CELEX: 51993PC0553
Language: en
Date: 1993-11-16
Title: Proposal for a COUNCIL REGULATION (EC) modifying Regulation (EEC) No 1101/89 on structural improvements in inland waterway transport

COMMISSION OF THE EUROPEAN COMMUNITIES
                                                              COM(93) 553 final - SYN 475
                                                             Brussels, 16 November 1993
                                   Report from the Commission
i?    on the effect of the structural improvement measures in inland waterway transport,
          as introduced by Council Regulation (EEC) No 1101/89 of 27 April 1989
                                           Proposal for a
                                COUNCIL REGULATION flBCi                         SYN 475
           modifying Regulation (EEC) No 1101/89 on structural improvements in
                                     inland waterway transport
K.:-
                                  (presented by the Commission)
 ---pagebreak---                                        - ~n -
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                                JftCpOjft frftffl ftft CoJlffljifffffOD
     on me effect of the structural improvement measures in inland waterway transport,
         as introduced by Council Regulation (EEC) No 1101/89 of 27 April 1989
 ---pagebreak--- 1.  Introduction
    Council Regulation     (EEC) No. 1101/89 of 27 April 1989( 1 ),
    introduced a number of measures designed to remove the structural
    overcapacity in inland navigation which has characterized this
    market since the economic recession of the 1980's. The Council
    Regulation created two sets of measures : (a) the granting of
    scrapping premiums to reduce the capacity of the active inland
    waterway fleet and (b) measures to curb investment in extra vessels
    in the course of the coordinated scrapping scheme. (The main
    elements of Council Regulation 1101/89 are described in more detail
    in chapter 2 ) . These latter measures, which are generally known as
    the "old-for-new" system, were introduced for a period of five
    years from the entry into force of the Regulation (28.4.1989) with
    the possibility of an extension for a further period of a maximum
    five years.
    Article 8   paragraph   5° of  the  Council  Regulation No.  1101/89
    states :
    "On the basis of a Commission proposal accompanied by a well-
    founded report, the Council may take a decision to extend the
    period referred to in paragraph 1 by a maximum of five years"( 2 ).
    The present report sets out why the Commission considers that such
    an extension is called for. The relevant proposal is attached as
    Annex I.
    Background
    The Council Regulation No. 1101/89 and the related Commission
    Regulation (EEC) No. 1102/89 of 27 April 1989< 3 ), laying down
    certain measures for implementing the Council Regulation, are
    designed to remove the structural imbalance between demand and
    supply in the inland waterway market. The main elements of what is
    called in short the "EC scrapping scheme" can be listed as
    follows :
    a)  In a harmonized Community framework, national scrapping funds
        operate in the Member States whose inland waterways are linked
        to those of another Member State and the tonnage of whose
        inland fleet is above 100.000 tonnes. These Member States
        directly concerned are Belgium, Germany, France and the
        Netherlands.
(1) O.J. L 116 of 28.4.1989, p. 25 last amended by Council Regulation
    (EEC) No. 3572 of 4.12.19:0, see O.J. L 353 ci 17.12.1990, p. 14
(2) The period referred to in paragraph 1 is the period from 28.4.1989
    till 27.4.1994 during which the old-for-new system applies.
(3) O.J. L 116 of 28.4.1989, p. 30, last amended by Commission
    Regulation (EEC) No. 3690/92 of 21.12.1992, see O.J. L 347 of
    22.12.1992 p. 22.
 ---pagebreak---                                    - 2 -
         Vessels registered in other Member States (e.g. Luxemburg) but
         operating on the same network adhere to one of the scrapping
         funds.
     b)  The total active fleet of cargo carrying inland waterway
         vessels and push boats operating on the principal network and
         registered in a Member State is subject to the scrapping
         scheme. A limited number of exemptions are specified in the
         Regulation.
     c)  The initial target of the Community scrapping action was to
         remove from the market, between 1.1.1990 and 1.12.1990, 10% of
         the capacity of the dry cargo fleet and 15% of the tanker
         fleet.
'$'!
     d)  To disencourage waterway operators from creating new surplus
         capacity, the so-called "old for new" system was created. This
         implies that carriers who wish to bring into service extra
         capacity shall :
         *   either scrap tonnage equivalent to the new vessel without,
             however, receiving a scrapping premium;
         *   or, if they decide not to scrap tonnage, shall pay a
             special contribution into the scrapping fund, which is
             equivalent to the scrapping premium for the type of vessel
             brought into service.
     e)  The total amount required for the granting of scrapping
         premiums was made available to the scrapping funds by the
         governments concerned in the form of repayable interest free
         loans. The loans are being repaid by the inland navigation
         industry over a period of years. For this purpose, vessel
         owners pay to the funds annual contributions based on the
         tonnage and the type of their vessels.
     f)  The Swiss authorities have introduced simultaneously identical
         measures for their fleet. The operations of the Swiss fund are
         coordinated with those of the other funds.
     g)  A system of financial solidarity applies between the funds in
         order to ensure that the reimbursement period for the interest
         free loans will be the same in all States concerned.
     Since this is a Community system decisions on its operation have to
     be taken at Community level. The Commission is authorized to adopt
     certain decisions on the application of the system. The Commission
     has thus fixed : the level of the scrapping premiums for the
     different types of vessels, the level of the annual contributions
     to be paid to the funds, the detailed rules for the mechanism of
     financial solidarity, etc.
     In addition, the Commission's services organise at regular
     intervals coordination meetings with representatives of the States
     concerned an^ the authorities responsible for the scrapping funds
     in order to ensure a uniform application of the rules. In this
     context the inland waterway profession is also consulted regularly.
 ---pagebreak---                                      - 3 -
3.  Summary of the results of the EC scrapping action
    The Commission presented a first report on the outcome of the
    common scrapping action on 15 July 1992(4). in the following the
    main elements of this report are briefly summarized and completed
    with additional information received from the scrapping funds and
    other sources for the subsequent period.
    Between 1 January 1990 and 1 May 1990 vessel owners could introduce
    applications for scrapping premiums. In the course of 1990 1615
    applications for a scrapping premium were accepted by the funds. A
    summary of the overall results for different categories of vessels
    is presented below.
    Tabel 1 : Scrapping applications accepted by funds of B, D, F, NL,
               and CH
                        Scrapping application accepted          average
                                                                tonnage
                           number         tonnage or kw         or kw
       dry cargo           1.318        799.200                  606t
       tankers               260        264.398                1.017t
       push boats             37                   30.407             822kw
    In order to make a comparison between the total capacity taken out
    of the market and the remaining capacity of the active fleet, the
    differences in productivity of different vessel types (e.g. : self
    propelled vessels, barges, towed vessels) have to be taken into
    account. To this end Commission Regulation No. 1102/89 defines
    adjustment coefficients, which make it possible to express the
    capacity of the fleet in "equivalent tonnage of motorvessels of
    over 650 tonnes".
    Tabel 2 : Capacity reduction achieved by the joint scrapping action
                       Active fleet 1991      Scrapping application      %
                      B + D + F + N L + C H         accepted
                                (a)                     (b)           (b:a)
       dry cargo          7.819.964 eq.t          613.357 eq.t          7,84
       tankers            1.710.625 eq.t          222.663 eq.t        13,02
       push boats           330.171 kw             30.407 kw            9,21
(4) Report from the Commission on the effect of the structural
    improvement measures in inland waterway transport, as introduced by
    Council Regulation (EEC) No. 1101/89 of 27 April 1989.
    Document No. SEC (92)1284 final of 15.7.1992.
 ---pagebreak---                                   - 4 -
    It appears that roughly 8% of the dry cargo and 13% of the tanker
    capacity has been scrapped in the framework of the joint scrapping
    action organised in 1990.
4.  Additional scrapping actions
    Following the German unification on 3 October 1990 an additional
    scrapping action was organised for the inland waterway fleet of the
    ex-DDR. The results of this small scale action have to be added to
    the figures presented above.
    On request of the German government the Commission by Regulation
    (EEC) No. 317/91 (5) laid down the conditions for this additional
    scrapping action. In total 196 applications representing a total
    carrying capacity of 98.589 tonnes, were accepted in the course of
    1991. The volume scrapped represents 14,25% of the initial capacity
    of the ex-DDR fleet. What remains of the ex-DDR fleet is now fully
    integrated in the Community scrapping scheme.
    In addition, the measures taken by the French government on the
    basis of Article 2.3. of Council Regulation No. 1101/89 have to be
    mentioned. This Article allows the Member States to exclude vessels
    with a dead weight of less than 450 tonnes from the scope of the
    Regulation if the economic and social situation in this specific
    sector so requires. In this case an alternative plan has to be
    drawn up by the Member State concerned. France made use of this
    possibility   and communicated    to the Commission     a national
    improvement plan under the state-aid rules. This so-called "Plan
    Economique et Social" is designed to take a considerable proportion
    of the small vessel fleet (20% or more) out of the market over a
    period of years. The plan provides for scrapping premiums and for
    accompanying social measures. Guarantees have been built in to
    avoid distortions of competition. This implies that vessel owners
    subject to the "Plan Economique et Social" do also have to pay
    annual contributions at a rate comparable to the rates applied in
    the Community scheme.
    When the "Plan Economique et Social" entered into force on
    1.1.1990, 2.153 dry cargo vessels with a total loading capacity of
    980.288 tonnes were subject to the scheme. In the period from
    1.1.1990 to 1.1.1993 569 scrapping applications, representing a
    loading   capacity  with   203.287 tonnes, were accepted.      This
    corresponds with 20;7% of the capacity of the initial fleet. The
    French authorities plan to terminate the scheme by the end of 1994.
5-  Total scrapping activity (1990-1992)
    In round figures, the global result of the various scrapping
    actions mentioned above, which were undertaken in the period from
    1.1.1990 to 1.1.1993, is as follows :
(5) O.J. L 37 of 9.2.1991, p. 27.
 ---pagebreak---                                  - 5 -
        dry cargo : over 2.000 vessels scrapped with a total loading
        capacity of 1.1 million tonnes;
        tankers    260 vessels   scrapped with  a capacity   of  260.000
        tonnes.
    In addition 30.000 kw of push boat capacity has been taken out of
    the market in that period.
6.  Financial implications
    The total expenditure for the granting of scrapping premiums under
    the joint scrapping scheme (including the ex-DDR fleet) in the
    years 1990-1992 is estimated at 104.401.576 ECU of which 66.041.893
    ECU for dry cargo vessels and push boats, and 38.359.683 ECU for
    tankers^").
    As has been mentioned above, these amounts have been made available
    to the scrapping funds by the governments of the Member States
    directly concerned in the form of interest free loans. The amount
    is now being paid back by the inland waterway operators through
    annual contributions based on the tonnage and the type of their
    vessels (e.g. 1 ECU per tonne p.a. for dry cargo motorvessels over
    650 tonnes).
    The special contributions paid by inland waterway operators who
    bring new vessels into service without scrapping an equivalent old
    tonnage, serve as a second source of income for the funds.
    The total receipts of the 5 funds since the beginning of the joint
    scrapping action can be summarized as follows :
    Table 3 : Receipts per annum (B + D + F + NL + CH) in ECU
              Year              Dry cargo             Tankers
                           (incl. push boats)
              1990              9.620.185             5.801.845
              1991              9.694.580              7.908.491
              1992              9.825.993            15.570.928
           1990 - 1992         29.140.758            29.281.264
(6) In addition, 15.9 mio ECU has been allocated for the granting of
    scrapping premiums under the French "Plan Economique et Social".
    This amount is financed outside the context of the joint action and
    is not considered further in this chapter.
 ---pagebreak---                                 - 6 -
   In the dry cargo sector 44% of the interest free loans had been
   reimbursed by the end of 1992. Whilst in the tanker sector 76% had
   been reimbursed already. The difference is due to substantial
   amounts of special old-for-new contributions received by the funds
   in relation to the construction of new tankers in 1991 and in 1992.
   For reasons set out in chapters 7 and 8, Commission Regulation
   No. 3690/92 of 21 December 1992 provides that the special
   contribution received for vessels newly brought into service
   without scrapping an equivalent tonnage, shall as from 1.1.1993, no
   longer be used for the reimbursement of the interest free loans but
   shall be used for the granting of scrapping premiums. The receipts
   in the years 1993 and following are to be estimated at roughly 9
   mio ECU in the dry cargo sector and some 5 mio ECU p. a. for
   tankers. As a consequence, the loans in the dry cargo sector are
   likely to be fully reimbursed around the end of 1996, whilst in the
   tanker sector the break even point might be attained in 1994.
   Considering that Council Regulation No. 1101/89 provides in its
   Article 6.4. that the repayment period shall not exceed 10 years
   (starting 1990) it can be concluded that the repayment is certainly
   well on schedule.
7. The economic impact of the scrapping action
   A major socio-economic effect of the joint 1990 scrapping action
   has been that a considerable number of private owner operators were
   enabled to leave the business on financially acceptable terms.
   Another possibly even more important objective of the operation was
   to create a better revenue situation for those who stayed in
   business.
   In the framework of the Commission's Market Observation System the
   evolution of costs and prices on certain waterway sub-markets is
   monitored on a permanent basis. The Rhine market is the most
   important of these sub-markets and covers more than than half of
   all waterway carriage in the Community.
   Dry cargo
   The following graph presents the evolution of cost and price
   indices for dry cargo carriage on the Rhine since the beginning of
   the scrapping action. The year 1988 has been chosen as the base-
   year, because it is the year preceding the coming into force of
   Council Regulation No. 1101/89. Prices and costs as observed at the
   beginning of 1988 are thus set at "100". However, this should not
   be taken as a sign that prices were equal to costs. On the
   contrary, prices in 1988 were extremely low and far from full cost
   coverage levels.
 ---pagebreak---                                    - 7 -
        Rhine market, dry cargo
         cost and price indices (1988=100)
    index
200
150
                                                   /     N
100                                     costs
 50
  o•               2 3 4       2 3 4          2 3 4     2 3 4 12
    12 3 4                                              1992 11993
                   1989        1990          1991
       1988
                             quarter / year
      As the graph shows, prices went up more than costs in the
      subsequent years : 1989, 1990, 1991 and the beginning of 1992. (For
      a detailed overview of cost- and price-indices see table 4 on the
      next page).
      This evolution was caused by a  combination of reducing the surplus
      capacity and a stable demand.    Statistical data derived from the
      Market Observation System show the following picture for the total
      volume carried in dry cargo by   inland waterway in EUR-5 (B, D, F,
      L, NL) :
      1988 = 344,6 mio t.; 1989 = 343,9 mio t.    1990 = 347,8 mio t. and
      1991 = 349,2<7) mio t.
      Statistical data for 1992 or 1993 are not yet available.
      Nevertheless, it is commonly held that the general economic climate
      suddenly deteriorated in the course of 1992. Important sectors for
      the waterway industry such as the building sector, the steel- and
      coal industry and the chemical industry reported sharp drops in
      production. This immediately had an impact on prices in the
      waterway market. Where the price index for Rhine dry cargo traffic
      reached a peak-level of 164 in the first quarter of 1992, the index
      dropped to 124 at the end of 1992 and went down further f-o 119 in
      the second quarter of 1993.
  (7) preliminary figure,
 ---pagebreak---                                  - 8 -
    Table 4 : Cost en price indices, Rhine traffic (1988 = 100)
                            dry cargo               liquid cargo
                        cost        prices       cost        prices
       1988      I       100          100         100         100
                II       100          100         100         100
               III       100          105         100           85
                IV       100          105         100           85
       1989      I       101          115         100           81
                II
               III       103          127         102         132
                IV
       1990      I       HI           115         110         197
                II                    127                     153
               III       106          129         106         167
                IV       110          132         108         204
       1991      I       116          147         114         184
                II       113          139         113         281
               III       112          135         112         254
                IV       113          129         112         185
       1992      I       115          164         114         239
                II       113          139         113         165
               III       116          125         115         132
                IV       115          124         114         128
       1993      I       121          126         119         125
/               II       121          119         119         116
    Considering that the cost index had also gone up to about this
    level (121 in the same quarter), the conclusion has to be that the
    cost/price ratio in the first half of 1993 was again as low as at
    the beginning of 1988.
Mi' Cost and price indices for the free Rhine market are a good general
    indicator for the market situation of carriers operating larger
    vessels. However, for the smaller categories of vessels the number
    of waiting days between two transport operations as recorded on the
    skippers bourses can serve as a useful additional indicator. The
    following graph shows the evolution of waiting days for the
    transport relations Netherlands-Belgium and Netherlands-France.
 ---pagebreak---                                      -  9
             North-South market
            waiting days, moving average
  waiting days
                                      Netherlands - France
0'-
 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4
      1988     ]     1989      |    1990        |    1991    |   1992
                               quarter / year
    The long waiting times (10 to 20 days) recorded at the bourses
    clearly indicate that there is substantial overcapacity in this
    market. The relation NL -> F showed a gradual reduction of waiting
    times in the period 1989-1991. This was caused by the scrapping of
    a considerable number of small vessels both in Belgium, France and
    the Netherlands, which had a positive effect on the turnaround
    times of the remaining vessels.
    The said effect is less apparent in the relation NL -> B because
    small vessels play a less important role in this traffic.
    The    effect    of    the   gradually      decreasing  demand   on the
    shippersbourses was thus compensated by the scrapping action.
    However, this evolution came to a stop and even reversed in 1992 as
    a   result    of    further   decreasing      demand.  The  strikes and
    manifestations of North-South operators in the Netherlands and
    Belgium in the summer of 1993, require no further statistical
    evidence to illustrate that the economic situation of these
    operators has again fallen to a critical level.
 ---pagebreak---                                       - 10 -
         Liquid cargo
         In 1988 the inland waterway tanker market was even more depressed
         than the dry cargo market. Therefore the target was set to scrap
         15% of the tanker fleet compared to 10% in the dry cargo sector. As
         mentioned above, the outcome has been that 13% of the available
         capacity was taken out of the market. As is illustrated in the
         following graph, prices for the carriage of liquid cargo in Rhine
         traffic started to recover in the course of 1989 and reached a
         peak-level in the first half of 1991.
i
         Rhine market, liquid cargo
           cost and price indices (1988=100)
       index
V 300;
                                               /     \
  250 I
                                             I         \ J \
                               \   Prlces/V
  200
  150                                                           ^
                                                    costs
  loo i — -      — •
       i
   50 !
V   0'
      1 2 3 4         2 3 4       2 3    4       2  3 4      2 3 4   1 2
         1988         1989        1990           1991        1992  11993
                                 quarter / year
         This upswing was caused by a combination of factors such as
         temporary peaks in demand (low water periods, Gulf-crisis) but in
         particular by the significant reduction of the fleet capacity. The
         strong recovery of prices is remarkable since the structural trend
         in demand for liquid cargo was rather down than up as follows from
         the following figures (EUR-5) :
         1988 = 74,7 mio t.; 1989 = 70,0 mio t.; 1990 = 69,0 mio t. and
         1991 = 69,8(8> mio t.
    (8) preliminary figure.
 ---pagebreak---                                 - 11 -
   Just as in dry cargo, the tanker market remained bullish until the
   first half of 1992. Then with the change in the general economic
   climate, prices dropped sharply, to such extent           that the
   cost/price ratio in mid 1993 is similar to that in 1988.
   General assessment
   From the description given it is apparent that the rehabilitation
   measures taken by the Council in 1989 were effective in ending the
   current crisis. However, from the analysis it also follows that the
   sector remains very vulnerable to fluctuations in demand and is
   presently severely affected by the economic recession.
8. The old-for-new measure
   The old-for-new measure was designed to counteract the observed
   tendency to over investment. Has this objective been achieved?
   As a first point it should be noted that the old-for-new rule was
   never meant to block all investment in new capacity. Contrary to a
   tonnage stop, an old-for-new regime should not hinder the necessary
   modernization of the fleet. Even if the market as a whole is not
   expanding, there will still be a need for expansion and
   modernization in certain sub-markets. In the reference period this
   has been the case in particular in the sub-markets for the carriage
   of containers and chemical products. It has been observed in
   practice that a sufficient number of such new vessels have been
   brought into service over the last years. In addition, a number of
   new push barges were brought into service. Therefore, as a first
   point it can be concluded that the restraint on investment has not
   been applied too severely.
   A second question is whether the regime has been, perhaps, too
                                                                       V
   loose to be effective? Based on data received from the five
   cooperating scrapping funds, table 5 (see next page) gives an
   overview of all operations having been subject to the old-for-new   V
   rule. In analysing these figures a distinction has to be made
   between the dry cargo sector and the tanker market.
   In the dry cargo sector 177.431 tonnes of extra capacity were added
                                                                       V:
   to the fleet during the period from 28.4.1989 to 1.1.1993. This
   represents an average expansion rate of some 50.000 tonnes per
   annum, or 0,5% p. a. of the total fleet capacity (10 mio tonnes).
   This is a relatively low figure. As an example it might be
   mentioned that in the year 1988 alone 210.117 tonnes of new
   capacity were added to the Communities dry cargo inland fleet.
   In addition, the new capacity brought into service was to a large
   extent (67%) compensated by the scrapping of 118.689 tonnes of old
   capacity on behalf of those who had new vessels constructed. For
   the new tonnage not being compensated special contributions were
   paid into the funds to a total of 4.036 mio ECU, this sum served
   for the partial reimbursement of the interest froe loans.
 ---pagebreak--- Table 5 : Application of the old-for-new role in the period 28.4.1989 - 1.1.1993
                                        "Old-for-new' role : special contributions and compensation tonnage offered for scrapping
                                                                    (Period : 28.04.1989 - 01.01.1993)
       Type of         New constructions, etc.                   Extensions               Special contributions (ECUS)         Compensation tonnage
      the vessel
                      Number           Tonnage            Number           Tonnage            Total            already         Total          already
                                                                                          contribution      received by                      scrapped
                                                                                               due            the Fund
  Dry cargo
   - self-propelled      10             22.081              56               9.352         1.600.650           802.814        24.058          24.058
   - barges              49             123.626              5                420          2.408.361         2.408.361        94.631          94.631
   - lighters             9             21.952                                              27.117**           27.117
                                                                                                                                                      I
  Total                  68             167.659             61              9.772          4.036.128         3.238.292        118.689         118.689
   Liquid cargo
   - self-propelled      41             86.630              20              54.871         14.705.908        13.423.012       19.734          19.734
   - barges               1               955                1                767            190.804           190.804         4.254           4.254
   - lighters
  Total                  42             87.625              21               5.638         14.896.712        13.613.816       23.988          23.988
   Pushbarges*            1              3.960               9               1.803           251.925           194.345         4.784           4.784
*/kw
••/compensation tonnage in barges in lieu of special contributions
 ---pagebreak---                              - 13 -
On the whole it can be concluded that the figures for the dry cargo
sector show a picture which globally corresponds with the initial
objectives that is :
(a) to bring the investments down to a level sufficient to cope
    with legitimate modernization requirements; and
(b) to persuade boat owners to "compensate" new construction by
    scrapping when possible.
The figures for the liquid cargo sector, however, show a different
picture. In the reference period 93.263 tonnes of additional
capacity were brought into service, corresponding to 25.000 tonnes
per annum, which represents an average expansion rate of 1,2% per
annum compared to the size of the total tanker fleet. Only a small
portion (26%) of the new capacity was compensated by the scrapping
of old tonnage (23.988 t . ) . Most operators preferred to pay the
special contribution in stead of scrapping.
The reasons for this behaviour are to be found in the market
situation in 1991 and the first half of 1992. When transport prices
for liquid cargo continued to rise in 1991 several tanker operators
decided to have new vessels constructed. The increased prices for
second hand tankers and the low construction prices offered by
shipyards   in Eastern Europe contributed       to the    investment
decisions. Because of the high prices for second hand vessels at
that particular moment in time it was cheaper to pay the special
contribution than to scrap, which explains the low compensation
rate.
As soon as figures on the above evolution became available the
Commission undertook to analyse and remedy the situation. In
concertation with the Member States concerned, the scrapping funds
and the professional organisations, it was concluded that in the
market situation - where second hand boats including very old ones,
are temporarily overpriced - the functioning of the old-for-new
mechanism could be improved by reserving the special contributions
received by the funds for granting scrapping premiums at a later
date. Hence, the special contribution should no longer be used for
the advanced reimbursement of the interest free loans but should be
used to take an equivalent tonnage out of the market as soon as
prices of old vessels come down to the level of the scrapping
premiums offered.
On 21 December 1992 the Commission adopted Regulation No. 3690/92
establishing the modifications as set out above and laying down
detailed rules for the granting of scrapping premiums under the new
procedure. The Regulation entered into force on 1.1.1993. As from
this date boat owners again have the possibility to introduce
applications for scrapping premiums. However, the financial
resources available are limited and consist only of the special
contributions   received   after   the  mentioned   date.   Properly
documented scrapping applications which cannot be accepted because
of lack of financial means are inscribed on a waiting list if the
owner wishes so.
 ---pagebreak---                               - 14 -
The first results of the new system are summarized in the following
table.
Table 6 : Scrapping applications accepted between 1.1.1993 and
           1.7.1993
                    number of      capacity     scrapping
                     vessels       scrapped     premiums paid
   dry cargo            1          2.185 ton      131.000 ECU
   push boats           1            985 kw       236.400 ECU
   tankers             23         11.877 ton    1.956.356 ECU
Because of the limited financial resources available only 2
applications could be accepted in the dry cargo sector (of which
one push boat). In the tanker sector more substantial amounts
became available - following the bringing into service of some new
tankers ordered in the boom period - which allowed the scrapping of
almost 12.000 tonnes of surplus capacity.
However, in the first 6 months of 1993 the cooperating scrapping
funds received many more scrapping applications than could be
accepted within the budgetary limits. At 1 July 1993 there remained
220 applications on the waiting list for the dry cargo sector
including push boats and 27 applications for tankers.
Conclusions
As regards the old-for-new measure it can be concluded that the
modification introduced on 1.1.1993 represents an improvement,
since it ensures that all capacity newly brought into service will
be compensated by the scrapping of an equivalent tonnage.
The large number of scrapping applications included on the waiting
list clearly indicates that there is a need for the continuation of
the current rehabilitation measures. With regard to the question as
whether the old-for-new rule as laid down in Article 8 of Council
Regulation No. 1101/89 should be reviewed on 28 April 1994, the
answer has to be positive in the light of the present market
situation. In line with Article 8 paragraph 6 of the said Council
Regulation, the Commission herewith presents a proposal to the
Council on the extension of the old-for-new rule, which is attached
to this report.
 ---pagebreak---                           - AS -
                            Proposai fora
                  COUNCIL REGULATION (EC\                        SYN 475
modifying Regulation (EEC) No 1101/89 on structural improvements in
                      inland waterway transport
                   (presented by the Commission)
 ---pagebreak---                                       -ne -
    Explanatory memorandum
    1.   The Council, acting on a Commission proposal, adopted on 27 April
         1989 a package of measures designed to reduce                  structural
         overcapacity in inland navigation. These measures are set out in
         Council Regulation (EEC) No. H O I / 8 9 ^ 1 ) . The Regulation provides
         for two sets of measures :
         (a) the granting of scrapping premiums to reduce the capacity of
 I            the active inland waterway fleet; and
  Î       (b) measures to curb investment in extra vessels in the course of
  T
              the coordinated scrapping scheme. These latter measures are
[;             generally known as "the old-for-new-rule". The old-for-new
h             provision is of a temporary character and expires on 28.4.1994.
u
H
[I, 2.   The Regulation No. 1101/89 stipulates in Article 8.S that the
  \      Council on the basis of a Commission proposal accompanied by a
•\i
         well-founded report, may take a decision to extend the period for
         which the old-for-new- rule was introduced by a maximum of five
         years.
         The report, which is annexed, shows that the old-for-new mechanism
         effectively contributes to the reduction of overcapacity. However,
         the report also shows that the waterway industry has been seriously
         affected by a recent drop in demand caused by the general economic
         recession which emerged in the course of 1992.
         For these reasons it is considered that a prolongation of the old-
         for-new measure is called for to further reduce overcapacity.
    3.   During consultations organised by the Commission services, the
         Member States directly concerned and the organisations of inland
         waterway operators expressed the view that the old-for-new measure
         should be temporarily extended for the reasons summarized in point
         2 and said out in more detail in the attached report.
    4.   The package of capacity reduction measures as introduced by Council
         Regulation No. 1101/89 is financed by the industry itself. Under
         the scheme Community operators         are obliged       to pay    annual
         contributions to the scrapping fund for a period stretching beyond
         the date of 28.4.1994. The eventual non-extension of the old-for-
         new rule would disrupt the balance of the package.
    5.   On the grounds set out above the Commission considers that the old-
         for-new rule should be extended for another period of five years.
         However, because of the fluctuations in the market situation it
         would be appropriate to reexamine the situation by the end of 1996
         and to present additional proposals to the Council if required.
         These proposals could include a gradual reduction of the conditions
         under the old-for-new rule to allow for a smooth transition.
     (1) O.J. No. L 116 of 28.4.1989, p. 25 last amended by Council
         Regulation (EEC) No. 3572 of 4.12.1990, see O.J. No. L 353 of
         17.12.1990, p. 14.
 ---pagebreak---                                    -"n-
                             Proposal for a
                        Council Regulation (EC) No.
                                of
           modifying Regulation (EEC) No. 1101/89 on structural
               improvements in inland waterway transporte1)
THE COUNCIL OF THE EUROPEAN COMMUNITIES,
 Having regard to the Treaty establishing the European Community, and in
 particular Article 75 thereof,
 Having regard to the proposal from the Commission^) r
 In cooperation with the European Parliament(3),
 Having regard to the opinion of the Economic and Social Committee(^),
 Whereas Council Regulation (EEC) No. 1101/89 introduced a number of
 measures designed to remove the structural overcapacity in the inland
 waterway sector and whereas one of these measures, which is designed to
 temporarily curb investment in extra capacity, was initially foreseen
 for a five year period;
 Whereas these said measures have contributed to the reduction of
 structural overcapacity in the inland waterway sector; whereas,
 however, the recent economic downturn has caused a drop in demand for
waterway services resulting in renewed overcapacity felt in every
 sector of the inland waterway transport market; whereas it is therefore
 appropriate to maintain the current structural improvement measures,
 for a certain period;
Whereas given that forecasts indicate that the overcapacity is likely
to persist for considerable time, it is appropriate to reexamine the
 situation before the end of 1996 in the light of the then existing
market situation.
 HAS ADOPTED THIS REGULATION :
 (1) O.J. L 116 of 28.4.1989, p. 25
 (2)
 (3)
 (4)
 ---pagebreak---                                          -If-
  I                                    Article 1
  jf'v                                            """'       V
  f     Regulation (EEC) No. 1101/89 is hereby amended as follows :
  î                                                                         -,
  ?••-'
 I      1.  In Article 8 paragraph 1(a) first phrase, the period of "five
  |         years" is replaced by "ten years".
 1                . .
        2.  The following paragraph 5 is added to Article 10 :
  j
            "5. The Commission shall draw up a report evaluating the overall
                effect of the measures provided for by this Regulation,
                together with proposals if appropriate, and submit it to the
                European Parliament and the Council by 31 December 1996".
  !'                               '   Article 2
        This Regulation shall enter into force on 28 April 1994.
        This Regulation shall be binding       in  its  entirety  and  directly
        applicable in all Member States.
        Done at Brussels,                      For the Council,
I
V
 ---pagebreak---                                              "7 2
                                                                     BSN 0254-1475
                                                              COM(93) 553 final
                                                              CUMENTS
EN                                                                             07
                                 Catalogue number : CB-CO-93-591-EN-C
                                                             ISBN 92-77-60756-4
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