Opinion of the Economic and Social Committee on: - the 'Proposal for a Council Regulation (EC) amending Council Regulation (EEC) No 3577/92 of 7 December 1992 applying the principle of freedom to provide services to maritime transport within Member States (maritime cabotage)', and - the 'Proposal for a Council Directive on manning conditions for regular passenger and ferry services operating between Member States'
Date: 1998-12-02
Institutions: European Economic and Social Committee
Subjects: ESC opinion, carriage of passengers, crew, ferryboat, freedom to provide services, maritime cabotage

15.2.1999

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Official Journal of the European Communities

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Opinion of the Economic and Social Committee on:

— the ‘Proposal for a Council Regulation (EC) amending Council Regulation (EEC)
No 3577/92 of 7 December 1992 applying the principle of freedom to provide services to
maritime transport within Member States (maritime cabotage)’, and

— the ‘Proposal for a Council Directive on manning conditions for regular passenger and

ferry services operating between Member States’ (1)

(1999/C 40/02)

On 9 July 1998 the Council decided to consult the Economic and Social Committee, under
Article 84(2) of the Treaty establishing the European Community, on the above-mentioned
proposals.

On 28 April 1998 responsibility for preparing the Committee’s work on the subject was given
to the Section for Transport and Communications; on 14 October 1998 this responsibility
passed to the Section for Transport, Energy, Infrastructure and the Information Society, which
adopted its opinion on 21 October 1998. The rapporteur was Mr Chagas.

At its 359th plenary session (meeting of 2 December 1998), the Economic and Social Committee
adopted the following Opinion by 95 votes in favour, four against and one abstention.

1.

Introduction

1.1.
The employment outlook for Community sea-
farers is a matter of great concern in view of the
continual replacement of Community crew by cheaper
labour from third countries.

‘The European seafarer,

1.1.1.
an endangered
species?’ was the theme of an international conference
held in Dublin in December 1996 under the auspices of
the Commission, evidence that the situation is a matter of
considerable concern. Figures quoted by the Commission
show that the number of EU nationals employed on
Community flagged vessels, which was about 206 000
in 1985, had dropped to only 129 000 in 1995, a fall of
37 %.

1.2. Maritime cabotage, and especially island cabo-
tage, are the last bastions of employment for a large
number of Community seafarers, providing a repository
for the maritime know-how of these workers. The
gradual loss of this know-how in the EU is a matter of
considerable concern when seen in the light of the drastic
reduction in employment for Community seafarers. In
the words of Commissioner Neil Kinnock, ‘If compe-
tition increases to the point where operators start firing
EU seafarers and instead employing third country
nationals, who are underpaid and have not even mini-
mum standards of social protection, then it is the
maritime sector as a whole that will suffer’ (2).

Furthermore,

1.3.
in the State aid guidelines for
maritime shipping (3), the Commission states that aid
policy should:

— safeguard employment in the Community (both at

sea and on land),

— preserve the Community’s maritime know-how and

develop maritime skills,

— improve safety.

1.4.
It will only be possible to fully assess the practical
implications of liberalizing island cabotage once it has
happened, in January 1999. However, the impact, both
social and economic, is expected to vary from one
Member State to another.

1.4.1.
In Northern Europe, island cabotage is prac-
tised on a very limited scale or hardly at all, so the
impact of liberalization is minimal.

1.4.2.
The greatest concentration of maritime cabo-
tage, particularly island cabotage, is found in Southern
Europe and the Mediterranean, where it provides
employment for seafarers in the Member States con-
cerned.

Solutions or arrangements should be found which
1.5.
help to prevent distortions of competition between
operators of regular cabotage services on the one hand,
and between these and other forms of transport on the
other. In a climate of fair competition, island maritime
transport and short-distance maritime transport would
have good development prospects, even in the passenger
transport sector.

(1) OJ C 213, 9.7.1998, p.16-17.
(2) Commission press release IP/98/387 of 29 April 1998.

(3) OJ C 205, 5.7.1997, p. 5.

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2. Council Regulation (EEC) No 3577/92 (Maritime
Cabotage) and the 2nd Commission Interim Report
1997

Council Regulation (EEC) No 3577/92 (1) was
2.1.
the result of long and difficult negotiations over a period
of seven years and contains a series of provisions
governing the liberalization of certain traffic.

2.2.

The most important of these are as follows:

— Article 3(1) — for vessels carrying out mainland
cabotage and for cruise liners, all matters relating to
manning shall be the responsibility of the flag State
(except for ships smaller than 650 Gt);

— Article 3(2) — for vessels carrying out island cabo-
tage, all matters relating to manning shall be the
responsibility of the host State;

— Article 3(3) — for cargo vessels over 650 Gt carrying
out island cabotage consecutive to a voyage to or
from another Member State, all matters relating to
manning shall be the responsibility of the flag State
(as from 1 January 1999);

— Article 3(4) — the Commission shall submit a report
to the Council on the economic and social impact of
the liberalization of island cabotage (by 1 January
1997), along with a proposal which may include
adjustments to the manning nationality provisions
laid down in paragraphs 2 and 3 so that the definitive
system shall be approved by the Council in due time
and before 1 January 1999;

— Article 4(2) — the circumstances under which
Member States may impose ‘public service obli-
gations’;

— Article 6 (1-3) — laying down a timetable of
derogations from implementation until 1 January
1999 (with a special extension for Greece until
1 January 2004).

2.3. With this set of compromise provisions it was
possible to ensure that the fleets of the countries of
Southern Europe were able to continue operating in
their traditional markets with an exemption which runs
until the end of the derogation period. The survival of
this sector may depend on how the liberalization process
evolves.

2.4.
The report referred to in Article 3(4) of Regu-
lation (EEC) No 3577/92 was submitted to the Council
on 17 June 1997 (2).

(1) Council Regulation (EEC) No 3577/92 of 7 December
1992, applying the principle of freedom to provide services
to maritime transport within Member States (maritime
cabotage), OJ L 364, 12.12.1992, p. 7.

(2) Report from the Commission to the Council on the
implementation of Council Regulation (EEC) 3577/92
applying the principle of freedom to provide services to
maritime cabotage (1995-1996) and on the economic and
impact of the liberalization of island cabotage
social
COM(97) 296 final.

2.4.1.
Basically, the report advocates complete liber-
alization of cargo cabotage by the end of the derogation
period and proposes revising the current Regulation
with regard to the manning conditions imposed by the
host State [Article 3(2)], which should be seen as a
temporary derogation from the normal flag State rule.

2.4.2. On the subject of regular passenger and ferry
services, the Commission allows the host State the
option of imposing its own rules on the proportion of
Community seafarers in the crew.

3. The Commission proposals

3.1. Proposal for a Council Regulation (EC) amending
Council Regulation (EEC) No 3577/92 applying
the principle of freedom to provide services to
maritime transport within Member States (mari-
time cabotage)

The Commission’s declared intention is to
3.1.1.
‘promote the employment of well-trained Community
seafarers and, more in general, to foster the further
development of maritime know-how in the Community’,
these being among the objectives of the common
maritime policy. The communication also takes up the
conclusions of the 2nd Interim Report of 1997.

3.1.2.
At the same time, the Commission intends to
ensure conditions of equal competition for operators
from different Member States running ships under
different flags.

The proposed amendment of Regulation (EEC)
3.1.3.
No 3577/92 is in response to Article 3(4) of the Regu-
lation and serves to lay down the definitive manning
nationality provisions.

3.1.4.
The Commission decided to make a distinction
between the manning rules for cargo vessels and those
for passenger vessels in island cabotage based on the
premise that the market for regular passenger services
in island cabotage is quite different from the cargo
cabotage market. According to the Commission, there
is no economic relationship with the international
market in the case of regular passenger services in island
cabotage, with ships remaining on the same route for
many years at a time or even for their entire service
lifetime. In addition, regular passenger services are in
general far more labour-intensive than cargo services,
making them an important source of employment for
local seafarers.

3.1.5.
The Commission proposes applying the flag
State rules, as already agreed for consecutive island
cargo and mainland cabotage, to all cargo cabotage
with vessels over 650 Gt.

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3.1.6.
In the case of regular passenger services, the
Commission proposes that it should be permissible
for host Member States to require that all personnel
employed on passenger vessels operating within their
territory shall consist of Community nationals, provided
that this rule applies equally to vessels operating under
their own national flag. If the employment of third
country nationals is allowed, they shall be guaranteed
the same conditions of employment as those of the flag
State.

In addition to ships operating regular passen-
3.1.6.1.
ger and ferry services, the Commission also proposes that
mixed passenger/cargo ships and scheduled cabotage
cruise services be dealt with in the same way.

3.2. Proposal for a Council Directive on manning
conditions for regular passenger and ferry services
operating between Member States

3.2.1.
The Commission notes the danger of a negative
spiral of erosion of working conditions for all crew,
resulting in considerable loss of employment for Com-
munity seafarers, due to the replacement of crews
or parts of crews with third-country crew members
employed on less favourable conditions. In response to
this, the Commission decided to submit a draft directive
on manning conditions for regular passenger and ferry
services operating between Member States (1), the pur-
pose of which is ‘to ensure the proper functioning of the
internal market and to avoid disruption through social
dumping’.

3.2.2.
The Commission proposal lays down that third
country seafarers must be assured the same conditions
of employment as those applicable in the Member State
where the ship is registered. If the ship flies the flag of a
third country, the rules to be observed are those of the
Member State with which the service is most closely
connected, in terms of the place in which the service is
offered and where the seafarers in question have their
residence.

3.2.2.1.
The conditions of employment referred to
above include maximum work periods and minimum
rest periods, minimum annual paid holidays, minimum
rates of pay, health and safety at work, protection for
pregnant women, equal treatment for men and women
and other anti-discriminatory measures.

3.2.3.
The Commission also mentions that it paid
special attention to checking the compatibility of the
proposal with the international obligations of the
Community, in particular with UN, OECD and WTO.
It found no incompatibility, and points out that similar

measures have already been adopted for other workers
in European Parliament
and Council Directive
96/71/EC (2), concerning the posting of workers in the
framework of the provision of services.

4. General comments

4.1. Proposal amending Regulation (EEC) No 3577/92

The report published in 1997 and the proposal
4.1.1.
amending Regulation (EEC) No 3577/92 examined here
are intended to meet the requirement of Article 3(4) of
the Regulation, i.e. to carry out an analysis of the
economic and social impact of the liberalization of
island cabotage and to propose adjustments to the
manning nationality provisions laid down in Article 3(2)
and 3(3).

The Commission report claims that there is no
4.1.2.
economic justification for a lasting exemption from the
flag State rules for cargo vessels of more than 650 Gt
engaged in island cabotage, but it does not provide an
adequate picture of the present impact and future effects
in economic and social terms on island cabotage services.

4.1.3.
report may be challenged, as follows:

Some of the points made in the Commission

i)

The Commission report concludes that the manning
conditions laid down by the host State [Article 3(2)]
should be seen as a temporary derogation from the
normal flag State rules. The analysis given in the
report did not reveal any compelling grounds to
justify a long-term derogation from the usual flag
State conditions.

However, the Committee feels that the provision
laid down in Article 3(2) should not be seen as
temporary, but rather as a condition which is
intrinsic to the particular nature of island cabotage
for the transport of cargo.

ii) The Commission report also states that cargo
cabotage services are often carried out by vessels
which participate for alternating periods in inter-
national and domestic trades. The manning con-
ditions for this type of cabotage should therefore not
deviate from the accepted practice in international
trade, which is that the flag State determines all
matters relating to manning.

However, this does not reflect the actual situation
in various Member States, particularly with regard
to cargo ships engaged in regular island cabotage
services.

The growing demands for a regular supply of
high-quality goods to island populations make it

(1) At present the number of workers from third countries on
such vessels represents 3 % of the total relevant work force.

(2) OJ L 18, 21.1.1997, p. 1.

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necessary to set up dedicated services operated by
vessels which are designed and built specifically for
the transport services they are used for on a
continuous basis.

In some Member States, island cabotage operators
are bound by public service obligations which
impose conditions of regularity, routing and fre-
quency of stops, making it impossible for their
ships to be used for other purposes.

In view of this, the observations made in the
Commission communication concerning passenger
ships in island cabotage (referred to in point 3.2.1)
should be extended to cover cargo vessels engaged
in similar activity on a continuous basis.

iii)

In some Member States, where there is no appreci-
able maritime passenger transport and island cabo-
tage is limited almost exclusively to cargo traffic,
it is these cargo vessels which provide a source of
employment for local seafarers.

In the countries of southern Europe, cargo vessels
engaged in island cabotage ensure the employment
of 30 % of all seafarers employed in cabotage (1) .
Given the fact that these cargo services are less
labour-intensive, it follows that the number of
vessels in operation is high.

iv)

It should also be borne in mind that passenger
vessels involved in island cabotage do not carry
just passengers, but by their very nature as (Ro-Ro)
ferries, also transport goods on trailers and mafis.
In view of this, applying different manning rules to
passenger vessels (which also transport cargo) from
those applied to vessels used exclusively for cargo
may lead to distortions of competition, which
would be unacceptable within the
intended
operating environment of island cabotage.

4.1.4.
Following submission of the above-mentioned
report, some Member States suggested that the pro-
visions of Article 3(2) and (3) should be retained
indefinitely without amendment since the imminent
liberalization of island cabotage services, from 1 January
1999 onwards, has to be seen as a threat to the jobs of
Community seafarers, given that, as mentioned above,
such services are the last bastion of employment for
these workers.

4.1.5.
Although agreeing with this point of view, the
Committee feels that, if there is to be an amendment to
the regulation, it should be borne in mind that the host
State is currently responsible for all matters relating to
manning, including the operational manning of the ship,
and that this state of affairs should be retained for all
regular island cabotage services.

(1) Council Regulation (EEC) No 3577/92 of 7 December
1992, applying the principle of freedom to provide services
to maritime transport within Member States (maritime
cabotage), OJ L 364, 12.12.1992, p. 7.

4.1.5.1.
The proposed widening of the regulation to
include mixed passenger/cargo services and scheduled
concise services must, in any event, be retained.

4.2. The proposed directive

4.2.1.
In examining the proposed directive, the Com-
mittee’s discussions revealed three distinct areas of
concern, namely the employment and labour aspects,
the development of the market at affordable prices and
the legal compatibility of the proposal with other legal
instruments in force outside the EU, with the possible
retaliatory measures that could ensue from third
countries.

4.2.2.
The Committee agrees with the objectives
expressed by the Commission in submitting this draft
directive, seeking as it does to protect the employment
of Community seafarers and to ensure that all seafarers
involved in such services enjoy working conditions in
line with the norms applied in the Community in general.

4.2.2.1.
The directive is also intended to ensure fair
competition conditions for all suppliers of regular
passenger ferry services between Member States.

4.2.3.
The Commission should ensure that there are
no legal incompatibilities between this proposal and the
international agreements and instruments binding the
Member States and the EU to third countries and
international organizations, especially ILO Conventions
87 and 98, in that it would interfere with working
agreements between Community employers and non-EU
trade unions.

4.2.3.1.
Reservations may also arise concerning the
application of this directive to intra-European services,
beyond the scope of national services, as it implies the
EU having extraterritorial jurisdiction over vessels flying
the flag of a third country when operating intra-
Community services, which may be considered inter-
national services.

4.2.4.
It is also important to assess the impact which
the implementation of such obligations may have on the
competitiveness of the sector, especially compared with
other modes of transport, not forgetting the social
aspects and the comparative advantages, in terms of
economics, the environment and safety, of maritime
transport.

4.2.5.
In addition, by restricting application of the
directive to third-country nationals, a situation may
arise where Member State nationals are discriminated
against because they come under the social and working
conditions of the flag state while third-country nationals
would be subject to the condition of the host state.

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4.2.5.1.
Although Directive 96/71/EC does not apply
directly to seafarers, the Committee feels that the
principles laid down in it should not be ignored, as they
are equally applicable to this activity.

4.2.6.
It is important to ensure that the introduction
of the proposed directive does not serve as a pretext for
third countries to take similar measures, in the various
maritime transport services, like for instance in the case
of cruise services. If this were to happen it would be
detrimental to thousands of Community seafarers who
are active in those markets and to the Community
shipping industry more generally.

5. Conclusions

5.1. Regarding the proposed amendment to the regu-

lation

5.1.1.
Bearing in mind the prime importance of the
general principles of fostering employment and maritime
know-how for Community workers, set out in the
Commission communication and in view of the fact
that:

i)

ii)

island cabotage services are the last bastion of
employment for Community seafarers;

some of the conclusions of the Commission report
which served as the basis for the draft amendment
of Regulation (EEC) No 3577/92 do not have the
support of a number of Member States;

iii) Article 3(4) of Regulation (EEC) No 3577/92
provides for the Commission to submit a proposal
which may include adjustments to the manning
nationality provisions, but this option does not
constitute an obligation to amend the Regulation;

iv)

the provision laid down in Article 3(2) of Regu-
lation (EEC) No 3577/92 is not necessarily a
derogation implying the establishment of new set
of definitive rules, but rather may be considered as
an adjustment to cater for the specific features of
regular island cabotage cargo services;

v)

the cargo ships used in most, if not all, regular
island cabotage services, are engaged exclusively in
these operations;

Brussels, 2 December 1998.

vi) passenger vessels engaged in island cabotage are

also used for transporting cargo;

vii) creating distinctions between the manning rules for
cargo services and those for passenger services will
distort competition;

and lastly,

viii) the provisions of Regulation (EEC) No 3577/92
constitute an intricate compromise which was
extremely difficult to reach, requiring a long period
of discussions and negotiations, and which may
fall apart if any amendment is made to the present
text,

the Committee feels that the time is not right to push
for amendments to Regulation (EEC) No 3577/92 as
this would risk upsetting the balance of interests which
allowed the Regulation to be passed.

5.1.2.
one of the following alternatives to the Commission:

In view of this, the Committee would suggest

— leaving the provisions of Article 3(2) and (3) of
Regulation 3577/92 as they stand, with the inclusion
of mixed passenger/cargo services and scheduled
cruise services already mentioned,

or

— not making any distinctions in manning rules so that
Article 3 continues to apply equally to passenger
vessels and regularly operating cargo vessels engaged
in island cabotage and the applicable rules on
manning are those in force in the State where the
service is carried out (host State).

5.2. Regarding the proposed directive

5.2.1.
The Committee agrees with the Commission’s
objectives in submitting this draft directive and feels
that any such Community provision should take account
of and respond to the concerns expressed above regard-
ing employment and labour; the economic aspects; and
the legal compatibility of the proposal with other legal
instruments and its repercussions upon the international
context in which the Community shipping industry
operates.

The President

of the Economic and Social Committee

Beatrice RANGONI MACHIAVELLI