Opinion Of the European Economic and Social Committee on the Proposal for a Regulation of the European Parliament and of the Council on enhancing supply chain security COM(2006) 79 final — 2006/0025 (COD)
Date: 2006-12-13
Institutions: European Economic and Social Committee
Subjects: carriage of goods, land transport, safety standard, security of supply, terrorism, transport safety

30.12.2006

EN

Official Journal of the European Union

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Opinion Of the European Economic and Social Committee on the Proposal for a Regulation of the
European Parliament and of the Council on enhancing supply chain security

COM(2006) 79 final — 2006/0025 (COD)

(2006/C 325/18)

On Tuesday, 4 April 2006, the Council decided to consult the European Economic and Social Committee,
under Article 80(2) of the Treaty establishing the European Community, on the abovementioned proposal.

The Section for Transport, Energy, Infrastructure and the Information Society, which was responsible for
preparing the Committee's work on the subject, adopted its opinion on 10 November 2006. The rapporteur
was Mr Simons.

At its 431st plenary session, held on 13 and 14 December 2006 (meeting of 13 December), the European
Economic and Social Committee adopted the following opinion by 115 votes in favour, with one absten-
tion:

1. Conclusions and recommendations

1.1
Following on from the security measures adopted in the
aviation and maritime transport sectors, the Commission has
drafted a regulation to enhance supply chain security on land.
The provisions are to be mandatory for the Member States and
voluntary for industry.

1.2
The Commission defines the supply chain as ‘comprising
all the transport and transport related operations and processes
beginning at the production site and ending at the cargo's point
of destination’. The Commission also indicates that the proposed
regulation relates only to freight transport and that passenger
transport may be addressed at a later stage if necessary.

1.3
The objective of the Commission's proposal is not only
to increase the level of security along the supply chain, but also
to establish a common framework for a systematic European
approach to safety in this area, without
jeopardising the
common transport market and existing security measures. The
aim is also to avoid unnecessary administrative procedures and
burdens at European and national levels.

1.4
The Committee feels that, given the high degree of inter-
dependence between the various inland freight transport modes
(inland waterways, roads, rail and also pipelines), a coordinated
approach is needed to making them secure, as the strength of
the entire supply chain depends on its weakest link.

1.5
That said, however, any measures that are proposed
must, with an eye to the Lisbon strategy, be effective and effi-
cient, and must not result in more red tape and/or distortions
of competition within or between the transport modes. The
Committee has serious doubts as to whether these objectives
will be attainable under the proposal for a regulation currently
on the table. The entire approach seems highly bureaucratic.
Moreover, the Committee cannot help feeling that the burdens
involved in rolling out the proposed measures will be passed on
to employers and workers in the sectors concerned. Accordingly,
for this reason, the benefits associated with the status of ‘secure
operator’ and its impact on the supply chain should be defined
more closely in order to prevent the risk of serious distortions,
which could lead to a rise in costs for the whole economy
without any appropriate benefits being obtained.

In that connection,

the Committee also notes

the
1.6
absence of any proposals for the adequate protection of physical
infrastructure against terrorist attacks. Precisely because inland
transport modes use infrastructure such as bridges, tunnels,
viaducts and also the pipeline network, proposals to enhance
supply chain security must also be accompanied by proposals
for the more effective protection of the physical infrastructure.

The Committee feels that the Commission's proposal to
1.7
make the Member States responsible for adopting security
measures is correct. This also applies in principle to the estab-
lishment of a special authority in each Member State to coordi-
nate, implement and monitor application of the supply chain
security measures proposed in the draft regulation. However, the
Committee feels that, given the key role of this special authority,
the Commission's proposal is seriously lacking in detail.

1.8
the
In the framing of new security-related proposals,
Committee would have liked to see an inventory made of the
characteristic features of the transport modes and due account
taken both of security measures already in place for the indivi-
dual freight transport modes and of existing recommendations
on this front. The fact that the various transport modes have
different traits — the road haulage sector, for instance, is made
up of 500 000 mainly small businesses — means measures
need to be put in place that are tailored to each specific mode.

transport modes,

1.9
Given the projected impact of the proposed measures on
the Committee thinks the
the individual
Commission proposal would have been more convincing had it
been much clearer about the advantages operators are set to
gain from the measures. As things stand, it is doubtful whether
there will be any advantage to be gained at all, not least given
the absence nowadays of systematic border controls in interna-
tional transport.

1.10 Member States are to draw up the minimum security
requirements to be met by operators under a ‘secure operator’
scheme. The Committee feels that such an arrangement is not
calculated to secure the establishment of a harmonised system
of minimum standards across the EU, and thus a level playing
field.

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The proposed measures are to be funded by the indivi-
1.11
dual Member States. The Committee feels that, from a subsi-
diarity angle, that is the right approach. Security investment
costs and ongoing related expenditure should be covered by the
operators and, in the Committee's view, should be factored into
the price or rate they charge. The Committee also thinks that
the Commission proposal should pay more attention to the
advantages to be gained from ‘secure operator’ status.

1.12 With regard to the European Commission's role, the
Committee feels that the Union must free up adequate resources
so that non-EU countries are also in a position to take the requi-
site action to attain the same level of security as the Member
States. The Committee feels this is important given the interna-
tional nature of inland freight transport.

2. Introduction

2.1
In its communication of 27 February 2006 to the
Council, the European Parliament, the European Economic and
Social Committee and the Committee of the Regions on enhan-
cing supply chain security (COM(2006) 79 final), the Commis-
sion cites terrorism as one of the greatest threats to democracy
and freedom.

The Commission believes that

2.2
the risk of a terrorist
attack targeting freight transport remains high, despite the tigh-
tened security measures that have been put in place. In Europe
in particular,
improvements have been made to aviation and
airport security and to maritime and port terminal security.

2.3
Regulation (EC) No 2320/2002 establishes a European
legal framework for aviation and airport security. Regulation
(EC) No 725/2004 deals with maritime and port
terminal
security, while Directive 2005/65/EC lays down measures to
improve security in the entire port area.

transport.

2.4
The Committee too has not been silent on these issues. It
has adopted a number of opinions, not least in the fields of air
and maritime
included
Ms Bredima-Savopoulou on the security of ports, ships and port
facilities, and Mr McDonogh on the security of (civil) aviation.
The issue of inland transport was considered in the exploratory
opinion on Security of modes of
transport adopted on 14
December 2005 (rapporteur: Mr Simons).

Rapporteurs

have

3. Commission proposal

The Commission points

3.1
to the need for enhanced
security in land freight transport and notes the current absence
of rules for the European land transport supply chain in its
In this context, the Commission defines the supply
entirety.
the transport and transport-related
chain as comprising all
operations and processes beginning at the production site and
ending at the cargo's point of destination.

The Commission proposes measures to enhance land
3.2
transport supply chain security as a complement to existing

Community transport security rules. These measures are manda-
tory for the Member States and voluntary for supply chain
operators. The Commission also notes that this proposal does
not cover passenger transport security, in particular mass trans-
port systems, which may be addressed at a later stage if neces-
sary.

The freight transport modes covered by the draft regu-

3.3
lation are thus internal waterways, rail and road.

3.4
Alongside the proposal for a regulation, the Commission
is also submitting a communication listing the key freight trans-
port security considerations and setting out the reasons why the
draft regulation is deemed to be the most realistic and focused
approach to enhancing the security of European freight trans-
port.

The Commission's objectives as set out in the communi-

3.5
cation on enhancing supply chain security are as follows:

— to increase the level of security along the supply chain

without impeding the free flow of trade;

— to establish a common framework for a systematic European
common transport
jeopardising the

approach without
market and existing security measures; and

— to avoid unnecessary administrative procedures and burdens

at European and national levels.

The measures proposed by the Commission to achieve

3.6
these objectives are as follows:

— to establish a mandatory system requiring Member States to
create a security (‘secure operator’) quality label which can
be awarded to operators in the supply chain meeting Euro-
pean minimum security levels, thus allowing mutual recog-
nition of the label on the internal market;

— to introduce, within the mandatory provisions for

the
Member States, a voluntary scheme under which operators
in the supply chain increase their security performance in
exchange for incentives;

— to make operators in the supply chain explicitly responsible
for their security performance in European freight transport;

— to allow ‘secure operators’ to benefit from facilitations where
security controls are carried out and to distinguish them-
selves positively from other competitors in the area of
security, giving them a commercial and competitive advan-
tage; and

— to allow regular updating and upgrading of security require-
ments, including recognised international requirements and
standards, through the committee procedure.

3.7
In this opinion, the Committee will seek to examine the
measures proposed by the Commission and thereby assess the
in fact, be
extent
achieved.

intended objectives can,

to which their

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4. General comments

Before considering the actual content of the communica-
4.1
tion and the proposal for a regulation,
it is important to be
clear about the terminology to be used. The English version of
the text, for instance, uses the term security. This is rendered in
Dutch as beveiliging and in German as Sicherheit. Some EU
languages make no distinction between the process of making
secure (in Dutch: beveiliging) and the state of being secure
(veiligheid). German, however, does make such a distinction,
which is why, in the German-language version, the term Sicher-
heit (being secure) will have to be replaced by Sicherung (making
secure), as the draft is, after all, about making the supply chain
secure, rather than about its security per se.

4.2
The Commission feels that, with a European legal frame-
work now in place for aviation and airport security and for
maritime and port terminal security, the time has come to lay
down rules for inland transport modes as well.

The Committee feels that the Commission has failed to
4.3
take due account of the fact that, as it itself recognises, air and
maritime transport modes are, by their very nature, completely
different from inland waterway, rail and road transport modes.
A feature of air and maritime transport is the limited number of
operators. In contrast, a huge number (some 500 000) of small,
frequently one-person businesses are active in the fields of
inland water transport and freight transport by road, operating
in a market with very small and often negative margins. If we
include product manufacturers positioned at the very start of
the supply chain, then the number of enterprises involved in the
process rises to some 4.7 million. This is, in the Committee's
view, a further obstacle to action along the lines proposed by
the Commission.

4.4
The Commission considers — in the EESC's view rightly
— that it is virtually impossible in practice to establish, in a
single all-embracing operation, security rules and measures for
the Commission
the land transport supply chain.
believes
is more realistic to establish a framework of
minimum security requirements capable of ensuring satisfactory
security levels in an operational environment in line with tech-
nological progress and risk developments.

Instead,

it

the individual security measures of

4.5
A chain is as strong or as weak as its weakest link. This
is also true of supply chain security. The Commission states that
each operator or each link in the supply chain can be made
responsible for the security of its own — but only its own —
activities and that
the
various operators add up to the security of the complete chain.
The Committee also feels that each operator should take respon-
sibility for his part of the supply chain. The Committee would
point out that risk of terrorist attacks applies not only to indivi-
dual links (that is to say individual operators), but also — or
perhaps even to a much greater extent — to transfer installa-
tions and infrastructure.

4.6
In particular, the risks posed to the physical infrastruc-
ture that must be protected by public authorities in the Member
in the Committee's view, been grossly underesti-
States have,
mated. The Committee feels there is no point in investing in the

security of individual links in the supply chain unless govern-
ment investments are, at the same time, also made in a high
level of security for the physical infrastructure.

Given the sheer number of businesses potentially affected
4.7
by the proposal,
the intended
the Commission feels that
measures can only be effective if each Member State designates
one competent authority to coordinate, implement and monitor
application of the supply chain security measures laid down in
the draft regulation. Assuming that the proposal on the table is,
in fact, the right one, the Committee feels that, on this point,
given the key role of the competent authority concerned, the
Commission draft is seriously lacking in detail.

4.8
the
To achieve a level playing field within the EU,
Committee feels it is important that ‘secure operator’ status
should be subject
to the same evaluation criteria in every
Member State. To qualify for this status, a transporter from, say,
Poland must comply with the same requirements as one from
Portugal or Greece. That is the only way to facilitate the mutual
recognition of
status. The Commission
proposal still gives insufficient safeguards as to how this level
playing field can be achieved. To be sure, the Commission has
appended a list of minimum requirements that must be met,
but the Committee feels that this fails to provide adequate safe-
guards to secure a level playing field.

‘secure operator’

4.9
The Commission's proposal comes at a time when, with
the Lisbon strategy in mind, Member States are calling for a
radical cut in red tape for loading and transport companies.
However understandable the background to the Commission
proposal may be, the administrative burdens involved in rolling
out this regulation will be passed on to employers and workers
in the sector concerned. The Committee feels that financial
investment should also be forthcoming from public authorities
at both national and international level.

4.10 Moreover, the proposal merely skims over the impact
of the projected ‘secure operator’ quality certificate on employers
and workers in the inland transport sector. Workers will have to
be trained in how to act in various situations, while businesses
will have to take all manner of high-cost security measures and
it is doubtful whether they will be able to pass those costs on to
consignor or final customer.

4.11
The Committee feels that the Commission proposal is
not specific enough about the potential benefits of acquiring
‘secure operator’ status. This applies both to the practical appli-
cation of those benefits and to their scope.

The Committee wonders whether, in framing this draft
4.12
regulation, the Commission has been sufficiently aware of the
measures already taken in the various sectors. To take just one
area, for instance, albeit the most vulnerable, freight transport
by road is covered by the European Agreement concerning the
International Carriage of Dangerous Goods by Road (ADR),
while the ADNR provisions (on the transport of dangerous
goods on the Rhine) apply to freight
transport by inland
waterway (see Article 1(10)). Similar agreements are in force for
freight transport by rail. The Committee feels that it would, in
the first instance, be advisable to consider whether, instead of

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putting forward a proposal for a new regulation, it would not
be just as effective to fine-tune the measures that are already in
place. It is not clear whether the Commission has given this
possibility any thought, but it should be taken into considera-
tion, not least from the angle of cutting red tape.

4.13
The Commission also believes that, once a company
has acquired the status of a secure operator, this will mean a
substantial reduction in freight checks in ports and at border
crossings. The Commission proposal, however, gives no guaran-
tees that this will happen and makes no mention of any agree-
ments in this regard. The Committee feels that, particularly in
the light of the efforts that are to be expected of operators and
individual companies, assurances must be given of the potential
advantages to be gained by taking part in the scheme, not least
since, as far as border waiting times are concerned, any potential
benefits are negated by the fact that systematic checks at the
internal borders are already a thing of the past.

The Committee would point out

4.14
the security
measures must be such that they do not impinge on certain
to company or trade
fundamental rights, such as the right
union representation, or pose a hindrance to people from
outside the company who are involved on a temporary basis in
its activities (e.g. loading and unloading).

that

4.15
The Committee would also draw attention to an issue
arising in particular in the field of international road haulage.
Parking areas are often deemed so unsafe that drivers no longer
dare use them for overnight stops. This makes it difficult to
comply with the rules on driving time and rest periods and
increasingly compromises road safety. The Committee feels that
much more investment is needed in making parking areas safe,
especially those used by international road hauliers for overnight
stops. The Committee would ask the Commission to consider
this issue and submit proposals to boost safety.

5. Specific comments

Before

examining

security-enhancing measures
5.1
proposed by the Commission, we would do well to consider
what security measures are already in place for individual inland
transport modes.

the

5.2
The inland waterway transport sector frequently uses
ports for loading and unloading. In such cases, the ISPS code
(International Ship and Port Facility Security) already applies.

The road freight transport sector, which includes both
5.4
professional road haulage firms and own-account transporters,
is in a very vulnerable position since it is made up of a huge
number of mainly small and micro enterprises. The coordi-
nating international organisation, the International Road Trans-
for
port Union (IRU), has drawn up security guidelines
managers, drivers and consignors. The IRU has also devised a
framework
arrangements with
customs authorities.

cooperative

voluntary

for

The basic principles underlying the security guidelines

5.5
mentioned in point 4.4 are as follows:

— security measures must not be so strict as to make normal

business impossible;

— newly introduced security measures must be proportionate
to their purpose, the costs involved and the consequences
for traffic;

— unilateral measures by states are not acceptable;

— security measures must be readily understood and reason-

able;

— in view of the international nature of transport, the security
measures to be taken should be applied uniformly, propor-
tionately and without discrimination, and with little or no
disruption to the most efficient business flows.

5.6
The Committee would stress that pipelines too are
vulnerable to security concerns. The Commission gives no
consideration to this transport mode which, although it may be
is
complex in terms of
nonetheless manageable given the small number of operators
involved. The Committee thus recommends that additional
consideration be given to the security of pipelines, which are
not just a transport mode but infrastructure as well.

the security arrangements required,

5.7
Subject the same proviso as in point 3.7 above, the
Committee undoubtedly sees advantages to be gained in each
Member States designating a single competent authority to coor-
dinate, implement and monitor supply chain security, provided
that this body is given not only the responsibility but also the
appropriate powers to act. This is not explicitly mentioned in
the draft regulation. The Committee recommends taking the
opportunity afforded by the adoption of such a weighty legal
instrument as a regulation to introduce more detailed provisions
on this front so as to secure a uniform approach across the
Member States.

5.3
Traditionally, the railways have always had a culture in
which the safety of staff and freight are of paramount impor-
tance. It would therefore be desirable to reinforce the principle
of a flexible and precise risk assessment. When taking security
measures, special consideration will have to be given to vulner-
able locations such as stations and marshalling yards. The Inter-
national Union of Railways (known by its French acronym UIC)
will have to come up with some recommendations for security
measures for international freight transport by rail.

5.8
The draft regulation proposes that Member States make
provision for the central authority to award the status of ‘secure
operator’ to operators involved a number of clearly defined
supply-chain activities. ‘Secure operator’ status may be awarded
for periods of three years, although this may be renewed where
the secure operator concerned continues to meet the minimum
requirements of the draft regulation. Once awarded the status of
secure operator, the operator concerned should then be subject
to less stringent security controls.

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The Committee feels that picture painted here by the
5.9
Commission is too rosy. The draft regulation is not clear about
the establishment of a system involving a single competent
authority for each Member State or about the procedure and
criteria for awarding applicants ‘secure operator’ status.

5.10
It is only in the accompanying communication that we
read that operators are required to meet certain minimum
security standards. Under the ‘secure operator’ scheme, Member
States are to decide for themselves what these minimum stan-
dards are to be. Such an arrangement, whereby each Member
State sets its own requirements in this area, is not calculated to
secure the establishment of a harmonised system of minimum
standards across the EU. Quite the reverse: unless requirements
are laid down as to the form and content of the minimum stan-
dards, the Committee fears the emergence of a non-comparable
system. As
the
Committee is concerned as to whether the desired level playing
field can be achieved in this way. The Committee recommends
that the Commission give particular attention to the question of
how to ensure that ‘secure operator’ status can be made to
mean the same thing and carry the same weight in the different
Member States.

already mentioned in point 3.8 above,

The proposed system of mutual recognition of

5.11
the
status of ‘secure operator’ may well also result in inequality of
treatment within the Union and thus, to a certain extent,
in
distortion of competition.

5.12
The Committee would point out that the meaning of
the term ‘secure operator’ may vary from mode to mode. The
rail market, for instance, is made up of a small number of large
undertakings, while the road haulage sector consists of some
500 000 mainly small businesses.

The Committee is not convinced by the secure opera-
5.13
tor's benefits outlined in Article 6 of the Commission's draft
regulation. Member States are to allow secure operators to
benefit from facilitations and simplifications related to security
control measures by being subject to so-called ‘fast track treat-
that would include a
ment’. According to the Commission,
reduced level of security controls. The Committee considers that

Brussels, 13 December 2006.

the wording used here is so vague and lacking in substance that
it has serious doubts about the applicability of the text in prac-
tice.

5.14
It is clear from the context that the Member States will,
in one way or another, have to fund the measures taken under
the proposals. The Committee feels this places a major burden
on the Member States. Clarification is needed of the areas of
responsibility and of cooperation of the Member State and the
‘secure operator’. The costs involved in setting up and main-
taining a system such as that proposed by the Commission will
be high given the disparate nature of
the target groups
concerned.

5.15
Obviously, Member State public authorities will cover
the costs involved in framing and monitoring implementation
of the rules. In addition, the European Union will have to free
up resources to provide every kind of support to non-EU coun-
tries so that these too are able to attain the same level of
security as the Member States. The Committee feels this is
important given the international nature of inland freight trans-
port.

5.16
The security investment costs as well as ongoing
security-related expenditure in areas such as staffing, insurance
and information measures should be covered by the operators
taking the security measures concerned and should be factored
into the prices or rates they charge. It must also be remembered
in this regard that businesses awarded ‘secure operator’ status
should be subject to lower insurance premiums as a result. A
question needing analysis is the possibility of a situation arising
whereby ‘secure operators’ and other firms not having this
status are offering their services on the transport market in
parallel. This could lead to the emergence of one group of
operators offering secure but more expensive services, and
another which does not have to bear the cost of raising security
standards and can thus offer its services more cheaply.

5.17
In recital 11, the Dutch version of the draft regulation
uses the term ‘gevestigd’. This is correct, but the Committee
notes that some other language versions (e.g. Polish) speak of
‘carrying on activities’, which is something quite different.

The President

of the European Economic and Social Committee

Dimitris DIMITRIADIS