ARCHIVESHISTORIQUES
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DOCUMENTS "COM"
COM(76)543
Vol.1976/0166

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COMMISSION OFTHEEUROPEAN COMMUNITIES
\•
COM(76)543final.
Brussels.8October1976.
COMMONSTEELPOLICY
/
/
COM(76)543final

-a-
ThecommonsteelpolicytheCommissionistosetupwillconsist
ofanassortmentofpermanentmeasuresandasetofspecialmeasurestobe
activatedonlyinacrisissituation.Thepolicywillalsocoverrelations
betweentheCommunityandthirdcountries,anditwilltakeaccountof
socialandregionalconsiderations .
A.PERMANENT MEASURES
1.Analysisandmonitoringofthemarket
Thferemustbepermanentstatistical monitoringofthesteelmarket.
Thiswillbedoneonthebasisoffasteranalysisofthestatistical data
suppliedperiodically totheSOEC,supplemented bybreakingdowndataonthevolume
thevolume .of... , .^oiordersbyconsumersector,on1,ordersbythirdcountryandonreceiptsand
costs.
Thisanalysisofstatistical datawillsupplyanup-to-datepicture
ofthesupplyanddemandpositiononthesteelmarket.
Improvedforecasting methodswillmakeiteasiertodetect,on
thebasisofthefundamentalstructureoftheCommunitysteelmarket,
thefirstsignsofacyclicalimbalance,andwillthusprovidethe
Commissionwithaninstrumentgivingafasterandclearerpictureof
therealmarketsituation.
2.Investments
NoCommissionactiononsteelinvestmentwouldattempttosupersede
theundertakings'own investmentinitiatives .Butinsofarasapredicted
imbalancebetweensteelsupplyanddemandwillcertainlyaffectthe
magnitudeofacrisis,theCommissionwillbemakingbetteruseofthe
informationalreadyavailableundercurrentTreatyprovisions.

SuchOpinionsandDecisionsastheCommission mayadopton
projectedinvestments andloans,basedastheywillbeonboththe
factsrevealedbyitsenquiriesanditsGeneralObjectivesforSteel*,
andbearinginmindsocialandregionalimplications,willbeoneof
themeasuresforcorrectingthisimbalance.
a)TheCommissioncanincreaseitsinfluenceifrequired,by
adoptingmoreopenlynegativepositionsoninvestmentprojects(particular
projectsorthefieldofinvestmentingeneral)whereexcesscapacity
canbeforeseen.TheCommission^opinionsoninvestments mustbe
publishedmorewidelytointerestedparties.Thiswillincreasetheir
impact.
Further,theannualsurveyoninvestments couldprovidean
opportunity forclosercontactswiththesteelindustry,andfordis­
cussionsonforeseeable capacitydevelopment,withpviewtocoordinating
investmentintentionsbetter.
Aspartofthebefore-the-eventdiscussions betweenthesteel
industryandtheCommission,thelattercantrytopreventinvestments
liabletoprovokeimbalances frombecoming$ttledplans.
Thisinformation wouldbeofagreatdealmoreuseifthelength
ofnoticetobegivenforinvestmentprojectswereextended.
b)Inordertoencourageabetterbalancebetweensteelsupplyand
demand,theCommissionoughttomakeuseofitsloanpolicytofacilitate
jointinvestments inheavyproductionplant,althoughofcoursetheTreaty
competitionruleswouldhavetobeborneinmind.TheCommissionshould
alsoencouragesuchmovestowardsrationalization aswouldachievea
betterbalanceofsupplyanddemand.
(*)Thecurrentsurveyoninvestmentsindicatesthatcompanieshave
recentlyrevisedtheirinvestmentprojectssothattheirplans
nowcoincidebetterwiththeforecastsintheGeneralObjectives
forSteel1980-85;thereiscurrently,therefore/lessriskof
surpluscapacityinthefuture.

B.CRISISMEASURES
MakinguseofthedirectmeansprovidedforintheTreatytocope
withacrisis,notablyproduction quotas(Article58)andminimumprices
(Article61),isnecessarily aslowbusinessastheseprocedures areso
cumbersome .
Accordingly,weneedtofindmeanstocopewiththisinevitable
delay,sothatwhenacrisisarisesstepscanbetakenimmediately to
containaworseningsituation.
Ineverycasethemeasuresrequiredwillhavetobetakenbymeans
ofaCommission Decision.AnysuchDecisionwillbebasedonaspecial
examination ofthesituationtriggeredoffbycertainindicators reaching
thresholdssettledinadvance,inthefieldscoveredbythesystemfor
analysing andsupervising themarket.Ifthesituation sorequires,the
CommissionwillgetintouchwithMemberStates'governments beforetaking
anyDecision.
Theindicatorswill,inthemain,befoundinorderbooksandnew
orders,inproduction forecasts andinunemployment forecasts/buttherate
ofcapacityutilization,patternsofstocking,oranabnormalandlong-
lastingreductionincompanyreceiptsfromsalesinsidetheCommunity
critically impairingthenormalcorrelation withcosts,wouldalsobe
considered .
Aprolongeddropinpricesontheinternational marketcouldbe
takentoshowtheneedforcontactswithproducersinnon-member countries.
1.Production
DuringthelastcrisisthenewformatForwardProgrammehelped
toadjustsupplytorealdemandandtocheckthedeterioration ofthemarket.
Accordinglyitisimportanttogainthemaximumpossiblebenefitfromthe
ForwardProgrammes,whicharepreparedwiththeregularhelpofproducers,

unions,consumers,merchantsandgovernmentrepresentatives .Forthis
purpose,morefinely-tuned forecasting methodsarebeingprepared.
WhentheCommissionhassodecided,basingitsDecisiononthese
cyclicalindicators,thereshouldbeagreaterdegreeofcompulsionin
theForwardProgrammes.
TheCommissionwillbreakdowntheproductionanddeliverytonnages
publishedbymarketintheForwardProgrammestocompanylevel,bearing
inmindthefundamentalobjectivesoftheTreaty.
Firmswillbeinvitedtoenterintoindividualundertakings with
theCommissiontotheeffectthattheywouldcomplywiththeproduction
ordeliverylevelsgivenintheForwardProgrammes.
InsofarastheCommissionturnstoconsultations withtrade
associations whenplanningandimplementing themeasuresoutlinedabove,
theCommissionwillbeconstantly onguardagainstanypossiblechance
thatanypoleofferedtothetradeassociations might,duringthetime
whenthesemeasuresareinforce,giverisetosituationsnotcompatible
withtheECSCTreatyingeneralandthecompetitionrulesinparticular.
Anymeasurestakenwillbesubjecttostricttimelimitsand
willbeendedbyaCommissionDecision.ThislatterDecisionwillbe
takenoncetheCommission canseethatcertainthresholds,settledin
advance,havebeenreachedinthefieldscoveredbythesystemfor
analysingandsupervising themarket.
2.Prices
Whenproductiondrops,itdoesnotnecessarilyfollowthatfirms'
receiptsalsodrop.However,whenreceiptsdropbelowtheleveldescribed
inArticle3(c)oftheECSCTreaty,thisimpliesaworseningmarket.
TheCommissionmustbeinapositiontoreceivetheinformation
oncompanyreceiptsneededtogivetheguidancethoughtmostappropriate
tocontainanysuchdeterioration .

Ifthe fall inprices inside the common market were due essentially
tolowprice imports from third countries ,theCommission ought togive
consideration toemploying themeasures required bysuch asituation
and ou(jht ,inparticular ,tomake contacts atinternational level as
itdid in1975 .
Ifneed be,and if,bearing inmind thebasic Treaty objectives the
Commission can see "that itisnecessary todoso.theCommission could
H
publish minimum references prices before any later recourse tominimum
prices asreferred toinArticle 61oftheTreaty .
C.RELATIONS BETWEEN THE COMMUNITY AND THIRD COUNTRIES ONTHE STEEL MARKET
Since the 1975 crisis there hasbeen signs ofmoves bysome third
country governments towards either some kind ofworldwide orderly
marketing agreement oraninternational steel charter .
Because ofthegrowing interdependence ofthemajor steel industries
intheworld steel economy ,theCommunity ought ,where appropriate ,to
take part injoint efforts bythemain producing countries tofind
solutions toproblems which arise atworld level .
There can,however ,benoquestion oftheCommission 'sjoining in
endeavours tolimit world free trade insteel products .Without prejudice
toany usemade ofarticle 74,itwould beessential totry forgreater
international cooperation ,particularly toovercome crisis situations ,
butalways bearing inmind both any internal Community measures and
thevarious ties theCommunity haswith third countries .
Such consultations could beuseful inensuring better exchange of
information oninvestment andproduction forecasts .Information of
this kind ,atinternational level ,onthevarious companies' plans />
would help toprevent duplication ofeffort andover-capacity and
would thereby contribute towards abetter balance between world
supply anddemand .

D.SOCIALANDREGIONAL PROBLEMS
Whenthereisacrisis,anoverriding concernisthemaintenance
ofemployment levels.TheCommission intendstoexamine,withMember
Statesandthevariousinterestedparties,inparticular bothsidesof
industry,thebestmeansofmakingitpossibletoresolvethis
problem.
Althoughthesocialeffectsoftherecentcrisiswerefelt
throughout thewholeoftheCommunitysteelindustry,someregions
withstructural weaknesses suffered morethanothers.TheCommission
isreadytocontribute towardsadetailedstudyoftheeconomicand
socialconditions underwhichthereconversion ofsuchregionsshould
becarriedout.
Awareoftheseproblems,theCommission ispreparing newguidelines
onreconversion policyandrecentlyconsultedtheECSCConsultative
1Committee onthissubject.ItwillalsoinformtheJointCommittee
onSteelofitsproposals.
TheexpansionofCommunityaidforindustrial reconversion
couldgivefurtherimpetustothenecessarymodernization ofthe
steelindustry.
1SeeResolution adoptedbytheECSCConsultative Committee on10thJune1976.