straightaway a large volume of business 
from a powerful institution from another country. 
Article 12 
5.8. The date for bringing the proposed Directive into 
force has been left blank. But a date should be fixed so as to 
allow the Member States sufficient time (e.g. five years) for 
adapting their laws to the Directive. If a transitional period is 
provided for as proposed in point 3.4 of this opinion, the 
deadline for implementing the Directive may be set at one 
year after the date of its publication. 
The Chairman 
of the Economic and Social Committee 
Gerd MUHR 
and, while regretting the absence of the social dimension, 
supports the ambitous target of a fully unified internal 
market by 1992. In declaring its firm commitment, the 
Committee calls on the Member States to honour their pledge Opinion on 'Completing the Internal Market' — White Paper from the Commission to the 
European Council 
(85/C 344/09) 
On 28 June 1985 the Commission decided to consult the Economic and Social Committee, under 
Article 198 of the Treaty establishing the European Economic Community on 'Completing the 
Internal Market' — White Paper from the Commission to the European Council (Milan, 28/29 June 
1985). 
The Sub-Committee on the Internal Market, which was responsible for preparing the Committee's 
work on the subject adopted its opinion at its meeting on 6 November 1985, in the light of the oral 
report by Mr Poeton, rapporteur. Co-rapporteur was Mr. Rouzier. 
At its 231st plenary session held on 27 and 28 November 1985 (meeting of 27 November 1985) the 
Economic and Social Committee adopted the following opinion by 90 votes to 14 with 17 abstentions 
(vote recorded):