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No C 41/14 Official Journal of the European Communities 18. 2. 91

Opinion on the Commission communication on the Community and German unification

(91/C 41/07)

On 3 September 1990, the Council of the European Communities decided to consult the
Economic and Social Committee on the package of proposals for legislation containing the
technical adjustments and transitional measures necessary to ensure the integration of the
territory of the German Democratic Republic into the Community.

The Committee bureau instructed a study group of the Section for External Relations, Trade
and Development Policy to prepare the work on the subject. Mr Petersen was nominated
Rapporteur-General.

At its 281st plenary session (meeting of 20 November 1990) the Economic and Social
Committee adopted the following Opinion unanimously.

1. Introduction

1.1. Since the borders were opened on 9 November
1989 the process of German unification has proceeded
at a pace which not even the greatest optimists would
have considered possible a year ago. The population of
the GDR pressed, with growing impatience, for the
rapid unification of the two German States. In no time
at all any ideas politicians might have had of a gradual,
long-term merger of the two States were made completely untenable by the growing masses crossing from
East to West. Any delay would have triggered off further emigration and given further impetus to the economic
demise of the GDR (!).

The driving force behind the peaceful revolution was
the desire for political and economic freedom — individuals being more important than the collective, freedom more important than power and human beings
more important than the State. The rallying cries were
'freedom and democracy' and the 'social market economy'. It was no accident that these two demands were
made simultaneously, for there was a growing realization in the GDR that the economy and society were
interdependent and closely linked.

The Economic and Social Committee welcomes the
unification of the two German States in response to the
will of the people. It expects that this unification will
help to further consolidate and to safeguard the key
ingredients of a free society in Europe, namely personal
liberty, social justice and solidarity. The Committee is
also of the opinion that German unification will hasten
the process of European integration, on both the political and economic fronts.

There are, of course, matters which still give rise to
concern and anxiety, not just amongst citizens of other

_i_ _[1]_ _)_ The Committee has already made an in-depth study of political developments following the opening of the borders and
economic issues affecting the GDR in the information report
of the Section for External Relations, Trade and Development
Policy on Central and Eastern European Countries (ESC
No 492/90 fin.).

EC countries but also in the former GDR. Germany's
EC partners are particularly concerned about the possible adverse effects of unification on the peripheral
regions of the EC and also about higher financial burdens which the poorer Member States are not in a
position to bear. In the former GDR, feelings of insecurity have been prompted by unemployment — which
is still rising for the moment — and the attendant
hardships.

In this connection the Committee would refer to its
Opinion on the Delors Report on Economic and Monetary Union (EMU) (CES No 1135/89) ( [2] ). This Opinion
voiced the Committee's concern about the wide variations of prosperity in the Community and pointed out
that the structural adjustments which still need to be
made in some Member States before the achievement
of EMU should not be at the expense of the most
underprivileged groups and regions in the Community.
It therefore regretted that no support measures had
been proposed to cushion any economic and social
hardship. The views expressed at that time are particularly valid in the context of German unification.

1.2. The removal of borders and strengthening of
democratic structures are clearly cornerstones for
increased economic cooperation with neighbouring
countries in Central and Eastern Europe too. It is
encouraging to note that an increasing number of East
European countries with centrally managed economies
are in the process of introducing democratic structures
and market economies. Closer economic cooperation
throughout Europe is thus in the offing, and will provide a challenge for the Community.

There is no doubt that efforts to strengthen economic
cohesion in the Community, to establish a single market
by the end of 1992 and to move towards closer cooperation with the East European States, mean risks as well

( [2] ) OJ No 329, 30. 12. 1989.

18. 2. 91 Official Journal of the European Communities No C 41/15

as opportunities for African, Caribbean and Pacific
countries (ACP). In the view of the Committee it is
of crucial importance that the European Community
upholds its pledges made under the new Lome Convention. The Community must continue to make sure that
no ACP country finds it more difficult to gain access
to traditional markets in Europe.

1.3. The EC responded both rapidly and constructively to the peaceful revolution in the GDR and the
subsequent unification process. It took all the necessary
steps to integrate the GDR into the Community without
delay. As early as 17 January 1990 the President of the
EC Commission, Jacques Delors, stated in an address
to the European Parliament that East Germany was
assured its place in the EC, if it so desired. Accession
had, however, to be a peaceful and democratic process
based on free self-determination and in line with the

principles of the Helsinki Final Act, the East-West
dialogue and the prospect of European integration.
German unification has undoubtedly been completed
in this spirit.

In response to the gathering momentum of the German
unification process, the EC Commission lost no time
in drawing up a three-stage plan for the incorporation
of the GDR into the Community as part of a united
Germany. The plan was given unconditional support
by the European Council at the special summit in
Dublin on 28 April 1990. As stated in the conclusions
of the Presidency, the European Council unreservedly
supported the unification of Germany. The Community
was confident that German unification — in response
to the freely expressed wish of the German people —
would benefit the development of Europe in general
and the EC in particular.

The EC Commission's three-stage plan envisages first
of all an 'interim phase', which began with German
monetary, economic and social union. This stage will
be followed by a 'transitional phase', beginning with
the achievement of the political unity of Germany,
before moving on to the 'final phase', in which the
whole of Community law is fully applied.

1.4. As early as the special Dublin summit it was
decided that the Commission should present the
Council as soon as possible with a general report and
in this context should also submit proposals for the
requisite transitional arrangements, on which the
Council would take an immediate decision.

The Communication published in the meantime by the
Commission on the Community and German Unification (*) sets out appropriate proposals for expediting
the rapid transposition and adaptation of Community
law after the GDR's incorporation into the EC.

The Committee regards the comprehensive Commission paper, produced at very short notice, as an

( []] ) Doc. COM(90) 400 final, Vols. MIL

important, indeed essential, contribution to the rapid
incorporation of the five new Lander into the European
Community. In general, it approves the adjustments
and transitional measures proposed in the document
for the territory of the former GDR. The Committee
deals below with individual sections of the package,
submitting proposals for amendments and additions
and making some critical remarks.

2. Community law and German unification

2.1. The territories of the GDR were integrated into
the European Community when they became part of
the Federal Republic of Germany on 3 October 1990.
The Commission proposals are confined to the immediate impact of German unification on the Community's
responsibilities and secondary Community legislation.

2.2. The legal integration of the former GDR into
the Community has been phased in.

The first State Treaty _{Staatsvertrag)_ of 18 May 1990
establishing a monetary, economic and social union
between the Federal Republic of Germany and the
former GDR on 1 July 1990 meant that key areas of
West Germany law were in force in the acceding territory prior to accession. Since these areas of law were
compatible with EC legislation, a vital step was taken
on the road to monetary, economic and social integration (despite the continued existence of two separate
States) before EC frontiers were extended on 3 October
1990.

The Treaty of Union _(Einigungsvertrag)_ concluded
between the two German States on 31 August 1990
stipulated that all Community law would apply in the
territory of the former GDR from the date of accession,
i.e. 3 October 1990. As Article 10 of the Treaty of Union
states, Community law includes the treaties establishing
the European Communities, amendments and additions
thereto, and legislation based on the treaties.

With the Treaty of Union, many Federal German laws
have been amended with a view to their application in
the new _Lander._ In certain cases these amendments still

have to be adopted by the all-German Parliament.

2.3. The automatic application of Community law in
the former GDR territories consequent upon unification
will not involve amendment of the treaties or other

primary legislation.

Secondary legislation can largely be applied immediately, which means that about 80% of direct and

No C 41/16 Official Journal of the European Communities 18. 2. 91

indirect Community legislation is already in force today
in the territories of the former GDR. This notably
includes external trade and customs legislation, most
directives on technical barriers to trade, and legislation
on freedom of establishment, the movement of capital
and services, competition, company law, indirect taxation and public procurement.

In some sectors, however, (about 20 % of the corpus of
Community law) transitional measures will be required
to take account of the former GDR's distinctive economic and legal features and to ensure an orderly and
socially acceptable incorporation of the five new Lander
into the European Community. The transitional
arrangements vary for each area and sector and can
have the same legal basis as the relevant secondary
legislation. They have been limited to what is absolutely
necessary so that the adjustment process in the former
GDR can proceed as rapidly as possible and integration
into the Common Market can be speeded up.

2.4. The transitional measures proposed by the
Commission essentially comprise technical adjustments
and temporary derogations which will apply for fixed
periods from the date of formal unification.

The Committee agrees with the Commission that in
such cases the following principles must be adhered to:

— acceptance of the 'acquis communautaire' must be
both the starting-point and ultimate objective,

— any transitional arrangements must be objectively

necessary,

— derogations must be temporary and cause minimum
disruption to the functioning of the Common
Market.

The transitional measures will be based on the degree
of Community integration achieved in the different
areas and sectors. They will generally apply up to the
deadline for transposition of the relevant Community
policies, i.e. derogations in respect of the single market
may apply until 1992 —1993 and derogations in respect
of the environment until 1995. In addition to transitional measures, new rules (such as a higher German
sugar quota) will be proposed to take account of the
increased production capacity resulting from unification.

2.5. The original idea was for transitional measures
and adjustments to be transposed into German law or
be directly applicable in the territory of the former
GDR before unification.

However, since unification came about on 3 October
1990, i.e. earlier than expected, it became necessary to
resort to an additional procedure and adopt provisional
measures in order to prevent any infringements of EC
law pending the adoption of the transitional measures.
On 17 September 1990 the Council, with the agreement
of the European Parliament, took a decision empowering the Commission to adopt provisional measures for
the former territory of GDR, permitting for example
some regulations not compatible with EC law to remain .
in force temporarily in this territory.

The ten-day period allowed by the Council was not
sufficient to enable the Economic and Social Committee
to comment on the provisional measures which entered
into force on 29 September 1990. However, given the
political and time constraints, the Economic and Social
Committee considers that it was essential to adopt such
measures since there was no other way of avoiding a
legal vacuum pending the Council's adoption of the
transitional measures. The Committee therefore gives
_ex post facto_ support to this interim solution.

2.6. On 27 September 1990 the Commission
empowered the Federal Republic of Germany in a
second stage to implement the provisional measures.
The German Federal Government was also empowered
under the first paragraph of Article 4 on the law approving the Treaty of Union to postpone or adapt the
application and implementation of directly applicable
Community laws, as well as German Federal law enacted in pursuance of Community law.

Under these powers the German Federal Government
adopted on 29 September 1990, with the agreement of
the _Bundesrat_ (upper house of Parliament), a Regulation on the transposition of the legislation of the
European Communities to the area referred to in
Article 3 of the Treaty of Union (Regulation on the
transposition of EC law). The Regulation sets out the
derogations which the European Commission had proposed should constitute the definitive transitional measures. A number of other derogations in line with the
Commission's proposals are already contained in the
appendices to the Treaty of Union. They will be
enshrined in Community law by EC legislation.

Owing to this interim solution the transitional arrangements and adjustments proposed by the Commission
now have legal force by and large. The Council will
have to decide whether they should continue to be
applicable after the 31 December 1990 deadline. Such

18. 2. 91 Official Journal of the European Communities No C 41/17

a decision will in no way be prejudiced by the provisional measures.

2.7. The Commission has also been empowered,
under a committee procedure specified in the Council
Decision of 13 July 1987 laying down the procedures
for the exercise of implementing powers conferred on
the Commission, to take additional provisional measures in order to avoid difficulties in Germany or any other
EC Member State and to regulate other details. Under
the terms of this procedure the Commission may adopt
proposals if the Council has not acted within a reasonably short period of time. In the agricultural sector,
implementing measures are to be adopted by management committees.

The Economic and Social Committee considers that it

is necessary to introduce such a flexibility clause which,
like the provisional measures already in force, would
apply only until 30 December 1990. A mechanism
whereby safeguards can be adopted without delay is
also in the interests of the other EC Member States.

2.8. With regard to the production and importation
of goods below the standards set by EC regulations,
the Commission's transitional measures stipulate that
such goods must remain within the territory of the
former GDR. To ensure that these provisions are strictly observed, end-use controls are envisaged. In this
connection the Commission has, in collaboration with
the German Federal Government, brought out a Communication in which the supervisory and control measures under consideration are reviewed in detail. Such

measures primarily cover goods produced in the former
GDR, goods imported into the former GDR from certain third countries without payment of duty, and agricultural products of the former GDR _X_ _[1]_ _)._

Controls may be carried out by the German authorities
or the appropriate departments of the European Commission and, as before, they may also be carried out
in other Member States. Infringements of transitional
measures incur penalties (customs penalties, seizure of
goods, withdrawal of import licences, fines of up to
10 000 DM). In the event of major market distortions,
Member States may ask the Commission to discontinue
the suspension of customs duties on certain goods and
reimpose normal customs duties.

Although the Commission's package of measures constitutes a comprehensive control system, doubts remain.
The Committee considers in fact that there is a well
founded danger of the transitional measures being circumvented at the border between the former GDR and

(!) ESQ90) No 1983 final.

the Federal Republic. It accordingly calls on the German
Federal Government and the European Commission to
make adequate use of the controls available, more
particularly so as to preempt any calls for special labelling for such goods.

3. Overall economic impact of Germany unity

3.1. The Commission considers that German unifi
cation will have a positive overall economic effect. The
growing demand for 'Western' consumer goods and the
enormous demand for production plant and machinery
— either for refurbishing outdated plant or fitting out
new firms — will benefit industry and the building
trade as well as the services sector (especially commerce,
banking and insurance). Considerable public aid for
strengthening the economy and mastering the social
problems arising during the period of transition in the
five new Lander will also cause a sharp increase in net
borrowing by the State with the result that fiscal policy
will also give a considerable impetus to expansion.

3.2. There has been a lot of speculation in the past
months about the overall economic effect of German

unity on the other Member States of the Community.
It is certainly right to say that the boost which is likely
to be given to demand and growth will also benefit
Western trading partners — including first and foremost Germany's partners in the Community. The initial
consequences of rising imports (coupled with modest
growth in foreign demand) can already be felt.
Germany's high current account surplus (which was still
as much as 104 000 million DM in 1989) is beginning to
shrink, while the state of other Community countries'
current accounts is improving. This change will be of
benefit to the international adjustment process and
there will be greater convergence between Member
States' external balances.

The revival and modernization of the former GDR's

economy will require enormous injections of capital
and this means that following the steady rise during
the eighties, there will be a sustained fall in the net
outflows of capital from the Federal Republic. Hence
the frequently expressed concern that other Community
countries such as Spain, Portugal or Ireland might suffer
as a result of German industry's involvement in the five
new Lander. The Community expects that — irrespective of the huge funds flowing to the new part of the
Federal Republic — German firms will continue to
invest in other Community countries. Investments considered to make economic sense will certainly be continued.

No C 41/18 Official Journal of the European Communities 18. 2. 91

3.3. Looking at overall economic progress so far,
there is no denying that expectations in the former
GDR have not been fulfilled by a long shot. The industrial base there is shrinking under the pressure of international competition and unemployment is rising steadily from month to month. The necessary transformation
— according to the most recent overall economic analyses of the main German economic research institutes

— is fraught with difficulties. These difficulties were
expected, though not the ferocity with which they have
surfaced.

According to the research institutes, the transformation
of the East German economy will take some time. To
quote: 'Privatization, the clarification of ownership
rights, the disentanglement of monopolistic enterprises
and the development of an efficient public sector are
already proving to be troublesome. It will be completely
impossible in the short term to complete the modernization of infrastructure, the building of a modern economy based on the division of labour, the development
of a differentiated wage structure and the clean-up of
the environment. It is not yet possible to foresee how
long the transformation process will take.' (*) At any
rate, the contraction will continue — according to the
institutes — until the middle of next year and not until
then is there a likelihood — starting at whatever level
the economy might have fallen to — of a gradual
revival. The institutes forecast an unemployment peak
of 1,7 million in 1991 and 2 million workers on short
time in the coming winter.

3.4. The Commission's and the German economic

research institutes' assessments diverge sharply, and
this raises the question of whether one of them is being
completely unrealistic. The Committee thinks that the
answer in this case is no. In fact, it is highly likely
that the positive macroeconomic effects forecast by the
Commission will materialize in the medium term. The

sole problem with the Commission's forecast is that the
time factor is ignored and the conflict-ridden transitional phase is not touched upon. General forecasts
about economic effects — no matter how correct they
may be — are of little use for economic policy decisions.
It is to be hoped that the difficult adjustment processes
which the East German economy must undergo do
not unduly impair the adjustments and transitional
arrangements proposed by the Commission. At any
rate, it is not out of the question that some of the
ambitious transitional deadlines — e.g. in the environmental sector — may soon prove to be wishful thinking
because of East German firms' inability to invest.

(*) From 'Die Lage der Weltwirtschaft und der deutschen Wirtschaft im Herbst 1990'.

4. External aspects

4.1. Since 3 October 1990, the EC's common trade
policy has also applied, in principle, to business in the
former GDR. In practice, it became applicable with the
entry into force of the first State Treaty on 1 July 1990,
since when the new _Lander_ have basically been subject
to the same customs, foreign-trade and tax legislation
as the Federal Republic. Thus, even before the formal
unification of the two German States, the Community
had entered into a _de facto_ customs union with the
GDR and this was supplemented by a _de facto_ agricultural union on 1 August 1990. From that date, trade in
agricultural products — with both the Member States
and non-Community countries — has also been governed by the relevant Community legislation.

4.2. German unification has undoubtedly raised a
number of foreign-trade problems for the Community.
These relate, on the one hand, to the extent to which
the Community can (or must) assume the international
rights and obligations of the former GDR and, on the
other, to the application in the new Lander of the
treaties concluded by the Community.

Account must also be taken of the economic conse
quences for neighbouring states and the former GDR's
principal trading partners as well as of ties between
COMECON countries and their suppliers in the former
GDR.

The maintenance and expansion of trade relations with
COMECON countries is in the interests of both sides.

Moreover, the Federal Republic and the former GDR
have assured their COMECON trading partners that
there is no danger of unification penalizing them, for
example as a result of the sudden abrogation of existing
contracts. This principle of 'legitimate expectation'
_(Vertrauensschutz),_ which is enshrined in both the State
Treaty and the Unification Treaty, has been consistently
reiterated by the Federal Government, particularly visa-vis the Soviet Union, the former GDR's main trading
partner.

4.3. The Economic and Social Committee regards
the principle of legitimate expectation as of crucial
importance for the international division of labour
especially in the context of German unification. The
Committee feels that this principle must be guaranteed

18. 2. 91 Official Journal of the European Communities No C 41/19

with respect to Eastern Europe at a time when it is
undergoing a major process of political transformation
and renewal as it attempts to introduce democratic
systems with market economies, and when the COMECON countries are making major efforts to liberalize
their foreign trade and seeking, quite justifiably, a closer
involvement in the world economic order.

4.4. The Committee welcomes the various forms of

Community support for the process of reform in Central and Eastern Europe, such as the conclusion of
trade and cooperation agreements and the multilateral
support programme of the Group of '24', which the
Commission has been coordinating since mid-1989 on
the instructions of the Paris Economic Summit. It is

also pleased that the Community intends to suspend
customs duties for a transitional period on certain
imports of industrial [including European Coal and
Steel Community (ECSC)] and agricultural products
covered by bilateral agreements between the former
GDR and COMECON countries or Yugoslavia, provided that the goods concerned remain in the former
GDR territory and certain maximum values or quantities are not exceeded. The transitional period proposed
by the Commission — one year with a possible oneyear extension — should, however, be reconsidered. It
might save more time and cause fewer problems to fix
a two-year transitional period from the outset.

4.5. Patience will also be required. Centralized mismanagement can hardly be eradicated in a short time.
Nor can fixed quotas, production targets and the use
of money merely as an accounting unit — which have
long characterized intra-COMECON trade — be conjured away overnight. At the same time, it is essential
to bear in mind that increased trade in goods and
services with COMECON must not be seen as a one
way process. Whilst the urgently required modernization and expansion of production capacity and infrastructure will inevitably suck in a large volume of
imports, a sound basis for trade with Central and
Eastern Europe will be established permanently only
when the countries concerned gain access to Western
markets and can earn the foreign currency they need.

4.6. The admission of the former GDR to the world

economic system must be based on the principles of
free (and fair) trade as laid down, in particular, in the
General Agreement on Tariffs and Trade (GATT). The
incorporation of the GDR into the Federal Republic
has automatically extended the GATT area, i.e. a non

member has acceded to GATT indirectly without going
through the admission procedures.

In principle, as already stated, Community trade policy
has applied in the former GDR since the formal unification of the two German States. However, legal, economic and political considerations make it necessary to
introduce the abovementioned adjustments and transitional arrangements, not least with a view to avoiding
abrupt changes. The Committee therefore agrees that
the Commission should notify GATT of the proposed
measures, but wonders whether notification alone is
enough. In its view, far from simply being notified, the
GATT partners must be asked to approve a waiver, that
is a temporary derogation from the GATT regulations.
This, however, means having to negotiate with GATT.
In particular, GATT must be convinced that the transitional trade arrangements and adjustments proposed
by the Commission will not permanently discriminate
against any of its partners.

5. Internal Market

5.1. In the key areas of Community Single Market
legislation, no derogations will be required for the
integration of the five new _Lander_ into the Community.
The main areas involved here are:

— customs union,

— public procurement,

— industrial and intellectual property,

— free movement of persons,

— financial services, company law and taxation,

— indirect taxation.

5.2. Most directives regulating trade in industrial
products can also be applied without derogations,
although transitional arrangements (which are to apply
until 31 December 1992) are planned for cosmetics,
machinery, electrical appliances, textiles, prepackaging
and crystal glass. The period of adjustment for pharmaceuticals and veterinary medicines will be extended
until 31 December 1995.

The Committee endorses the transitional periods proposed for these product areas, which it considers appo

No C 41/20 Official Journal of the European Communities 18. 2. 91

site for solving the problems of adjustment. In this
connection, it would draw attention once again to the
provision stipulating that GDR products and goods
imported from COMECON countries which do not
comply with Commission directives may not be marketed in the Community outside the territory of the former
GDR. Germany has to take all the necessary action to
ensure that these goods remain within the former GDR.
The action taken must be compatible with the Treaty,
and in particular the objectives of Article 8A, and
must not lead to intra-Community border controls or
formalities. Conversely, the Committee would ask the
Commission to ensure that no other Member State is

compelled to increase its controls or formalities. It
would be disastrous if the ambitious plan to establish
a frontier-free area by the end of 1992 were to be
watered down this way. The aim should be to induce
firms in the former GDR to focus all their efforts in

the coming year on adjusting rapidly to Community
standards and quality requirements.

5.3. In the field of the professions the directives
regulating the recognition of diplomas on the basis of
a Community definition of minimum training will be
directly applicable once a few technical changes have
been made. This applies to the general rules governing
the recognition of diplomas, and the specific rules for
doctors, nurses, dentists, veterinary surgeons, midwives, architects and pharmacists. An 18-month period of
adjustment will be required only for the application
of the Directive harmonizing the training of medical
specialists.

The Committee gives its approval to the proposed
amending Directive; at the same time it assumes that
where evidence of formal qualifications is required to
exercise a regulated profession, such qualifications will
only be recognized by the Member States after careful
examination of the diplomas and certificates submitted.
In addition to professional competence, the political
facts behind the evidence of formal qualifications
should play a role here.

5.4. In the field of competition law there is no need
for any derogations with regard to the application of
EEC Treaty Articles 85 and 86 and the Community
legislation derived therefrom (Regulation No 17, control of mergers, group exemptions, etc.). The Commission ensures their application on a non-discriminatory basis.

The control of state aid will also not require any formal
adjustments. If major difficulties emerge in individual
sectors, the Commission should apply EEC Treaty
Articles 92 and 93 flexibly. The shipbuilding industry

(proposals for amending the 6th and not yet adopted
7th Directives) is a special case. The wording of the
proposals differs slightly in the German version (maybe
unintentionally), but both stipulate that operating aid
for shipbuilding and ship conversion in the former GDR
may be compatible with the Common Market provided
that:

— the shipbuilding industry has undertaken a systematic and specific restructuring programme, including
capacity reductions, which can be considered capable of allowing it to operate competitively after the
end of 1992, and

— the aid is progressively reduced.

The Committee can endorse these proposals. However,
it thinks that the two-year transitional period laid down
is insufficient. The shipyards in the former GDR will
have to make considerable adjustments and act urgently
to restructure and increase productivity. A start has
already been made in this direction. In addition, studies
are being carried out at the moment and some of these
will not be completed until 1991. Even if the selective
restructuring measures still to be adopted are
implemented rapidly, the shipyards are hardly likely to
become fully competitive in the remaining period.

In this connection, the Committee would refer to its
Opinion of 19 September 1990 (ESC No 1057/90) on
the proposal for a 7th Council Directive on aid to
shipbuilding ( [x] ). Because of the unduly degressive
reduction in aid and its validity for only two years, this
Commission proposal was considered by the Committee to be generally unsatisfactory.

6. Common agricultural policy

6.1. Because of the differing institutional and economic conditions, bringing the former GDR's agricultural sector under the common agricultural policy
(CAP) presents a special challenge. The Commission is
attempting to minimize derogations in the core areas
of agricultural policy and impose a strict time-limit on
them. In the view of the Committee the Commission

should also make sure that the proposed derogations
do not put any Community region, for which the CAP
is of vital importance, at any sort of disadvantage.

6.2. Under the terms of Article 15 of the first State

Treaty between the two German States, the former

(!) Doc. COM(90) 248 final.

18. 2. 91 Official Journal of the European Communities No C 41/21

GDR committed itself to introducing a price support
system and a system of external protection modelled on
the Community regime. The aim was to bring national
producer prices into line with Community prices as
quickly as possible. Thus the GDR had taken its most
important farm policy decision even before acceding to
the Federal Republic, for prices are the key regulatory
mechanism in market economies.

6.3. The differences in production between the two
parts of the united Germany are striking. Despite the
roughly comparable quality of the land the average
yields per hectare in the new _Lander_ are 20-30 % lower.
Sugar beet production lags a particularly long way
behind. With modern production techniques, better
quality seeds and dynamic management, however, it
will be possible to increase crop yields appreciably in
a relatively short period of time.

This will undoubtedly put pressure on a Community
agricultural market which has now been struggling with
structural surpluses for many years. Measures to take
some pressure off the market will therefore be indispensable in the five new _Lander,_ too, if the future of
the CAP reforms is not to be put in jeopardy. The
CAP's principles must be observed — also as regards
intervention quantities and production quotas.

— With regard to the sugar quota, the Commission is
proposing a basic quantity of 870 000 tons white
sugar. The Committee considers a further large
reduction in this basic quantity to be indispensable.

— The Commission also proposes cuts in milk production. The former GDR's milk regime will remain
in force until the end of the milk marketing year,
but the quota scheme will be introduced on 1 April
1991. Instead of the average 8 million tons per year
between 1986 and 1988 there is to be a guaranteed
total quantity of only _6,6_ million tons in the 19911992 milk marketing year.

6.4. The drastic cuts in milk production will necessitate a sharp reduction of roughly 20% in the former
GDR's dairy herd. In order to ensure that the ensuing
meat mountains do not distort the highly sensitive
Community market in meat products, the Committee
suggests that the meat be exported to East European
countries. The Soviet Union and — without question
— other countries will probably continue for some time
yet to be very keen on importing farm produce. The
lack of foreign currency might of course be an obstacle,

which is why the Committee proposes that these
countries be given food aid in emergencies.

However, if the efforts being taken by East European
countries to push through reforms also extend sooner
or later to agriculture, these countries will make every
effort to become exporters of farm produce themselves.
This eventuality is borne out by a US Ministry of
Agriculture forecast that the countries of Eastern Europe will become farm-produce exporters in important
product areas by the year 2000.

_6.5._ Quality standards for crop and livestock production lag a long way behind — as does the processing
and marketing of produce. There is a shortage of
slaughterhouses, cold storage plants and meat-processing facilities, to quote but three examples. The processing industry in the former GDR is therefore not in a
position — at least in the immediate future — to comply
with all Community provisions. The Commission is
consequently proposing transitional arrangements
which will last until 31 December 1992. At the same

time, produce which fails to comply with Community
quality of health standards or the like (e.g. the legislation governing livestock epidemics or the protection
of animals) can be marketed only within the territory
of the former GDR. The Committee urges the Commission to carry out effective checks to ensure the strict
observance of this rule.

_6.6._ The structure of agriculture in the former GDR
is radically different from that in the Federal Republic
and the rest of the Community. It is the outcome of a
policy which has been modelled for many years on
the industrialization of agriculture. Expropriation and
collectivization were the most important instruments
used to attain the objective of establishing a fully organized agro-industrial complex. Although there are various types of farms in the five new _Lander,_ the most
common is the agricultural production cooperative _[Landwirtschaftliche_ _Produktionsgenossenschaft_
(LPG)]. These were set up during the collectivization
phase between 1952 and 1960 and were subsequently
developed further. Last year these cooperatives, which
are not comparable in any way with the types of cooperatives to be found in the Member States of the European
Community, farmed roughly 85 % of agricultural land.

Without a doubt the most important, but at the same
time most difficult, task facing agricultural policy in
the former GDR is to unravel the structures that were

established by force.

6.7. Existing Community structural aid measures
offer hardly any chance of success in the former GDR.
According to the Commission, more harm than good

No C 41/22 Official Journal of the European Communities 18. 2. 91

could be done in some cases. The Commission has

therefore adapted the available structural policy measures to conditions in the former GDR. The guiding
principle has been not only to satisfy the needs of the
large production cooperatives but also to offer family
farms effective assistance in re-equipping and modernizing their establishments.

6.8. The Economic and Social Committee has given
detailed consideration to the package of measures. The
proposed measures are considered to be adequate in
part, though the Committee thinks that some of them
should be modified. Whether or not the planned deadlines are realistic is debatable. This applies not only to
the special provisions under Regulation (EEC) No 797/
85 but also to the proposal amending Regulation (EEC)
No 866/90. Article 13 of the latter excludes investments

in respect of which work commenced more than six
months before the date on which the Commission

receives the application for assistance. The Committee
considers that, in view of the difficult transitional period in the former GDR, this time-limit is hardly likely
to suffice. It should be extended to nine months mainly
because the Lander autorities' machinery for approving
and forwarding future investment applications has not
taken shape yet.

6.9. The Committee expressly welcomes the Commission's proposed set-aside and extensification
schemes for stabilizing Community production and
improving the rural environment. Special mention
should be made of the inclusion of land planted with
potatoes. The Committee thinks that set-aside should
be extended even further, especially where the ground
is heavily contaminated and must be taken out of
production because food can no longer be grown on it.

6.10. In order to make the restructuring of agricultural production cooperatives easier, the Commission
is proposing to raise the ceilings on eligible investments
and make a larger number of pigs and dairy cows
eligible for investment aid. The Committee agrees with
the Commission on the need to encourage the restructuring of agricultural cooperatives, provided that the
number of pigs is not increased and that account is
taken of the reduction in the number of dairy cows
which will have to take place in the former GDR.

It is not in the interests of production cooperatives or
family farms in the former GDR to receive aid for

measures which sooner or later may turn out to be
uneconomic. In view of the Community surpluses, there
should be no intensification of farm production in the
former GDR. It has long been established in the other
Member States that such intensification is economically
and ecologically unsound.

The Committee proposes that the Commission focus
available resources on measures which reduce costs but

do not increase production. In particular, a major effort
should be made to establish in the five new _Lander_ a

highly efficient and flexible processing and marketing
sector which has close ties with agriculture.

7. Transport and telecommunications

7.1. The^ transport and telecommunications infrastructure in the former GDR is inadequate, overcrowded, antiquated and prone to breakdowns. The command-economy infrastructure policy of the past
overtaxed the railways, retarded the development of
the road network considerably and neglected telecommunications. Enormous funds will have to be invested

in order to rehabilitate and expand the infrastructure,
and optimize its quality.

7.2. According to the Commission the integration of
the former GDR's transport sector into the Community
will require only a few transitional measures. The transitional arrangements are timed to ensure that the integrated transport market can be completed to all intents
and purposes by the end of 1992.

The adjustments and transitional arrangements meet
with the Committee's broad approval. In the case of
maritime transport, however, the Committee wonders
whether it is in fact necessary to grant a four-year
period of grace for agreements concluded by the former
GDR. The parties to the UN Code of Conduct for Liner
Conferences have pledged not to conclude any bilateral
cargo-sharing agreements amongst themselves, and on
top of this the Member States of the Community have
promised to let all such agreement with non-Code signatories expire by the end of 1992. Why a further twoyear period of grace is necessary for the former GDR
is difficult to understand. The Committee thinks that

the Commission should ensure that the agreements
entered into by the former GDR expire before 1 January
1995.

In the road-transport sector the main concern is the
deadlines for fitting tachographs recording driving
hours and rest periods. The Commission proposes a

18. 2. 91 Official Journal of the European Communities No C 41/23

three-year period of grace, which it justifies on the
grounds that workshop capacity in the former GDR is
inadequate. The Committee admits that this may justify
a lengthy period of grace, but firmly believes that the
period should be shortened to no more than two years.
Some of the vehicles in question are already equipped
with a Community-approved tachograph, and there is
hardly any danger of workshops having too much work
on their hands. The Commission's second argument —
that it wants to give smaller firms the chance to replace
their fleets (which are frequently between 20 and
28 years old) before they get involved in a costly reequipped operation — is well meant, but equally unconvincing. There is no overlooking the fact that the tachograph is vital in helping to improve working conditions
(driving hours and rest periods) and road safety. The
possibilities for carrying out checks during the transitional period is another point which the Committee
wonders about: there is no reference at all to this in

the Committee document.

7.3. The funds needed for the large-scale renewal of
infrastructure in the former GDR are being revised
upwards all the time. In its latest estimates, the Federal
Ministry of Transport arrives at a figure of 125 000
million DM for transport infrastructure alone. These
funds are to be used initially to bring the network in
the former GDR up to Western standards; the rail
network will require slightly less than 50 000 million
DM, about 60 000 million DM will go on trunk and
local roads and the inland waterways will require a
further 8 000 million DM. These figures do not include
the cost of increasing infrastructure capacity, plugging
gaps and everyday maintenance and repair.

In view of the vast funds required and the need to
complete the most urgent projects in a reasonable space
of time public funding will be clearly overtaxed. Therefore, new forms of infrastructure finance should be
considered. Above all, private capital will have to be
mobilized. Examples such as the Channel Tunnel, the
link with Scandinavia and the Transrapid magnetic
levitation railway show that private finance may be
quite a realistic proposition.

7.4. Because of its geographical position, united Germany will undoubtedly become the crossroads for EastWest and North-South traffic in Europe. The demand
for transport services will increase, especially once the
Single Market has been completed. Today restrictions
and barriers exist between countries but tomorrow the

question of whether a transport operation is confined
to one country or covers the whole of Europe will be

immaterial. Hence the need in future to consider and

judge infrastructure investment more in a Europeanwide context, with the railways playing a special role
from the transport, regional development and environmental points of view. The planning of infrastructure
of Europe as a whole is gradually taking shape. Given
this fact, the Committee welcomes the Commission's
intention to pay close attention to the development
of East-West links so that the merging of European
economies is not impeded and the associated exchange
of goods not hampered by transport bottlenecks.

7.5. The rules of the market place are going to come
more to the fore in European transport. This means
keener competition. Equal opportunity, liberalization
and harmonization are the ultimate objectives. The
Committee therefore urges the Commission to help
ensure that Member States' transport market regimes
do not lag behind the liberal provisions. Transport
and infrastructure form the natural basis for a large
European market; they are the prerequisites for further
economic growth and social progress.

7.6. Developments in the former GDR and the opening-up of East European markets also present telecommunications with new tasks. The telecommunications

sector in the former GDR is in an extremely dilapidated
state. The telephone network dates back to the Twenties, more than 90 % of telephone lines are reported to
be worn out and only 17% of the population have a
telephone. Telecommunication services such as telefax,
teletex and videotex are largely unknown. According
to the latest information, a total of 55 000 million DM
is to be invested between now and 1997 in modernizing
and developing the telecommunications network in the
former GDR.

The Commission considers that the most important
Community telecommunications legislation can be
applied immediately. Only two Community Directives
(terminal liberalization and mobile communications
frequencies) will have to be adapted.

8. Structural policy

8.1. The economy of the former GDR is on the brink
of a difficult period of restructuring. The switch from
a centrally managed economy to a social market economy is bound to spark off wide areas of sweeping
structural changes. Enterprises are uncompetitive in
wide areas of the economy: their range of products fall
far short of the customary international quality

No C 41/24 Official Journal of the European Communities 18. 2. 91

standards, and productivity — while fluctuating sharply
— is still only 30-50% of West German rates; in
addition, the systematic waste of human resources,
energy and environmental assets is borne out by a high
capital-output ratio, above-average per capita energy
consumption and the alarming extent to which the
environment is being destroyed.

8.2. Because of this terrible state of affairs, the Commission considers that Community assistance is also
necessary and thinks that the Community's structural
funds have an important role to play. The Committee
accepts the Commission's proposal that the five new
German _Lander_ should qualify for aid from the Community structural funds, as this will underscore their
integration into the Community.

The Commission is proposing a special programme for
the structural development of the former GDR, with
funds totalling 3 000 million ECU for the period 19911993. The structural funds will be topped up for this
purpose, i.e. the money will not be siphoned off from
the other Member States. The Committee advocates

that the funding be reviewed at the end of 1993 and be
scaled down in line with any improvement in the overall
economic situation in the new Lander. It also assumes

that in future all possible steps will be taken to avoid
conflicts about the distribution of funds between a

united Germany and the poorer peripheral regions of
the Community. The Federal Government formally
renounced any Community contribution towards the
cost of German unification at the special Dublin summit
on 28 April 1990.

8.3. The Commission states correctly that the
restructuring of the former GDR economy must be
tackled swiftly. It has therefore proposed a simplified
procedure for development plans. There is to be only
one such plan for the five _Lander_ and even this is to be
less detailed than usual. The Federal Government is

drafting this development plan at the moment, and it
is to be submitted to the authorities in Brussels by 31
January 1991. It will form the basis for the drafting
by March 1991 of a Community support framework
regulating the use of the structural funds, the deployment of resources and German co-financing.

8.4. When appraising this simplified procedure, consideration should be given to the fact that the statistical
base in the former GDR is extremely poor, for data are
distorted and fragmentary. Furthermore, it does not
seem feasible at the moment to make reliable plans two
years in advance for the comprehensive adjustment

process; deployment of the structural funds is therefore
also out of the question at the moment. It is objectively
impossible to select and plan aid for areas in the former
GDR which, by Commission definition, are backward,
are threatened with industrial decline or face adjustment problems in agriculture. Flexibility is required
here. It therefore makes sense for the Commission not

to designate objective 1, 2 and 5b areas. Furthermore,
aid granted under the funds should wherever possible
be global and its use should be carefully coordinated
by the Federal Government and the new _Lander._

8.5. One question to be asked in the wake of unification is what is to happen to the Federal German aid
granted to Berlin and the areas along the border
between the two former German States. This aid was

designed to mitigate the hardship resulting from the
division of Germany, but this motive has now ceased
to exist. The Federal Government therefore intends to

table a law before the end of 1990 phasing out these aid
programmes over a seven-year period. The Committee
thinks that this transitional period is too long and
should be reduced considerably.

9. Energy

9.1. The power supply system in the former GDR is
inadequate, polluting the environment and endangering
health. Its excessive reliance on indigenous brown coal
means that oil, natural gas, nuclear energy and hard
coal are used comparatively little. The system is typified
by the low efficiency of energy consuming plant and
high energy conversion losses, especially in connection
with electricity supplies. The situation is exacerbated
by high distribution and transport losses in the electricity and gas networks.

Brown coal in the former GDR provides almost 70%
of aggregate primary energy needs. Deposits will last
for another 60 to 70 years at the current rate of extraction and therefore do not inhibit its use. Its availability,
quality, wastefulness and environmentally damaging
nature are, however, inhibiting factors. Brown coal's
high sulphur content makes the former GDR, with an
annual output of more than 5 million tons, one of the
worst S 0 2 polluters in Europe, since power stations
have no filter equipment. In addition, the quantities of
material which have to be removed in order to extract

the coal are increasing, causing a drop in the level of
the water-table and an increase in the land-area being
used.

18. 2. 91 Official Journal of the European Communities No C 41/25

A good 80% of the 23 000 mW output from power
stations is obtained by burning brown coal. The energy
technology used here is completely out-of-date, as are
the carbonizing and high-temperature coking plants in
which fuels and raw chemicals are obtained from brown

coal. Antiquated power station technology has a very
damaging effect on the environment. Not one power
station in the former GDR is equipped with properly
functioning equipment for the removal of sulphur and
nitrogen oxides. Dust filters — if at all present — are
not used all the time.

The power supply system is also highly subsidized, and
though this will change, there will be no incentive until
then to use energy sparingly. Unduly high per capita
primary energy consumption — almost 20% higher
than the figure for the Federal Republic — is the inevitable consequence of this.

9.2. All in all, the power supply situation in the
former GDR may be said to be extremely critical.
The complete reorganization of the power industry
is urgently necessary. Sustained energy savings and
efficient power supplies will be the key objectives.
The power industry's installations must be thoroughly
modernized and made technically safe, environmentally friendly and economic. A different, balanced energy
mix is required, embracing not only fossil fuels and
renewable energies but also nuclear energy, the safety
requirements for which must be raised to the highest
level. The oil industry monopoly must be abolished.
Competition is needed and must be secured wherever
possible.

9.3. The Commission document provides for only a
few derogations for the energy sector. A twelve month
transitional period is proposed merely for information
and consultation on the prices of crude oil and petroleum products and the notification of hydrocarbon
imports and exports. The Committee endorses this
derogation. However, two additional remarks are
required in respect of the Commission's comments on
the restructuring of the energy sector. Firstly, the Commission states that the former GDR's gas imports from
the USSR will rise from 8 000 million m [3] to 16 000
million m [3] by the year 2000. This forecast seems to be
over-optimistic; at any rate there is no reliable information to corroborate such a rise. Secondly, the passage
about the supply of fuel elements for reactors in operation should indicate not only that natural uranium is
produced in the former GDR, but also that the USSR

owns 95 % of the uranium mining company Wismuth
AG. Even if Wismuth AG intends to cease its mining
operations at the end of 1990, negotiations will probably have to be conducted with the USSR, especially as
Euratom will become the owner of all special nuclear
material in the former GDR.

9.4. Energy policy is committed — at both national
and international level — to overall economic objectives, and must therefore make every effort to remain
operational — or become so again — at all levels.
Energy problems can no longer be solved overnight by
nations going it alone. Energy policy is a long-term
task, requiring close international cooperation and
coordination. European cooperation is called for. This
realization is not new, but so far it has not been
addressed properly. For example, the European Communities have still not developed a common energy
policy, although work on the urgent tasks at hand
— reduction of energy consumption, replacement of
petroleum by other energy sources, swifter development
of modern energy technology and more energy research
— ought to have been coordinated by Member States
long ago.

Therefore the Committee emphatically welcomes and
supports the call for the creation of a European energy
community made by the Dutch Prime Minister, Mr
Lubbers, at the European Council meeting in Dublin
on 25 June 1990.

10. Social affairs, education and training

10.1. The rapid political and legal incorporation of
the former GDR into the Federal Republic ( [1] ), will have
to be matched by major efforts to achieve corresponding
social integration. The Committee attaches crucial
importance to the social aspects of the unification process as witness the numerous Opinions in which the
social forces represented on the Committee repeatedly
indicated the sine qua nons for economic and social
cohesion. The Committee Opinion on social developments in the Community in 1989 described the social
market model and the people's Europe ethic as cornerstones for political and social progress towards European Union. The Committee is also convinced that
these factors are crucial to the Community's attractiveness for the fledgling democracies in Eastern Europe.

( []] ) OJ No C 225, 10. 9. 1990.

No C 41/26 Official Journal of the European Communities 18. 2. 91

10.2. The Committee broadly endorses the handful
of adjustments and transitional arrangements which the
Commission considers to be necessary in the field of
social policy. A number of additional comments and
suggestions on individual Commission proposals are
set out below:

— The Committee welcomes the immediate introduc
tion of freedom of movement for workers without

any transitional arrangements. Following the abolition of the border between the two Germanies, it
would be neither defensible nor practically possible
to treat German workers differently. However, it
should be noted that Spanish and Portuguese workers will not enjoy freedom of movement until 1993.

— Community legislation on social security for
migrant workers has always been immediately
applicable on the accession of a new Member State.
However, the Commission points out that several
sections of the relevant Regulations [Nos 1408/71
(EEC) and 574/72 (EEC)] will have to be adapted
in the wake of unification. This cannot be done —

the Commission argues — until the shape of future
social legislation in the former GDR becomes clear.
The Committee finds it difficult to accept this line
of thought, for the Commission has long known
that the Federal Republic's labour and social legislation was to be transposed directly to five new
_Lander._ The Committee therefore asks the Com
mission to submit the allegedly necessary transitional arrangements without delay with a view to
rapid adoption by the Council.

— There is no need for any adjustments with regard
to the equal treatment of men and women or labour
legislation. Appropriate provisions have been in force since the introduction of German monetary,
economic and social union.

— The protection of workers at the workplace is now
covered by fifteen Community Directives or proposals for Directives which — insofar as they have
already been adopted by the Council — will have
to be incorporated into national legislation by
31 December 1992. The Commission proposes that
the Directives on the protection of workers from
the risks arising from exposure to chemical, physical
and biological agents at work should be deferred
until 31 December 1992. The difficult conditions

in the former GDR brought about by antiquated
industrial plant and administrative, technical and
training-related problems seem to rule out a

reduction in this transitional period or even the
Directives' immediate application.

— Workers' skills will play a key role in the restructuring of the East German economy. The switch from
a centrally managed to a social market economy
must be backed up by a large-scale skills-acquisition
campaign which must be seen as an important
investment in a better future.

— Workers in the former GDR have very good paper
qualifications. Roughly 80 % of the workforce have
successfully completed some form of vocational
training. However, the types of skills acquired in
a socialist economy differ considerably from the
requirements of a competitive market economy.
Above all, the knowledge and experience of modern
production, information and communications technology is lacking and must first be acquired. This
is compounded by severe non-skills-related shortcomings, for independence, initiative and creativity
are not required in a planned economy. Retraining
and further training are therefore urgently required
at all levels. This includes the right of workers
to participate on equal terms in all Community
education and training programmes. The Committee welcomes the fact that it will not be necessary
to amend existing legislation in this area. It urges
the Commission however to take steps to brief
citizens in the five new _Lander_ as quickly and comprehensively as possible about the numerous Community vocational training programmes available.
This should be done in close liaison with the com
petent German authorities.

10.3 Efficient consumer protection depends crucially
on the information given to the population of the new
_Lander._ The level of the provision of such information
should be brought into line with EC practice as soon
as possible. Assistance should be provided in this area
by the Federal German authorities and consumer organizations, but the European Community itself should
also launch information campaigns.

The Committee wonders whether consumer infor
mation should not become an integral part of the Community's education and training programmes.

10.4 An operational system of self management for
citizens of the former GDR will also be required if
democratic structures are to be developed and living
and working conditions improved. Working conditions
should be reformed and reorganized via autonomous
channels for the reconciliation of interests. The Com

18. 2. 91 Official Journal of the European Communities No C 41/27

mittee supports the free workers' and employers' organizations now being established for the first time since
1933; they will bear a special responsibility in view
of the difficult period of economic change and rising
unemployment in the new _Lander._ They must strive to
agree on common objectives and priorities and help to
reconcile interests and liaise between State and indi
vidual.

11. Environment and nuclear safety

11.1. In large areas of the former GDR air, water
and soil are heavily polluted. Despite a comprehensive
battery of environmental laws, and although protection
of the environment was written into the constitution

from 1972 onwards, in practical terms environmental
concerns were only of secondary political importance.
And the lack of an effective environment protection
infrastructure meant that in any case there was no way
of enforcing the laws.

The causes of this heavy pollution are in many respects
to be found in the system itself. In particular, the
decision of the former GDR government to hang on to
technologically obsolete industrial plant, to step up the
use of brown coal and to force the pace of industrial
production in energy-intensive sectors was a major
contributing factor to environmental pollution. Incentives to use raw materials and energy economically were
completely lacking.

11.2. The most serious environmental problem is the
high level of atmospheric pollution. Annual emissions
of S 0 2 into the atmosphere total more than 5 million
tons. This makes the former GDR one of Europe's
main sources of S 0 2 emissions. The main culprit is
the electricity supply system, which is almost 70%
dependent on brown coal as its primary energy source.

High emissions of pollutants coupled with relatively
scarce water resources have led to heavy water pollution
and thus to water supply shortages. Only just over
20 % of total supplies is of drinking water quality. The
technological inadequacy, or indeed complete lack, of
municipal and industrial water treatment plants is the
cause of this problem. One consequence is that large
quantities of cadmium, mercury and lead find their way
into the Elbe and from there into the open sea.

Soil pollution is no more encouraging. Intensive brown
coal mining has left large tracts of wasteland in its
wake. Their recultivation will take decades. Waste man
agement policy has only compounded the problem.
Whilst it is true that raw material shortages have led
to recycling on a wide scale, there has been very little
in the way of organized disposal for non-recycled waste.

Rubbish tips are overburdened and some of them are
a danger to ground water.

11.3. A review of the environmental situation in the

new _Lander_ reveals a gloomy picture. Federal German
environmental legislation has applied in the former
GDR since the first State Treaty came into force. Insofar
as Federal German legislation incorporates Community
environmental legislation, the former GDR's environmental legislation has formally been Community-compatible since 1 July 1990. Areas covered include environmental protection, nuclear safety and radiation protection, the water industry, waste management and chemicals. This affects first and foremost the construction

and operation of plant and the associated rules and
regulations. When the former GDR joined the Federal
Republic, Community legislation affecting products
and substances (e.g. the Regulation on drinking water)
and environmental quality standards also came to apply
in the territory of the new _Lander._

11.4. The Commission has checked close on 200

Community Directives and Regulations on environmental matters to see whether transitional measures are

necessary. It proposes such measures for those cases
where the state of the environment is such that Com
mission standards could not be complied with at the
time of unification. This means in reality air, water and
waste standards.

The Committee agrees with the Commission that the
transposition of Community legislation should be completed as swiftly as possible. However, in view of the
economic difficulties, the requisite restructuring process
and the frequently still hazy picture of the actual scale
of pollution, the Committee wonders whether it would
not make sense to introduce a flexibility clause in
connection with the proposed transitional periods. This
would enable the Commission to act quickly and unbureaucratically, for example, in extending deadlines or
taking additional measures as new knowledge came to
light. The flexibility clause should, however, only apply
to legislation relating to plant or equipment and not to
legislation governing the make-up of goods and product
quality.

11.5. It is proposed that nuclear safety, unlike the
environmental sector, is not to be subject to any transitional measures. The Euratom Treaty entered into
force in the five new _Lander_ when they joined the
Federal Republic and Articles 33, _35,_ 36 and 37 of the
Treaty are therefore to apply there, too. It will thus be
possible to immediately close plants which fail to comply with Community standards of protection. The clear
line to be followed by the Commission here is welcomed
unreservedly by the Committee.

12. ECSC

12.1. The integration of the East German steel industry into the Community system will cause serious indus

No C 41/28 Official Journal of the European Communities 18. 2. 91

trial, social and regional problems. The EC Commission
estimates that none of the plants at a total of 15 sites
is likely to be viable in its present form. They need
to be modernized, restructured and rationalized. The
Committee endorses this analysis, and in particular the
Commission's conclusion that many jobs will inevitably
be lost.

12.2. In view of the difficult and time-consuming
restructuring process the Committee considers the
Commission's proposals to be not comprehensive
enough and not adequately tailored to the task.
Although the Commission is prepared to apply ECSC
instruments to combat the likely upheaval in the East
German steel industry and pay out reconversion aid in
the form of structural fund grants, it intends to be
strict in applying the rules for aid to the steel industry
established by Decision 322/89/ECSC (which allows aid
for closures, research, environmental protection and
regional investment only under certain circumstances).
Thus, operating losses cannot be covered and neither
investment aid nor operational aid, even during the
period of return to profitability, can be granted. Despite
these additional remarks the Committee notes with

satisfaction that the Commission has lost no time in

putting the ECSC instruments into practice.

12.3. The Commission's view that the steel firms in

the five new _Lander_ should be weaned off aid as quickly
as possible is certainly the right one. However, in view
of the difficult and protracted rehabilitation process, a
high degree of flexibility will be required. There have
already been transitional arrangements in other new
Member States, especially Spain, so similar arrangements should be made by the Commission to solve
restructuring problems in this particular case. Such
arrangements would without question give considerable
support to the steel industry's rehabilitation.

13. Financial aspects of German unification

13.1. Politicians, economists and the public at large
have for months now been grappling with the burning
question of what German unification is to cost and
how it is all to be financed. In the other countries of

the Community there is a growing concern that the
financing of German unity will have an adverse effect
on money and capital markets and on prices in those
countries. After all, billions of Deutschmark will have

to be found in the medium term to modernize and

extend infrastructure in the new _Lander_ (transport,
telecommunications, local services), eliminate the enormous damage done to the environment and clean up
the soil contamination (forecasts talk about 20 to 30 000
suspected old dumps). The enormous funds required for
private investment and the high cost of housebuilding
should not be forgotten, either.

13.2. The third volume of the Commission's paper
contains initial information about the financial impact
of German unity on the Community budget. The Commission rightly points out that its figures are provisional
estimates, which by necessity had to draw on questionable and fragmentary data. Agriculture takes up a particularly large slice of expenditure and according to
Commission estimates will devour anything between
700 and 1 250 million ECU in 1991 (because of administrative deadlines 1991 will have only eleven months).
This wide margin is indicative of the difficulties
encountered in estimating the future pattern of consumption and trends in production in the former GDR.
On top of this, the sum of 1 000 million ECU has been
earmarked for the special programme for the structural
development of the newly acceded territory in 1991.
Additional expenditure in other policy areas is put by
the Commission at a further 150 million ECU — the

presumed amount of the former GDR's contribution to
the Community's own resources. In view of the numerous imponderables which are inevitably attached to
these estimates, the Committee regards the figures as a
rough guide, which may have its merits but can barely
stand up to factual analysis.

13.3. On 7 November 1990 the budget committee of
the German _Bundestag_ (lower Chamber) held a hearing
about the cost and financing of German unity. The
Committee would have appreciated a Commission representative giving the Community viewpoint at its hearing. Being a well-established member of the European
Community the Federal Republic has assumed a special
responsibility, both politically and economically.
According to the Committee this also implies giving
close consideration to the possible economic effect of
German unification on other Community countries and
making allowance for this in the future formulation of
German economic, fiscal and social policy.

In the run-up to 1992 and the second stage of the
planned EMU the Committee would recall that it has
repeatedly called for greater economic convergence and
closer coordination of economic policies. The need for
this is greater now than ever before. The Committee

182.91 Officialjournalofthe European Communities N o C ^ 2 9

would appeal totheEederalCovernmenttotaloe the
initiative once more and explain to the European
Council thefmancial policy decisions to be tal^en to
meet the cost of Cerman unity and the overall economic

Done at Brussels, 20 November 1990.

consequences for other member States. This first step
would certainly dispelanumber of fears and goalong
way towards getting member States towers together
even more closely in the economic field, too.

Opinion on theproposal for a Council Directive concerning theprotection at workof
pregnant women or women who have recently given births

(91BC^1B08)

On 22 October 1990, the Council of the European Communities decided to consult the
Economic and Social Committee, under Article 119A of theTreaty establishing the European
Economic Commumty,on the abovementioned proposal.

The Section for Social, Eamily,Educational and Cultural Affairs,which was responsible for
preparing the Committee^sworl^ on the subject, adopted its Opinion on leoNovember!990.
The rapporteur was Airs RangoniAiachiavelh.

At its 281st plenary session (meeting of 20 November 1990) the Economic and Social
Committee adopted the following Opinion with no dissentingvotes but with five abstentions.

1. Ceneral comments

1.1. The Committee can endorse the proposal which
rightly linl^s the protection of health and safety of
pregnant v^omen,or women v^hohaverecentlygiven
birth,with the maintenance of employment and income
rights. Theproposalis also welcomemthatitintro
duces measures which mal^e maternity easier and which
could help to redress the demographic imbalance affect
ing most EC member States, not least the ageing of the
population.

1.2. In line with thenghts and measures foreseen
intheSocialCharter and accompanying social action
programme, the proposal is also in accord with the
views expressed in relevant Committee Opinions as
regards

— basic Community social rights^),inwhich it was
stressed^the rights of child, mother and family to
legal and economic protection,

— the burden of proofs, in which it was stated that
good employment practices and modern personnel
techniques needed to deter potential discrimination
on se^ grounds,

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