CELEX: 51987PC0336
Language: en
Date: 1987-07-06
Title: Proposal for a COUNCIL DECISION relating to maritime transport between Italy and Algeria (submitted by the Commission)

ARCHIVES HISTORIQUES
DE LA COMMISSION
COLLECTION RELIEE DES
DOCUMENTS "COM"
COM (87) 336
Vol. 1987/0191
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 ---pagebreak--- COMMISSION OF THE EUROPEAN COMMUNITIES
                                            COM(87 ) 336 final
                                            Brussels , 6 July 1987
                               Proposai for a
                              COUNCIL DECISION
        relating to maritime transport between Italy and Algeria
                      ( submitted by the Commission )
       11   12
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 ---pagebreak---                                        - 1 -                          Coh 33c
                               Explanatory Memorandum
  I . BACKGROUND
      1 . The Italian Delegation raised on 11 July 1985 in the
           context of the consultation procedure on shipping
           matters ( 1 ) the problem presented by certain practices of
           cargo reservation pursued by Algeria .     These practices had
           the effect that 80 % of the liner trade between Italy and
           Algeria was carried by the Algerian state line      ( CNAN ) , the
           participation by Italian vessels having dropped to 20 % .
           According to information recently provided by Italy , the
           Italian share has by now dropped to around 10% , whereas
           around 90% is carried by the CNAN .
      2.   In conformity with the conclusions of the Council on
           17 October 1985 a diplomatic note of the Community and its
           Member States together with Norway and Sweden was
           delivered on    29 October 1985 to the Ambassador of
           Algeria ( 2 ) expressing concern with the tendency of
           Algeria to reserve for her national fleet the greater part
           of the cargoes in her bilateral trade with certain States
           party to the demarche .
      3.   In spite of repeated efforts , no official reply has been
           received from the Algerian Government .     However , renewed
           attempts by the Commission succeeded in the Autumn of 1986
           to obtain agreement on initiating consultations on the
           problem .    The Council Working Party on Transport Questions
           agreed that delegations would provide up - to - date
           information concerning the percentages of traffic carried
           by the CNAN and the companies of Member States .
      4 . Soon afterwards , on 12 December 1986 , Algeria ratified the
           UN Code of Conduct for Liner Conferences .     As a result the
           Code will enter into effect for Algeria on 12.6.87 .
      5 . On 22 December     1986 the EEC Council adopted Regulation
           4055 / 86 applying the freedom to provide services to
      ( 1 ) OJ L 239 of 17.8.1977 , p. 23
      (2 )  MAR 61   of  15.10.1985 - Annex I
1
 ---pagebreak---                                   - I -
     maritime transport between Member States and between
     Member States and third countries    ( 1 ) . At the same time
     the Council adopted another three Regulations relating to
     shipping , among them Regulation No 4058 / 86 concerning
     coordinated action to safeguard free access to cargoes in
     ocean trades ( 2 ). The Regulation on freedom to provide
     services entered into force on 1 January 1987 ;       the other
     three Regulations will enter into force on 1 July 1987 .
6.   In the wake of these developments ,    and in view of the new
     situation created by Algeria 's ratification of the Code
     and the adoption of the Council Regulations , on 15 January
     the Commission services requested the Member States to
     provide information on the organisation of their liner
     trades with Algeria   ( conference agreements and
     participation of non-conference lines ).
7 .  The  information received indicates ,    inter alia , that
     there are no conferences operating in the Member States'
     trades with Algeria ;    flag shares of Member States ,
     Algeria and third countries vary widely among these
     trades .  Two Member States have indicated they envisage to
     take steps for their lines on the basis of the Liner Code .
8.   In the meantime ,  on 17.3.87 the services of the Commission
     received from the Italian Permanent Representation
     notification of a draft agreement on maritime transport
     between Italy and Algeria initialed on 30.01.87 and signed
     on  28.02.87 .
9.   According to the note from the Italian Permanent
     Representation , this agreement was notified to the
     Commission under the terms of Article 6 , para 5 of
     Regulation ( EEC ) No 4055 / 86 .
( 1 ) OJ No 378 of 31.12.1986 , p.     1
( 2 ) OJ No 378 of 31.12.1986 , p. 21
 ---pagebreak---                                      A- 4 -
   10 . The analysis of the Commission in respect of this
        agreement leads it to the conclusions and proposal set
        out below , on the basis of which the Council is called to
        decide on the necessary action , in accordance with the
        provision of Article 6 , para 2 , of Regulation No 4055 / 86 .
II CONSIDERATION     OF  THE CASE
       Exceptional circumstances
   11 . Under the terms of Article 5 , para 1 of Regulation
        No 4055 / 86 , " cargo-sharing arrangements in any future
        agreements with third countries are prohibited other than
        in those exceptional circumstances where Community liner
        shipping companies would not otherwise have an effective
        opportunity to ply for trade to and from the third
        country concerned .       In these circumstances such
        arrangements may be permitted in accordance with the
        provisions of Article 6 ."
   12 . The first question , therefore , that arises is whether the
        Italian   lines   find themselves   in such circumstances that
        only a cargo-sharing arrangement would provide them an
        effective opportunity to obtain cargo .
   13 . Whatever the situation may have been until quite
        recently , the ratification by Algeria of the UN Code of
        Conduct has changed that situation fundamentally .
        The correct means now for Italy to enable its shipping
        lines to participate in the trade is to ratify the Code
        in conformity with Council Regulation No . 954 / 79 .
        The content of the agreement signed by Algeria and Italy
        is itself an indication of readiness on the part of
        Algeria to find a solution to the problem in accordance
        with the   Code .
 ---pagebreak---                                 - 5 -
14 . As long as a Member State has not ratified the Code and
     attempted to implement it in its trade with a codist
     third country ,  it cannot be considered to have exhausted
     the means at its disposal in respect of that trade .     It
     cannot therefore claim to be under exceptional
     circumstances within the meaning of Article 5 of
     Regulation 4055 / 86 , subject to any problems which may
     arise in the transitional period before the Code comes
     into force for the traffic in question .
15 . It is therefore concluded that Italy does not face
     exceptional circumstances ( except possibly for a
     transitional period ) in the sense of Article 5 , since
     ratification by Italy of the Code of Conduct should
     provide the basis for that country to attempt to resolve
     the problems of participation of its lines in the liner
     trade with Algeria without the need for an agreement
     involving cargo sharing arrangements .
16 . It may be added that exceptional circumstances in the
     sense of Article 5 do not automatically justify a
     cargo-sharing arrangement ; nor is the necessity for such
     arrangement to be judged by the Member State in the first
     place .
     In the terms of para . 2 of Article 6 , " the Council ,
     acting by qualified majority on a proposal of the
     Commission , shall decide on the necessary action .   Such
     action may include , in the circumstances envisaged in
     Article 5(1 ),  the negotiation and conclusion of
     cargo-sharing arrangements ".
17 . It suffices to note in this connection that following
     the adoption of Regulation No 4058 / 86 the Council has , as
     from 1 July 1987 , at its disposal the means to take other
     measures , if it considers this appropriate .   But even in
     case it finds that a cargo-sharing arrangement is
     necessary , it would normally be a matter for the
     Community to negotiate and conclude such arrangement .
 ---pagebreak---                                      6
       Procedure
18 . Even in the case of the exceptional circumstances
       mentioned in Article 5 of Regulation No 4055 / 86 , a period
       of six months is foreseen in Article 6 , para 3 , for
       the definition of Community action before the Member
       State concerned " may take such action as may for the time
       being be necessary to preserve an effective opportunity
       to ply for trade ", such as the negotiation and conclusion
       of a cargo-sharing arrangement .
19 . Therefore , if a Member State considers it is facing
       exceptional circumstances , it should follow the procedure
       required by the Regulation : it should notify the other
       Member States and the Commission with a view to obtaining
       Council action , on a proposal by the Commission ; in
       accordance with Article 6 , paras    1 and 2 .
20 .   It is  understood that   the  Italian Government  considered
       that in this particular case the Member States and the
     . Commission had been informed and had had ample time for
       action since July 1985 .     This argument , however , is not
       legally acceptable since Regulation No 4055 / 86 entered
       into force only on 1.01.87 .     It cannot moreover be
       accepted on the basis of the actual situation , as the
       situation has fundamentally changed since its previous
       consideration by ( i ) Algeria 's ratification of the Code
       and ( ii ) the adoption of a package of four shipping
       Regulations by the Council in December 1986 , which
       provide the Council with means of action it did not
       dispose of before .
21 .   In the circumstances the Commission is inclined to treat
       the Italian notification of the draft agreement on
       17.3.87 as a notification under Article 6(1 )     of
       Regulation 4055 / 86 . The procedure envisaged by that
       article   thus commences  from that date .
 ---pagebreak--- Analysis of the relevant provisions of the Agreement
22 . The draft Agreement notified by Italy contains a
      cargo-sharing arrangement . The relevant provisions are
      contained in Articles 2 , 3 and 4 . Although there is no
      direct allocation of cargo to lines they are charged
      to make an arrangement between themselves and this
      constitutes a cargo sharing arrangement .        Article 20 is
      also relevant in respect of duration , extension ,
      denunciation and entry into force .
23 . Article 2 states that the agreement relates to the
      transport of goods undertaken by regular lines and it
      does not apply to vessels engaged in tramping .        This
      would allow the transport of bulk commodities by regular
      lines to be included in the scope of the cargo sharing
      arrangements in the agreement .
24 .  However , Regulation   ( EEC ) No 4055 / 86 does not allow for
      such a possibility .     In fact , Article 5 , para 2 of the
      Regulation refers to the case "... where a third country
      seeks to impose cargo-sharing arrangements on Member
      States in liquid or dry bulk trades ," as a case where
      "... the Council shall take the appropriate action in
      accordance with Regulation ( EEC ) No 4058 / 86 concerning
      coordinated action to safeguard free access to cargoes in
      ocean trades . " ( 1 )
25 .  In order to be in conformity with Community law the
      Agreement should , as it does for tramping services ,
      explicitly exclude the transport of bulk commodities from
      the field of application of the cargo sharing
      arrangements even if they are carried by regular line .
26 .  Articles 3 and 4 of the Agreement present two aspects        :
      the first aspect relates to the organisation of the trade
      and to its distribution ,     whereas the second concerns the
      respect of international obligations of each party .
( 1 ) OJ No L 378 of 31.12.1986 , p.     21
 ---pagebreak---                                        - s -
27 . Article 3 " encourages " the participation of ships of the
     two countries in the transport of cargoes between them
     without prejudice to the rights of ships flying the flag
     of third countries to carry cargoes between ports of the
     two contracting parties .
28 . In spite of the mention of third-country lines' rights ,
     this provision of the Agreement gives preference to
     Italian   lines   vis - a - vis  other Member  States'  lines .
     Therefore access to cargoes for the lines of other Member
     States cannot be considered as fair ,          free and
     non-discr iminatory , as required by para 4 of Article 6 of
     Regulation No 4055 / 86 .        This is particularly so if the
     combined effect with the provisions of Article 4 of the
     Agreement is considered .
29 . Para .  3 of the same article further provides that
     shipping companies of the two Parties may have recourse
     to chartered vessels , which will be considered as flying
     the flag of one or the other Party .           This provision also
     discriminates between Italian shipping companies and
     other Community shipping companies .
30 . In order to conform with Community law ,          Article 3 of
     the Agreement should provide that ( i ) any measures to
     encourage the participation of Italian vessels in the
     trade would not discriminate between them and vessels
     flying the flag of any other Member State of the EEC and
     ( ii ) vessels chartered by Community shipping companies
     would be considered as flying the flag of the respective
     Member   State .
31 . Article 4 is the principal provision on car go - sharing ;
     the cargo is to be shared
     -  within  the   framework      of  a conference or similar
        agreement
     - in accordance with the cargo-sharing principle of the
        Liner  Code
     - while respecting the international obligations of the
        two parties .
 ---pagebreak---                                           - 9 -
    32 . In respect of this article the following comments can be
         made :
         - the wording leaves no room for independent lines - it
           is a prescription for closing the trade , a case that
           would come under Article 7 of the competition
           Regulation      ( No 4056 / 86 ).
         - the general reference to international obligations is
           far from ensuring fair , free and non-discriminatory
           access to Community shipping lines , as required in
           Article 6 para . 4 of Regulation No 4055 / 86 .
    33 . The relevant Community obligations of Member States
         include the Community rules on competition ( Regulation
         No 4056 / 86 ), which inter alia provide for open trades ,
         and free ,    fair and non-discriminatory access to Community
         nationals and shipping companies , as defined in
         Article    1 , paras    1 and 2 , and Article 6 para 4 of
         Regulation No 4055 / 86 .        This has the effect that , as far
         as the participation of the Community shipping lines in
         the  Italian share        is concerned ,  a  sort of redistribution
         scheme   has   to   be  introduced   such   as in Article 3  of
         Regulation No 954 / 79 .
    34 . In addition , when Italy ratifies the Code of Conduct ,          it
         will   have   to  do   so  with  the reservations   annexed  to
         Regulation No 954 / 79 and implement the Code in accordance
         with that Regulation ;          this inter al ia involves also
         obligations vis - a - vis the other OECD countries on the
         basis of reciprocity .
III CONCLUSIONS
    35 . From the preceding analysis it appears that the correct
         way to secure the participation of Italian lines
         in the traffic with Algeria is by means of the
         ratification      of   the  Code  of Conduct   of the United
         Nations ,    in accordance with Regulation No 954 / 79 .
 ---pagebreak---                                - io -
36 . The procedure by which Italy has signed the agreement and
     the terms of the agreement itself are not satisfactory in
     terms of Community law .
37 . Whether a cargo-sharing arrangement would be
     indispensable as a temporary means for Italian lines to
     be able to participate in the trade with Algeria in
     anticipation of Italy 's ratification of the Code of
     Conduct , may depend to a certain extent on the time still
     necessary for Italy to ratify the Code .
38 . In order to provide for such participation and taking
     account of the delay that Italy may still find necessary
     for the  ratification  of the  Code and  the transitional
     situation in which Italy finds itself arising out of the
     coming into force of Regulation No4055 / 86 , Italy might be
     allowed to ratify the agreement , amended either directly
     or through an additional protocol in order to bring its
     terms in accordance with Community Law .     This
     possibility , however , could only be considered as a
     temporary measure in the sense that the application of
     Articles 2 , 3 and 4 , as amended , would be for a limited
     period , not to exceed three years .    During this period
     Italy would be expected to become Contracting Party to
     the Code .
39 . For these reasons it is proposed that the Council
     authorize Italy to conclude the agreement with Algeria
     containing cargo sharing provisions , on condition that :
     (a)  it takes steps to ratify the Code of Conduct as soon
          as possible ;
     (b)  it amends the cargo sharing arrangements in the
          agreement so as to bring them into conformity with
          Community Law ;
     (c)  the cargo sharing arrangements of the agreement
          cease to have effect as soon as the Code applies but
          in any case not later than three years from the date
          of  the Council  decision .
40 . A proposed Council Decision is appended .
 ---pagebreak---                                     - Il -
                                 Proposai for a
                                COUNCIL DECISION
                  Relating to maritime transport between
                              Italy and Algeria
The Council of the European Communities ,
Having regard to the Treaty establishing the European
Economic Community ,       and in particular Article 84 ( 2 )      thereof ,
Having regard to Council Regulation ( EEC ) No 4055 / 86 of 22
December     1986 applying the principle of freedom to provide
services to maritime transport between Member States and
                                                     1
between Member States and third countries              and in particular
Article 6 para 2 thereof ,
Whereas    the    Italian  Government         submitted   on 17  March   1987
to the Commission a draft Agreement on maritime transport
between Italy and Algeria ;
Whereas    this     submission   is  to be  treated as  a  notification
for the purposes of Article 6 ( 1 )               of            Regulation
( EEC ) No 4055 / 86 ;
Whereas the question of Algerian practices of cargo
reservation           was   raised by the Italian delegation in July
1985 in the context of the consultation procedure on shipping
matters as established in Council Decision 77/587/EEC^, and has led to a Connuiity
demarche in October 1985 ;
Whereas Algeria recently ratified the UN Convention on a Code
of Conduct for Liner Conferences , which           enters       into force
for Algeria on 12 June 1987 ;
( 1 ) OJ N °L3 78 , 31 . 12.86 , p.1 .
( 2 ) OJ N ° L2 3 9 , 17.9.77 ,   p.23 .
 ---pagebreak---                                        1 2. -
Whereas Art . 5 ( 1 ) of      Regulation     ( EEC )
n°4055 / 86 provides that cargo sharing arrangements with third
countries are prohibited other than in the exceptional
circumstances where Community liner shipping companies would
not otherwise have an effective opportunity to ply for trade
to and from the third country concerned ;
Whereas the ratification by Algeria of the UN Code of Conduct
has changed the situation and gives a new opportunity to
Italian lines to ply for trade as soon as Italy ratifies the
Code in conformity with Council Regulation ( EEC ) No 954/79^;
Whereas the terms of parts of the Agreement do not fully
comply with Community Law ;
Whereas , however , a cargo sharing arrangement might be
indispensable as a temporary means for Italian lines to be
able to participate in the trade with Algeria ;
Whereas , pending ratification of the Code of Conduct , Italy
should be allowed to ratify the             Agreement as a temporary
measure , provided that it is amended so as to conform with
Community Law ,
Has Adopted this Decision :
( 3 ) OJ No L 121 , 17.5.1979 , p.1 ,
 ---pagebreak---                                    Article     1
Italy is hereby authorized to ratify the Agreement on Maritime
Transport and Navigation signed with Algeria on 28 February 1987
on    condition    that
(a)   Italy takes the necessary steps to ratify as soon as
      possible the United Nations Convention on a Code of
      Conduct  for   Liner   Conferences       in  accordance    with
      Regulation ( EEC No 954 / 79 ;
( b ) The cargo sharing arrangements in the Agreement are
      brought into conformity with Community Law in accordance
      with the  Annex   to   this   Decision ;
( c ) The cargo sharing arrangements cease to have effect
      with the coming into force of the Code of Conduct in the
      trade Italy-Algena but in any case not later than three
      years from the date of this Decision ;
( d ) Before ratification of the amended Agreement Italy shall
      consult  the   Commission .
                                   Article     2
This Decision is addressed to the              Italian Republic .
Done at Brussels ,
                                             For   the  Council
                                             The   President
 ---pagebreak---                                            i–Annex
             Amendments to be made to the Agreement
               ( Possibly by an additional Protocol )
Concerning Article 2
exclusion of bulk transport from the field of application of
the cargo sharing provisions of the agreement
concerning Article 3
" encouragement " to Italian vessels to participate in the
bilateral trade and equal treatment of vessels chartered by
Italian  lines   shall be without discrimination vis - a - vis
vessels of the other Member States or chartered by their
shipping lines .
concerning Article 4
It shall be specified that :
   . the organisation of the traffic shall not restrict access
     to cargo by independent lines
   . sharing of cargo in accordance with the Code relates to
     the cargo carried by the Conference
   . pending ratification of the Liner Code by Italy , the
     share of Conference cargo claimed by Italian lines is
     subject to redistribution with other Member States'
     lines .