15.3.93 OfficialJournaloftheEuropeanCommunities NoC73/9
OpinionontheEuropeanAircraftIndustry:FirstAssessment andPossibleCommunity
Actions
(93/C73/04)
On14May1992,theCommission decidedtoconsulttheEconomicandSocialCommittee ,
underArticl198oftheTreatyestablishing theEuropeanEconomic Community onthe
EuropeanAircraftIndustry :FirstAssessment andPossibleCommunity Actions.
TheSectionforIndustry,Commerce ,CraftsandServices,whichwasresponsible forpreparing
theCommittee 'sworkonthesubject,adopteditsOpinionon6January1993.TheRapporteur
wasMrMobbs.
Atits302ndPlenarySession (meetingof27January1993),theEconomic andSocial
Committee adoptedthefollowingOpinionunanimously .
1.Introduction
1.1.ThisOpinionisoneofanumberofOpinions
whichresultfromtheCommission 'sCommunication
onIndustrial PolicyinanOpenandCompetitive
Environment —Guidelines foraCommunity approach
[doc.COM(90 )556](1).
1.2.TheCommission 'sFirstAssessment onthe
EuropeanAircraftIndustryfollowsontheearlierCom­
missionCommunication onaCompetitive European
Aeronautical Industry [doc.SEC(90)1456of23July
1990].
1.3.TheCommittee welcomes theCommission 's
Communication asafirststepindeveloping acoherent
setofmeasuresfortheCommunity ,MemberStatesand
allpartnersinIndustrytobeimplemented withthegoal
ofstrengthening thecompetitiveness oftheEuropean
AircraftIndustry .TheCommission hasidentifiedthe
majorissuesbeingfacedbytheAircraftIndustry .
1.3.1.TheCommittee alsowelcomes theCouncilof
Minister'saffirmation oftheimportance ,forthewhole
oftheeconomyandforthestrategicaspectofEuropean
technology ofastrong,dynamicandcompetitive air­
craftindustry (2).
1.4.WhilstdetenteandtheeasingofEast/Westten­
sionarewelcomed ,itisevidentthattherewillbemajor
changesandrepercussions forallareasofthedefence
industry,includingaircraft.
1.4.1.SincetheCommission 'sFirstAssessment was
published (29April1992),theaircraftmarketplacehas
changedandcontinuestochangerapidly.Thedecline
indefenceorderscontinues .Whileithasnowbeenagreedinprincipletoproceedwithaslimmeddown
versionoftheEuropeanFighterAircraft,itseemsthat
therewillstillbeaconsiderable delaybeforeproduction
canbegin.Therearereductions innewordersforcivil
products,deliveriesonsomeexistingcivilordersare
beingdeferredandoptionscancelled .
1.5.Thesituationtodayhasdeteriorated signifi­
cantlysincepublication oftheCommission document
andisnowextremelyserious.Urgentactionisrequired
tofacethecontractioh intheindustryduetofalling
demandandincreasingproductivity :
1.5.1.consideration bytheIndustryoftherangeof
productsonoffer,especiallywheretherearetoomany
similarproductstoensureprofitability inalimited
market;
1.5.2.consideration bytheIndustryofamalga­
mationand/orrationalization ofcompeting companies
andstrengthening ofinter-company collaboration ,
withinaworldwide competition policy,toimprove
profitability andprovideadequatefinancialresources
forfutureinvestment ;
1.5.3.ensurethereisnolossofmomentum in
R&D,andthatfundingiscontinuous ,atCommunity
andnationallevel,inorderthattheEuropeanindustry
doesnotfallbehinditsmaincompetitors .Atthesame
timeadequateproduction capacitymustbemaintained .
BoththeseaspectsarevitaltotheabilityoftheEuro­
peanIndustrytocompetesuccessfully whentheinevi­
tableupturninthecivilmarketoccurs;
1.5.4.giveadequateconsideration tothesocial
aspects :
—protection ofjobs;
—maintenance ofskills;
—retrainingforalternative employment ;
(!)OJNoC40,17.2.1992.
(2)OJNoC178,15.7.1992. —dialoguewiththesocialpartners .

NoC73/10 OfficialJournaloftheEuropeanCommunities 15.3.93
2.GistofthemainCommission proposals 2.3.7.topromotesocialdialoguetoensureinvolve­
mentofsocialpartnersinthepromotion andimplemen­
tationoftheseinitiatives ;
2.1.OveralltheCommission seesthatthemeasures
neededtostrengthen theaircraftindustry'scompeti­
tivenesslargelyliewithintheindustry .2.3.8.toensurealevelplayingfieldbyapplyingfair
competition ruleswithintheCommunity ,aimforfair
competition atinternational levelrecognizing theinter­
nationalextentoftheaircraftindustrymarket,within
rulesoftheGeneralAgreement onTariffsandTrade
(GATT)pursuenegotiations toarriveatmultilaterally
bindingrulesforthissector;2.2.HowevertheCommunity andMemberStates,
withintheprincipleofsubsidiarity ,musthelptopro­
videanenvironment conducivetotheimprovement of
theaircraftindustry'scompetitiveness .
2.3.9.tomaintainthetechnology levelbyimproving
theefficiencyofR&T,supporttransitionfrommilitary
tocivilareas,improvebettercoordination between
nationalprogrammes ,enableindustrytobenefitfrom:
Research afterMaastricht .AnAssessment .A
Strategy (4);2.3.ThustheCommission proposes :
2.3.1.toaccelerate harmonization oftechnicalstan­
dardsandguaranteefreedomofmovement foraircraft
andpassengers andalsoahighlevelofsafetythrough­
outtheCommunity ;
2.3.2.tosupportAECMA (j),theEuropeanCom­
mitteeforStandardization (CEN),theEuropeanCom­
mitteeforElectrotechnical Standardization (Cenelec)
throughthetransferofresourcesfromnationaland
companystandardization toEuropeanstandardization .
TheCommission contribution willcovertheexpenses
incurredbytheapplication ofCEN/Ceneleccommon
rulestostandardsworkedoutbyAECMA;2.3.10.toresolvethedollarissue,whilstrecognizing
thatonlyinthelongtermwillastablemonetarysystem
makeitpossible.Attentionwillbegiventoconsidering
variousshort-term solutions—anindustryandfinancial
experts'jointworkinggrouphasalreadybeensetup;
2.3.11.toguarantee thebalancewiththeenviron­
ment—closecooperation withECAC(5)andICAO(6),
andconsidertheeffectatairports;
2.3.3.tospeeduptheharmonization ofcommon
JARs(2).ThiswasapprovedbyCouncilinOctober
1991;2.3.12.toconsiderthepositionofCentralandEast­
ernEuropeandtheformerUSSR;
2.3.13.tocontinuetoworkwiththeindustryto
ensuremoretransparency soastoimproveexchanges
ofinformation .
3.Generalcomments2.3.4.todoallitcantospeedupproviding the
EuropeanAircraftIndustry,withtheEuropeancom­
panystatute,withalegalframework foradaptingits
industrialandlegalstructurestotheconditionofglobal
competition ;
2.3.5.totakeallactionspossibletopromote
vocational traininginordertoprovidepersonnelcapa­
bleofdeveloping andusingnewaircraftindustrytech­
nologies .Attentionwillbegiventotheharmonization
ofqualifications .Supportwillcontinuewithinitiatives
alreadystartedundervariousprogrammes ;
2.3.6.toexpandtrans-European networksalready
beingdeveloped underseparateprogrammes and
improvetheirimpactontheaircraftindustry .Most
importantly ,processessetupwithdifferentbodiescon­
cernedwithATC(3)willbeimprovedandspeededup;3.1.TheEuropeanAircraftIndustryismodern,high
technology andcomplex .Itisandwillbecapableof
holdingitsownintheworldmarketplaceproviding
theproblemsfacingtheindustrytodayarerecognized
andunderstood byallparties,andthatconstructive
andmeaningful solutionsaredetermined andacted
upon.Theindustryisnotseekingassistancebecauseit
cannotfaceuptotherealitiesoftoday'smarketneeds.
Infact,giventherightsupport,theindustrywillbe
wellplacedforthefuture.
(i)AECMA=European Association ofAerospace Manufac­
turers. (4)Seedoc.SEC(92)682final.
(2)JARs=JointAirworthiness Requirements .
(3)ATC=AirTrafficControl.(5)ECAC=EuropeanCivilAviationConference .
(6)ICAO=International CivilAviationOrganization .

15.3.93 OfficialJournaloftheEuropeanCommunities NoC73/11
3.2.ThestatisticsincludedintheCommission Com­
munication ofJuly1990,'ACompetitive European
Aeronautical Industry'(1988data),havenotbeen
updatedintheCommission Communication ofApril
1992becausetheCommission considersthattheoverall
picturehasnotchangedmuch.
3.2.1.Nevertheless itisworthrecording somekey
factsbasedon1990data(1988dataisinbrackets
forcomparison ).TheCommunity aerospaceindustry
accountsforsome3%ofECindustrialproduction .It
employsabout1%oftheEClabourforce,withdirect
jobsat400000(downfrom450000)andindirectjobs
atabout1000000(unchanged ).
3.2.2.Turnover hasincreased toECU37billion
(fromECU30billion).
3.2.3.Oftheworldtotalproduction (excludingfor­
merUSSR),worldcivilproduction accountsfor45%
(upfrom30%)andmilitarytheremaining 55%.
3.2.4.Militaryactivityisnotthesubjectofanydetail
inthisCommission Assessment .
3.2.5.TheEuropeanshareofdeliveriesofcommer­
cialjets(inmoneyterms),whichisthebulkofcivil
activity,isat20%(slightlyupfrom18%).statement (17June1992)thattheCommission should
'extendcontactstoallinvolvedintheAirTransport
Sector'.
3.3.1.Severaloftheproblemsaddressed intheFirst
Assessment alsoconcerntheengineandequipment
manufacturers ,thesetwoimportantsectors,whichtog­
etheraccountforsome50%ofemployment andturn­
overintheindustry,havealsoadifferentpositionin
theworldaeronautical environment .
3.3.2.InthecaseofEuropeanairframecompanies ,
competition operatesatthelevelofthefinishedproduct
(e.g.USA-Airbus),withsubstantial reciprocal subcon­
tractingforcomponents andequipment .
3.3.3.ThepositionfacingEuropeanenginecompani­
esisdifferent .ProductalliancesbetweenUSandEuro­
peanenginecompanies alreadyexist.Nevertheless ,
irrespective ofthesealliances,European enginecom­
paniesmustmaintainacompetitive technology base,
eithertoenablethemtocollaborate asequalpartners
withUScompanies ,ortoenablethemtocompetewith
theUSonfinishedproducts .
3.3.4.TheEuropeanequipment industryisamajor
suppliertoUSandEuropeancompanies .Itismadeup
ofalargenumberofsmallandmediumenterprises
whichmaydependcompletely onaerospace business,
aswellaslargecompanies whichmaynotbeentirely
dependent onaerospaceequipment .
3.3.5.SomeoftheproposalsforCommunity action
arenotasspecificastheCommittee wouldwish.Itis
regrettable thattheproposalsforResearchandTech­
nology(IVc)remainatthestageofdefinitionandare
notyetfirmprogrammes withproposedexpenditure
levels.Thepreservation ofthetechnological capability
oftheindustryisafundamental elementforthemain­
tenanceofcompetitiveness .
3.3.6.Inviewoftheselfevidentstrategictechnologi­
calimportance oftheaeronautical industry,theCom­
mitteerecommends thataspecificmajorprogramme
ofresearchandtechnology shouldbelaunchedassoon
aspossibleundertheproposal [doc.COM(92 )309,
15July1992]foraworkincreaseintheexistingIII
R&DFramework Programme andcontinueunderthe
proposednewIVFramework programme onresearch
anddevelopment (R&D)[doc.COM(92 )406final,
9October1992].TheEuropeanaeronautical industry
hasrecommended specificareasofintegratedaction:
—Improvedairvehicleefficiency .
—Improvedairvehiclecosteffectiveness .
—Environmentally friendlyairtransport .
—Improvedairtransportoperability .
—Improvedpassengerorientedtechnologies .3.2.6.Theallocation ofworkinanaircraftremains
at:
Section %
Airframes 50
Engines 20
Equipment 30
100
3.2.7.Theamountofbusinessdone,ineithermoney
orquantityterms,inthefieldofgeneralbusiness/light
aircraftisnotconsidered sufficienttowarrantcomment
atthisstage.
N.B.1.Comparative information hasbeenprovided
bytheCommission .
2.TheCommittee stressesthatsincetheCom­
missionmadeavailabletheabovedata,the
numberofjoblossesintheaerospaceindustry
hasincreasedalarmingly andcurrentlyshows
nosignofabating.
3.3.TheCommission 'sFirstAssessment islimited
totheaircraftmanufacturers .TheCommittee findsthis
restrictive andwelcomes theCouncilofMinister's

NoC73/12 OfficialJournaloftheEuropeanCommunities 15.3.93
TheCommittee welcomes theseproposals andis
especiallyinterestedtoseethattheindustrycontinues
togivehighprioritytosafetyandtheprotection ofthe
environment .try.InadditiontheindustrysuppliesmanyEuropean
airlines.Failuretokeepabreastwithworldcompetition
asaresultoffallingbehindtechnically orcompetitively
willhaveasevereeffectontheEuropean balanceof
trade.Furthermore ,theamountofcompetition willbe
reducedwiththeconsequential adverseeffectonprices.
3.4.TheGulfWaratthesametimeasarecession
wasdeveloping ,hasledtoareduceddemandforcom­
mercialaircraft.Furthermore ,thecollapseofCommu­
nismandtheopeningupofEasternEuropeandthe
formerUSSR,allpresenttheEuropeanAircraftIndustry
withsevereproblems .Cutstodefencebudgetsarealso
havingtheeffectofreducingdemandformilitaryair­
craftandequipment ,bothinEuropeandintraditional
exportmarkets.
3.4.1.Contraction ofeitherthecivilorthemilitary
marketmightbeasituationwhichcouldbeaccommo­
dated,withresourcesbeingswitchedfromonemarket
totheother.Whenbothhappentogether,theproblem
becomesverysevereforanyMemberStateorindustry .3.10.Inordertofaceuptothesizeandriskofmajor
newprojects,therehasbeenconsiderable consolidation
inboththeUSandEuropeanaeronautical industries .
InEuropethishastendedtobewithinacountrywith
transfrontier cooperation inallmajorprojects.Further
development inthisdirectionisinevitable ,andthereis
atrendtowardsspecialized Europeancompanies (e.g.
Eurocopter ).Inordertomakefurtherprogress,the
complication ofdifferentformsofcompanyownership
willhavetoberesolved .Suchdevelopments raiseissues
inrespectofCommunity policiestowardsmergersand
cooperative agreements .Whensuchmatterscome
underconsideration ,itisessentialthattheireffectis
evaluatedinthecorrectperspective—usuallytheworld
market—andforthecorrectproductsegment .
3.5.ThewholeEuropeanAircraftIndustryisone
madeupofhighlyskilledpeopleproducing extremely
complexproducts,ofteninrelativelysmallquantities ,
sometimes atgreatcost.Products,usuallysubjectto
environmental constraints ,haveatalltimestomeet
complexrulesandregulations regardingallaspectsof
safety.3.11.TheEuropeanAircraftIndustrycurrentlyhas
tocopewithstructuraladjustment problemsandisstill
toosubdivided .Unlesschangesaremadetheindustry
willnotbeabletocompetesuccessfully inworldmar­
kets.WhilsttheCommission assessment commentsonly
ontheaircraftmanufacturers ,verysimilarsituations
prevailandremarksapplytoenginesandequipment .
Theseadditional sectorsshouldnotbeleftout,evenif
theyreceivemorecomprehensive attentionatalater
date.Furthermore ,theCommission shouldgiveatten­
tiontothespaceindustryandthemilitaryindustryas
farasitimpactsonthecivilsector.3.6.Therecoveryofhugedevelopment costsisspre­
adoveryearsandiscomplicated bythefactthatthe
dollaristhenormalcurrencyofthecivilaircraftindus­
try.Thissituationmightbeacceptable weretheworld
marketnotsooversuppliedandcompetitive thatfew
aircraftprojectsevermakeaprofit.
4.Specificcomments ondiagnosisofcompetitiveness3.7.TheEuropeanAircraftIndustryhasrecognized
thatthedevelopment oflargeciviljetsisbeyondthe
meansofindividual MemberStatesandformedaEuro­
peanconsortium toproducetheAirbusfamily(ashap­
pensforsomemilitaryaircraftprojects).Whilstthere
aresomeEEIGs(1)forsmalleraircraftorequipment ,
thereremaintoomanyproductsproducedbytoomany
companies inEuropeasawholeandnotjusttheCom­
munity.4.1.Detente(lll.D)
3.8.Inthedefencemarket,nationalsecurityissome­
timesusedasameanstoprotectsuppliersfromfull
competition orpreventlogicalmarketdrivenamalga­
mations .4.1.1.Withthewelcomeendingofthecoldwarand
easingoffourdecadesoftensionbetweenEastand
West,planshavebeenannounced formajorreductions
inNATOdefenceforces,andcancellations ofexisting
majorprogrammes .Thisisleadingtosubstantial
reductions inEuropean militaryaeronautical pro­
ductionandcorresponding cutsintheworkforce.
Thesecutswillbefurthercompounded byassociated
lossofstrengthinthecivilindustrybecausetheeffective
strengthofacompany inseveralaspects—financial
base,manufacturing base,facilitiesbase—reflectsthe
combined levelsofthecivilandmilitarybusiness .Some
fixed'overheads'(thecostswithinthecompanywhich3.9.Exportperformance oftheEuropeanAircraft
Industryisamongthebestofanymanufacturing indus­
(')EEIG=EuropeanEconomic InterestGroup.

15.3.93 OfficialJournaloftheEuropeanCommunities NoC73/13
donotvaryproportionately withthevolumeofrevenue
earningbusiness )areattributable tobothciviland
militarybusinessandaresharedbetweenthem.whichmakesitdifficultfortheaeronautical industry
toformulateclearpoliciesatthisstage.
4.1.2.Thus,ifthevalueofmilitarybusinesssuffers
decline,therewillbelossof'scale'strengthandreallo­
cationof'overhead'coststothecivilbusiness—both
havingtheeffectofreducingcompetitiveness ofcom­
panies.Thisislikelytoleadtoadeclineintheskill
basefromwhichtheindustrymighthavedifficultyin
recovering .4.2.2.Whereastheaeronautical industriesinthepre­
vioussatellitecountriesinEasternEuropearerelatively
underdeveloped andfairlysmall,thoseintheoldUSSR
areverylarge.Measured bynumbersofpeople
employed,theoldUSSRisabouttentimesthesize
oftheWesternEuropeAerospace industryintotal
(Commission assessment ).Itisextremely difficultto
foreseewhatmighthappentothismassiveindustry,
howtherelationships betweenthevariousairframe,
engine,equipment designbureauxandthemajormanu­
facturingfacilitieswilldevelop.4.1.3.Allthisistakingplaceagainstthebackground
oftheUSA,Europe'smajorcompetitor ,statingthatthe
government willcontinuetosupportdefenceresearch
andtechnology acquisition withappropriate funding
despitethefallinproduction orders,inordertoprotect
thelongtermcapability oftheindustry('Anew
approachtoDefenceAcquisition 'USDepartment of
DefenceFactSheet1992).Preliminary indications show
thatchangesareunlikelyunderthenewUSAdminis­
tration .4.2.3.Thedegreetowhichtheymightbekeptunder
centralcontrolfromMoscoworpossiblyprivatised
piece-meal isveryimportanttothepatternofanyfuture
collaboration .
4.2.4.Thepossibleexportsalesoflowpricedmili­
taryaircraftandhelicopters bytheformerUSSRcould
adverselyaffectwesternexportingcompanies .4.1.4.TheCommittee isconcerned thattheassetsof
theaerospaceindustryshouldnotbelostbyEuropeas
aresultofreduceddefencespendingwhichimpacts
onthefinancialhealthofcompanies andtherefore
recommends thatnationalcivilresearchandtechnology
spendingshouldbeincreasedtooffsetreductions
resultingfromthelossofdirectlaunchaidunderthe
newUSA/ECGATTAgreement andthereforesafe­
guardthefuturecompetitiveness oftheIndustry .4.2.5.Itmustberecognized thattheformationofa
marketeconomywithinthesecountrieswillneverthe­
lesshavetorespectthefactthattheywillwishtoearn
sufficientforeigncurrencytopayforimports,andthey
willnaturallygivepreferencetotheirownproductsand
thismaylimitthedegreeofpenetration byWestern
Europeanaircraft,enginesandequipments .
4.2.6.Despitethesedifficulties ,thereshouldbea
clearobjectivetoensuretheCentralandEasternEuro­
peanandtheoldUSSRaeronautical industriesshould
becomeprimarycollaborators withWesternEuropean
industryandnotrivalslinkedtotheUSAorJapan.
Therefore ,withinafaircompetition policy,European
industryshouldbeencouraged toseekasmanycolla­
borativeventuresaspossible .4.1.5.Furthermore theCommittee supportsthepro­
posedCommunity strategyforconversion anddiversifi­
cationofdefence-oriented productstowardsciviluse.
TheCommittee callsontheCounciltoauthorise a
Community workprogramme ,tobedrawnupbythe
Commission incooperation withtheaircraftindustry
andallthesocialpartnersinvolved,andnotifiedto
theEuropeanParliament andtheEconomicandSocial
Committee .TheCommittee believesthatIndustry,the
Community andMemberStatesmusthaveanadequate
andrealisticindustrialpolicy,otherwiseskillsandtech­
nologycapacitiesandcapabilities willbelostandmany
morejobsinthedefencesectorwillbeatriskincoming
years,withnoprospectofalternative employment .
4.2.AircraftIndustriesofCentralandEasternEurope
andoftheIndependent StatesoftheformerUSSR
(1II.D.2)4.2.7.Tomakeprogress,theCommittee suggests
thatthisphilosophy ofpotentialcollaboration should
beacceptedbytheCommission ,andmoreoverthat
supportbytheCommunity toCentralandEastern
EuropeandtheoldUSSRshouldbechannelled to
joint-ventures involvingEasternandWesternEuropean
Companies ,ratherthanbydirectsupporttotheaero­
nauticalindustryintheEast.Suchcollaboration will
beamuchmorerapidandcosteffectivemeansof
regeneration thandirectfinancialaidwhichwillbe
difficulttocontrolormonitor.WesternCompanies
shouldbeprotectedagainstunusualcommercial risks
whichwillariseastheirEasternpartnersadjusttoa
marketeconomyandlearnthenecessarytechniques ,as
wellasdeveloptheirownqualityandairworthiness4.2.1.WithregardtoCentralandEasternEurope
andtheformerUSSR,therearemajoruncertainties

NoC73/14 OfficialJournaloftheEuropeanCommunities 15.3.93
specifiedonprojectsinvolvingAmericancustomersand
toalargeextentonEuropeanprojectswherenoEuro­
peanorinternational standardsareavailable .Thiswill
notstarttochangeuntilthereareagreedandaccepted
worldwidestandards—alongtimeintothefuture—un­
lessspecialeffortsaremadebyall.involved tospeedup
theprocess.standards includingadaptingtheirexistingonesto
acceptable Westernstandards .
4.2.8.Standardization activitiesundertaken inWest­
ernEuropebyAECMAandtheJointAirworthiness
Authorities overthelasttwentyyearshavebeenamajor
burden,andtheincreasing levelofsuchactivityisnow
becoming adifficultyforWesternEuropeindustryto
support.Therefore ,theCommission shouldaddressthe
questionofstandardization andalsojointairworthiness
requirements toseeifthereissomewayoffundingthis
activity,whichwouldbemutuallybeneficialandin
particularbringaboutasituationwheretheold'USSR'
aeronautical industryworkstoEuropeanstandards ,
ratherthanseetheadoptionofrivalstandards ,suchas
thoseoftheUSA.5.1.1.7.Inthemeantimestandardisation isoftenper­
ceivedtobeaweaponoftradefavouring American
processes,partsandmaterials .
5.1.2.Airworthiness Certification regu­
lationsandprocedures [IVA.1(b)]
5.CommentonproposalsforCommunity action5.1.2.1.DespitetheAgreement onStandardization
oftechnicalprocedures applicabletoCivilAircraft [doc.
COM(90 )442],NationalAuthorities arestillinsisting
oncarryingnationalapprovalprocedures .
5.1.Createafavourable framework (IV.A)
5.1.2.2.ThisMultiplenationalcertification inEuro­
peiscostly,butfreeofchargeintheUSA,andthus
constitutes ahandicaptothecompetitiveness ofthe
Europeanaircraftindustry .
5.1.2.3.TheCommittee urgestheCommission to
establish,withoutdelay,theproposedWorkingGroup
tostudyalltheremaining obstaclestoestablishing a
singleEuropeanAuthority .
5.2.Promotevocational training(1V.A.3)
5.2.1.TheCommittee regretsthattheCommission
isnotmorespecificwithitsproposals inthisimportant
area.5.1.1.Accelerate harmonization oftech­
nicalstandards (IV.A.1)
5.1.1.1.Itisessentialtoincreasetherateofpro­
ductionofEuropeanStandards ,toavoiddominance of
Americanstandards intheindustry,toavoidwasteful
duplication ofstandardsatnationalandcompanylevel,
andtocontribute totheestablishment ofacomplete
setofinternational standards fortheindustry .The
EuropeanIndustryisfindingthisisanincreasingand
unacceptable financialburden.
5.1.1.2.TheCommission assertsthattransferring
resourcesfromnationalandcompanystandardization
willcoverthecostsoftheincreased numberofEuro­
peanStandardsneeded.
Thisisnotthecase:
5.1.1.3.Alargenumberofcompanystandards will
stillberequiredtocoverprojectandspecificcompany
procedures ,processesandworkingpractices .
5.1.1.4.ThecostofagreeingEuropeanStandards is
farhigherthanagreeingnationalstandards .Itinvolves
international meetings ,interpretation ,traveletc.
5.1.1.5.Theindustrylooksforincreasedfinancial
helpfromtheCommission ,aspartoftheCommission 's
statedcommitment toencouraging EuropeanStandard­
ization.
5.1.1.6.Theaeronautical Industryworkstostan­
dardsfrommanydifferentsources.USstandardsare5.2.2.Whilsteveryeffortshouldbemadetoretain
jobs,theCommission needstorecognisetheextentof
currentandpotentialjoblosses.Necessary workforce
restructuring measures shouldbeagreedbetween
employerandworkerrepresentatives .Additional train­
ingandretraining measuresforallaffectedworkers
(e.g.skilledworkers,technicians ,engineers ,research
staff)shouldgiveallemployees acareeropeninganda
future,ifnecessaryinadifferentsectororplaceofwork.
Stepsshouldalsobetakentoensurethatemployment
ismaintained asfaraspossiblethroughcontinuing
investment intechnology programmes .
5.2.3.Thereisandtherewillcontinuetobeaneed
toattractnewhighlyskilledpeopleinordertohavean
adequatepoolofskillavailabletotakeadvantage of
theinevitableupturninthemarket.

15.3.93 OfficialJournaloftheEuropeanCommunities NoC73/15
5.2.4.Tobepositive,theCommission shouldcon­5.6.Guarantee fairinternational trade(IV.B.2)
sider:
5.6.1.ThedisputebetweentheUSAdministration
andtheEuropean Communities regarding alleged
unfairsubsidiestoAirbushasfocusedmuchattention
onthequestionofStateaid.Suchaidhasplayedakey
roleinallmajoraeronautical industries ,reflectingboth
theimportance attachedtoprogressinaviationandthe
keyroleofaeronautics innationaldefence.—ThesettingupofaspecialEuropean Defence
Retraining andRe-adaptation Programme .This
wouldfundretrainingprogrammes toreducejob
lossesfordefenceindustryworkersandprovideRe­
adaptation aidforaffectedpartsoftheCommunity .
Theoperationofsuchaprogramme mustinvolve
genuineparticipation bythesocialpartners .
—TheCommunity shouldtakestepstoensurethat,
whereappropriate ,workershaveanentitlement to
aspecifiednumberofdaystrainingeachyear.
—Thepotentialunemployment ofhighlyskilledwork­
ersinthedefencesectorandincivilaeronautics ,
particularly aerospace ,makesitallthemore
importantthattheCommunity 'sworkoncompara­
bilityandmutualrecognition ofqualifications
shouldcontinuetofacilitatemobilitybetween
MemberStates.5.6.2.Thepossiblemechanisms ofaidarenumerous
andtheirusevariesfromcountrytocountry.Notall
governments conformtoasinglepatternofaid.The
fundamental pointisthattherelevantmeasureisthe
totaleffectofaidbothdirect(suchaslaunchaid)
andindirect (suchaspublicfundingofresearchand
technology acquisition ).
5.6.3.Itisessentialthatdifferences inthisoverall
effect,asbetweenonecountryandanother,shouldnot
distortthemarkettoanunacceptable degree.Inter­
nationalandintra-European consideration ofaidmust
recognizethiskeypoint.5.3.Promoting socialdialogue(IV.A.5)
5.3.1.TheCommittee supportstheCommission 's
intentiontocreateaclimateinwhichconstructive dia­
loguebetweenthesocialpartnerscantakeplace.The
recognized numberofjobslosttodateandatriskin
thefutureissogreatthatitisimperative thatall
thoseinvolvedtryandfindsolutionstotheproblem.
Moreover ,suchaconstructive dialogueisoflasting
importance .5.6.4.Formanyyearsithasbeenwidelyaccepted
thattheexceptional leveloffinancialriskandlongpay­
backtimecharacteristics ofmanycivilaircraftpro­
grammesjustifytheprovisionbygovernments ofrepay­
ablefinancialloanstoaircraftandenginecompanies
tocontribute totheheavyinitialcostswhichhaveto
beincurredinthedevelopment phaseofanymajornew
programme .Overthepastdecades,Europeangovern­
mentshaveadvancedorguaranteed anumberofsub­
stantialloanstoEuropeancompanies toaidthelaunch
ofmajoraeronautical projects :manyoftheseloans
havebeenorarebeingrepaid.5.4.Ensurealevelplayingfield(IV.B)
5.4.1.Thisisregardedasanessentialfunctionofthe
Commission ,bothwithinandoutsideEurope.Itis
probablythesinglemostimportantresponsibility ,since
manyotherissuesspringfromit.5.6.5.IntheUSAitisnotthepracticeforgovernment
toprovidesuchdirectassistancealthough,asdiscussed
elsewhere ,indirectsupportisgiventoUSindustry
whichislargerthantheaidgiveninEuropeandisnot
repayable .5.5.Applycompetition rulesinsidetheCommunity
(1V.B.1)
5.6.6.InJapan,government supportforthecostof
aeronautical development isgenerallygivenviainterest
ratesubsidiesfordevelopment loanstakenoutby
manufacturers ,repayment beingobtainedbyroyalties
receivedfromsubsequent productsales.5.5.1.Theeffectofcollaborative alliancesistoput
togetheranindustrialresourcewhichislargeenough
tocompeteontheworldmarketbutwhichmaybe
perceivedtobeverylargeinrelationtotheEuropean
Market.Ifsuchcasescomeunderscrutinyfromthe
pointofviewofECcompetition policy,marketrealities
mustbetakenintoaccount,giventheopennessand
transparency oftheEuropean Markettocompeting
aeronautical suppliersworld-wide ,theonlyrelevant
testisthecomparative positionintheworldaeronaut­
icalindustry .5.6.7.TheCommittee anticipates withthecom­
pletionoftheSingleMarketattheendof1992,thatthe
Commission willrigorously enforceequitablemarket
conditions withinEurope.However ,thegreatertaskof

NoC73/16 OfficialJournaloftheEuropeanCommunities 15.3.93
ensuringequitablecompetition conditions withtherest
oftheworldrequiresequallydetermined action.
5.6.8.TheabilityoftheEuropeanindustrysuccess­
fullytocompeteatworldleveltodayistheresultofa
combination ofinvestment inresearchandtechnology
acquisition madesome10-15yearsagoandinasignifi­
cantnumberofcases,theavailability oflaunchaid.At
thepresenttimebothareseverelythreatened .
5.6.9.Withcurrentreduction indefencespending
coupledinsomeinstanceswithageneralreductionin
supportforindustry,thereisthedangerthatexpendi­
tureonaeronautical researchandtechnology acqui­
sitioninEuropewillsignificantly decline,thisisata
timewhenspendingonresearchandtechnology acqui­
sitionbytheUSAandJapanhasnotbeenreducing.In
factexpenditure isincreasing incertaincriticalareas:
intheUSAforstrategictechnologies ,andinJapanfor
genericresearchprogrammes e.g.newmaterials .Secondly,theindirectaidgivenintheUSAhasnotso
farbeeneasilyverifiable,anditisdifficulttoseehow
itcouldbemonitored inthefuture.
5.6.14.Evenifindirectaidistobelimitedto4%of
turnover,subsidiesforlargeUSfirmswillbemuch
higherthanfortheaverageEuropeanmanufacturer .
5.6.15.ItisvitaltothefutureoftheEuropeanaero­
nauticalindustrythattheCommission andNational
Officialsdonotallowtheexistingdirectandindirect
supportinEurope,whichhasfacilitated itscurrent
competitive position,tobefurthereroded:indeed,the
amountofsupport,inwhateverallowableform,needs
tobesubstantially increased .Urgentactionisrequired :
i)toensurethefuturecompetitiveness oftheEuro­
peantechnology basebylaunching amajorpro­
grammeofresearchandtechnology acquisition and
validation atEuropean level.
ii)toensureimplementation oftherecentbilateral
agreement governing supporttotheUSandEC
aircraftindustries isdoneinatransparent ,easily
verifiableandequitablemannersothatEuropeis
notdisadvantaged relativetoitscompetitors
throughindirectR&Dsupportandothermeasures
suchas:
—taxconcessions ,financesupport,exportcredits,
interestrates,flexibilityofemployment ,research
programme fundinglevels,etc.
iii)toensurethatthespin-offfromtheindirectsupport
giventotheUSmilitaryindustryandtheindirect
supportgiventhroughNASA(2)tothecivilindustry
aretakenintoaccountinthecurrentGATTnego­
tiations (see5.6.11above).
5.6.16.Asafirststepareliablesurveyandassess­
mentofindirectaidinallcountries shouldbecarried
out.Secondly,theAmericanFSC(ForeignSalesCorpor­
ation)systemshouldbecoveredbytheGATTagree­
ment.5.6.10.Thereductionindefenceexpenditure inboth
EuropeandtheUSAisexpectedtocontinueintothe
foreseeable futurebutispredictedtohaveagreater
impactontheEuropeantechnology basethanthatof
theUSA.
5.6.11.Abilateralaccordondirectsupportorlaunch
aidtotheAircraftIndustrywasreachedbetweenthe
USandtheEuropeanCommission inJuly1992(*).This
accordisvalidforoneyearduringwhichtimeitmust
bemadepartofamultilateral GATTagreementor
failingthisabandoned ,inwhichcasegeneralGATT
ruleswhichhavebeensubjecttosomuchdisputewill
reapply.
5.6.12.Iftheagreement ismaintained ,itsetsa33%
limitoncostofdirectlaunchaid,onlyhalfofthe
typicallevelsthathavebeennecessarytoensurethe
startupofanumberofAirbusprojects.Thislaunch
aid,whichisrepayable bytheIndustryhasbeenvital
tothesuccessofEuropeanprojects.
5.7.Multilateralization andextensiontoregionalair­
craft,largeenginesandmajorequipments
5.7.1.Consideration shouldbegiventothemultilat­
eralization ofthecurrentagreement .Theagreement
couldbeextendedtocoverotherAeronautical Industry
productsandnotrestricted,asatpresent,tolargecivil
aircraft.5.6.13.Theagreement withtheUSAstillpresents
problems .Firstofall,theEuropeanAircraftIndustry
willfinditdifficulttodevelopnewproductswith
government development costloansofthesizepermit­
tedunderthebilateralGATTAgreement (atmarket
interestrates).ItisuncertainifIndustrywillbeableto
securetheremaining largeloanswhichitwillneed
underriskconditions withoutgovernment guarantees .
HOJNoL301,17.10.1992.(2)NASA:NationalAeronautics andSpaceAdministration
(USA).

15.3.93 OfficialJournaloftheEuropeanCommunities NoC73/17
5.7.2.Theextension toregionalaircraft,large
enginesandmajorequipments shouldbecarefullycon­
sideredinthelightofdifferentmarketconditions ,costs
andrisksinvolved .competitiveness ,italsorecognizesthevalueofspin-off
ofleadingedgetechnologies tootherindustries .Itis
essential,therefore,thattherecommendations ofthis
sectionaretranslatedintopositiveactions.
5.7.3.Itisessentialthatequitablelevelsofsupport
applyacrosstheboardtoensurefairtradingconditions .5.8.5.ItwouldhavebeenmorehelpfuliftheCom­
munication wouldhavegivensomeindication ofthe
financialscaleofactionwhichitseesasnecessaryto
ensurethecontinued competitiveness oftheindustry,
foritisdifficulttoviewtheCommission 'scomments
constructively intheabsenceofspecificrecommen­
dationsonlevelsoffinance.Nevertheless Industrymust
takeprimaryresponsibility foritsownfutureinvest­
mentinR&Tprogrammes .5.8.Maintainthetechnology level(IV.C)
5.8.6.TheCommittee sharestheCommission 'scon­
cernaboutthefragmentation ofpublicfinancingof
R&T.Duplication ofresearchprogrammes andinfra­
structuresshouldbeinvestigated byMemberStatesand
Industrywithaviewtoeconomicrationalization and
efficientuseofresources .5.8.1.Fortheforeseeable future,thetechnological
qualitiesofaeronautical productswillcontinuetobe
crucialtotheircommercial success.Thus,assured
accesstoafullyadequateandup-to-date aeronautical
technology basewillcontinuetobeanessentialrequire­
mentforrealization oftheindustries'potential .Tech­
nologicalcompetition is,andislikelytoremain,intense:
andthecostoftechnology acquisition issteadily
increasing .Atthesametime,theindustryisunder
additional pressurewhichresultsfromadeclinein
themilitarybusinesswhichisasourceofmuchnew
technology andprovidesanimportant partofthe
incomeofmanyaeronautical companies .
5.8.2.Inconsequence ,thepointhasbeenreached
whereamajorincreaseinintra-European cooperation
inaeronautical researchandtechnology acquisition ,
especiallybetweentheaeronautics andspacesectorsis
essential ifcriticalmassofhumanandmaterial
resourcesdemanded bymoderndevelopments inaero­
nauticaltechnology istobeassured.5.8.7.TheCommittee notesthatintheFinancial
Statement ,formingpartof'ProposalforaCouncil
Decisionconcerning supplementary financingofthe
thirdFramework Programme ofCommunity activities
inthefieldofResearchandTechnological Development
(1990to1994)',thereisaCommission proposedsup­
plementofECU281millionforthewholeofIndustry
andMaterialsTechnologies andrecommends thata
substantial proportion beallocatedtotheAeronautical
Industry .Inaddition,theCommittee truststhatthe
Commission willcarryonsuchwork,withincreased
funding,aspartoftheforthcoming IVR&DFrame­
workProgramme .TheCommission 'sconcernthat
therecouldbeareduction inthelevelofactivities
betweentheIIIandIVR&DProgrammes isfully
sharedbytheCommittee .
5.8.8.Ifexpenditure onaeronautical researchand
technology acquisition inEuropeisallowedtodecline
furtheratatimewhenitisnotreducinginJapanand
theUS,theEuropean industrywillloseforeverthe
abilitytocompeteasamanufacturer ofcompleteair­
craft,enginesandsystems,andwillberelegatedtothe
statusofsubcontractor onAmericanprogrammes .This
willinevitably resultinfurtherjoblosses,erosionof
theEuropean skillbaseandtheendofyetanother
viableandvaluableEuropeanindustry .5.8.3.TheEuropeanCommunity hasafundamental
roletoplayinstimulating andsupporting theneeded
Europeancooperation inaeronautical researchand
technology acquisition .Astarthasalreadybeenmade
throughthepilotandintermediate phaseactionsauth­
orisedaspartsofBrite/Euram (1989/1990)and
Industrial&MaterialsTechnologies (1992-1994 ).The­
seactionshaveshownthefeasibilityandutilityof
Europeancooperation actioninaCommunity frame­
workbuttheyaretoosmallinsizeandtooepisodicin
timetoprovidethemajorimpulsewhichisneededto
puttheupdatingoftheEuropeanaeronautical tech­
nologybaseonanadequatebasis,takingintoaccount
thelongterm,highrisk,natureofaeronautical research.
AmajorEuropeancooperative programme ,planned
andconducted onalongtermbasis,isurgentlyneeded.
Theultimateresponsibility forpreparation ofanyfor­
malproposalforactionintheframework oftheEuro­
peanCommunity willliewiththeCommission . 5.9.Copewiththedollarissue(1V.D)
5.8.4.InitsAssessment ,theCommission recognizes
thataccesstoup-to-date technology isessentialfor5.9.1.European manufacturers haveareasonable
measureofcontrolovertheextentoftherisktheybear

NoC73/18 OfficialJournaloftheEuropeanCommunities 15.3.93
regardingtechnical,market,resourceandproductivity
issuesbuttheyhavenocontroloverdollarexchange
ratesordifferential inflationbetweenEuropeandthe
USA.establishment ofastableworldmonetarysystemwill
makeitpossibletoresolvethedollarproblem.Atthe
Community level,theEconomicandMonetary Union
willcontribute significantly totheachievement ofthis
goal'.
5.10.Guarantee balancewiththeenvironment (1V.E)
5.10.1.TheCommunity policyofworkingclosely
withECACandICAOonaircraftnoiseandemissions
iswelcomed .5.9.2.Asaresultofcontinuing USdominance of
mostofthecommercial airlinermarket,thesizeand
importance oftheUSmarket,theavailability ofdollar
financingandotherfactors,commercial aircraftare
pricedalmostexclusively inUSdollars.Thus,cash
inflowsinmanufacturers 'currenciesarehighlydepen­
dentonrelevantdollarexchangerate.Although,over
theyears,Europeaninflationhasgenerallyout-paced
USinflation,thedollarhasbeenweakeragainstEuro­
peancurrenciesthancouldbeexpectedonthebasisof
costindicesandpurchasing powerparity.Currently
itissignificantly undervalued againstmostEuropean
currencies .5.10.2.InthreeOpinions (*)theCommittee has
endorsedtheCommission 'sapproachtoproblemsof
environment relatedtothetransportandaircraftindus­
tries.
5.10.3.TheCommittee considersthatenvironmental
standards foraircraftnoiseandemissions shouldbe
progressively improvedonaworldwide basis,inline
withadvancesinenginetechnology .5.9.3.Whenforwardsellingdollarstoremovefuture
uncertainty ,itisnecessarytoexerciseconsiderable
judgement astothetimingofsuchsalesandtheextent
ofcover,inviewofthewideandunpredictable fluctu­
ationsinexchangerates.Theforwardsellingrateisset
onthebasisofthecurrentrulingrateandthereislittle
meritinsellingforwardunlessviableorattractiverates
canbesecured.Banksalsoimposelimitsontheamount
andtimescaleofcovertheywillprovide.5.10.4.Aircraftshouldnotbeallowedtotakeoffor
landinECcountriesunlesstheymeetthesestandards .
5.11.PursuethedialoguewiththeEuropeanAircraft
Industry(1V.G)
5.9.4.Thecombined effectofdifferential inflation
andweakdollaradverselyimpacttheprofitability of
Europeancompanies ,aspricelevelsaresetbymarket
expectations andstrongUScompetitors .(N.B.prices
followUSinflationwhereasmostcostsmoveinline
withEuropeaninflation,whichinsomecountriescon­
siderablyexceedsthatoftheUSA.)5.11.1.Itisessentialtomaintaindialogueonareg­
ularandfrequentbasisatEuropean levelwithallrel­
evanteconomicandsocialgroups.
5.12.SmallandMediumEnterprises (SMEs)
5.12.1.Thereisconcernaboutproblems facing
SMEs,whicharenotadequately coveredbytheCom­
missionCommunication .Primeandmajorcontractors
relyonasubstantial andincreasingnumberofinnova­
tiveSMEs.5.9.5.Theadverseeffectscanbereducedtosome
extentbytransferring morecostsintodollars,ifthis
canbeachievedatcompetitive productivity levels,to
obtainaninherenthedgingeffect.However,thisisonly
apartialsolutiontodecoupling Europeanfinancial
businessperformance frominternational currencyvari­
ationsandthereisalimitifasubstantial industrial
capability istoberetainedwithinEurope.5.12.2.Thesortofproblemstobefacedare:
—manySMEsareconcentrated inregionsheavily
dependent tipontheaircraftindustry;therefore,any
reductioninaprimecontractor'sactivitiesmayhave
amuchmoreseriouseffectonemployment than
mightseemapparentatfirstsight;5.9.6.TheCommittee welcomes theCommission
initiativetosetupajointIndustry/Commission work­
inggroup.Howeveritisdifficulttoseehowthepro­
posedinsurancemechanism couldbeselffinancingby
industryiftheUSdollarcontinuestobeweak.
5.9.7.Therefore theCommittee agreeswiththe
Commission 'sstatementthat'inthelongtermonlythet1)OJNoC221,28.8.1989,OJNoC339,31.12.1991and
OINoC313,30.11.1992.

15.3.93 OfficialJournaloftheEuropeanCommunities NoC73/19
thatthelevelofjoblossesmayappearsmallwhen
comparedtomassivejoblossesinlargecompanies ,
buttheeffectmaybemuchgreaterontheSMEs
involved .thereisthedangerofprimecontractors changing
sourcesofsupplytolowercostthirdcountries ;
althoughSMEsareknownfortheirabilitytoadapt
tochange,theyneeddiversification programmes to
assistthem;
DoneatBrussels,27January1993.
TheChairman
oftheEconomicandSocialCommittee
SusanneTIEMANN
OpinionontheproposalforaCouncilRecommendation onCommonInformation Tech­
nologySecurityEvaluation Criteria
(93/C73/05)
On29September 1992theCouncildecidedtoconsulttheEconomicandSocialCommittee
underarticle198oftheTreatyestablishing theEuropean Economic Community ,onthe
abovementioned proposal .
TheSectionforIndustry,Commerce ,CraftsandServices,whichwasresponsible forpreparing
theCommittee 'sworkonthesubject,adopteditsOpinionon6January1993.TheRapporteur
wasDameJocelynBarrow .
Atits302ndPlenarySession(meetingof27January1993)theEconomicandSocialCommittee
adoptedthefollowingOpinionunanimously .
1.Introduction
1.1.TheproposalpresentedbytheCommission is
designedtoensuregreaterconsumerconfidence inthe
securitycapabilities ofinformation technology products
andtoestablishayardstickagainstwhichthesecurity
capabilities ofinformation technology (IT)products
maybejudged.Ittakesforwardworkalreadycarried
outinMemberStates,theUSandJapanonthedevelop­
mentofITsecurityevaluation criteria.
1.2.TheproposedCouncilRecommendation isfor:
i)theadoptionoftheInformation Technology Secur­
ityEvaluation Criteria (ITSEC)throughout theEC
foraninitialperiodoftwoyears;
ii)theadvancement ,undertheaegisoftheSenior
OfficialsGroupforSecurityofInformation Systems
(SOG-IS),ofinternational harmonization andstan­
dardization ofthesecriteria;andiii)thereviewofthesemeasuresaftertheinitial2year
periodandtheproposalbySOG-ISofappropriate
furtheractionfortheCommunity .
1.3.ITSECcomprisestandardcriteriafortheevalu­
ationofsecurityofITproductsandsystems,covering
bothhardware andsoftware .
1.4.ThesecriteriaaretobeappliedtoITsystems
andproductsundernationalcertification schemesby
independent andimpartialevaluation bodiesatthe
requestofa'sponsor'(normallythevendororuserof
theITsystem/product).Certification isthereforepurely
optional .
1.5.Information Technology Securityhasthreecom­
ponents :
—Confidentiality —prevention ofunauthorized dis­
closure;