CELEX: 51987PC0388(01)
Language: en
Date: 1987-07-30
Title: PROGRAMME FOR THE CONVERSION OF STEEL AREAS PROPOSAL FOR A COUNCIL REGULATION INSTITUTING A COMMUNITY PROGRAMME TO ASSIST THE CONVERSION OF STEEL AREAS ( RESIDER PROGRAMME )

No C 272/16                                Official Journal of the European Communities                                  10.10.87
Programme for the conversion of steel areas
                Proposal for a Council Regulation instituting a Community programme to assist the conversion
                                                 of steel areas (Resider programme)
THE COUNCIL OF THE EUROPEAN COMMUNITIES,                               the new Member States adversely affected by steel
                                                                       restructuring should be allowed to benefit, in the form of
Having regard to the Treaty establishing the European                  a Community programme, from measures analogous to
Economic Community,                                                    those introduced by the said Regulation;
Having regard to Council Regulation (EEC) No                           Whereas, on account of the worsening difficulties in the
1787/84 of 19 June 1984 on the European Regional                       steel industry, it will also be necessary to introduce in
Development Fund (x), as last amended by Regulation                    other areas of the Community, in the form of a
                                                                       Community programme, measures analogous to those
(EEC) No 3641/85( 2 ), and in particular Article 7(4)
                                                                       already taken in certain areas of the Community under
thereof,
                                                                       Regulation (EEC) No 2616/80 and, where appropriate,
                                                                       to reinforce as part of the same programme the existing
Having regard to the proposal from the Commission,                     measures in those areas, in view of the considerable job
                                                                       losses which have occurred in the steel industry since 31
Having regard          to    the   opinion of   the    European        December 1985, the date of expiry of Commission
Parliament,                                                            Decision No 2320/81 /ECSC (5);
Having regard to the opinion of the Economic and                       Whereas the Member States concerned have provided
Social Committee,                                                      the Commission with the necessary information and
                                                                       whereas, pursuant to Commission Decision No 1566/
                                                                       86/ECSC (6), steel undertakings must supply the
Whereas Article 7 of Regulation (EEC) No 1787/84,
                                                                       Commission with iron and steel statistics at regular
hereinafter referred to as the Fund Regulation, provides
for participation by the fund in Community programmes,                 intervals;
the purpose of which is to help in solving serious
problems affecting the socio-economic situation in one                 Whereas, by assisting with the conversion of the
or more regions and which are designed to provide a                    declining industrial regions affected by restructuring of
better link between the Community's objectives for the                 the steel industry, the Community               programme
structural development or conversion of regions and the                contributes to the furtherance of both regional
objectives of other Community policies;                                development objectives and the Community's objectives
                                                                       with regard to steel; whereas the level of Community
                                                                       participation must therefore be the maximum permissible
Whereas the Commission has determined, pursuant to                     under the Fund Regulation and whereas, at the same
Article 46 of the ECSC Treaty, the general objectives for              time, the programme is to be given priority in the
steel in the Community for 1990; whereas, despite the                  management of fund resources;
considerable effort that has been made in recent years
and that has led to sizeable reductions in production
                                                                       Whereas it is necessary to avoid combining aid granted
capacity, the steel industry in the Community is still
                                                                       under the specific Community measures instituted
faced with problems of over-capacity;
                                                                       pursuant to former Council Regulation (EEC) No
                                                                       724/75 O or (EEC) No 3634/84 (8) with aid granted
Whereas a number of areas in the Community which are                   under this Community programme;
highly dependent on steel making and which have
already suffered major job losses as a result of the                   Whereas Community assistance must be provided in the
decline in the steel industry are likely to see a worsening            form of multiannual programmes drawn up by the
of these adverse consequences;                                         competent authorities in the Member States concerned;
                                                                       whereas, to ensure sound financial management of the
Whereas, on 7 October 1980, the Council adopted Regu-                  fund, Member States must transmit those aid
lation (EEC) No 2616/80 (3), as amended by Regulation                  programmes to the Commission within a certain period
 (EEC) No 216/84 ("), which instituted a specific                       after the areas to be covered by the Community
Community regional development measure contributing                    programme have been determined; whereas it is for the
to overcoming constraints on the development of new                     Commission, in adopting those programmes, to ensure
economic activities in certain zones adversely affected by             that the operations proposed therein are in keeping with
restructuring of the steel industry; whereas the areas in              this Regulation;
O   OJ No L 169, 28. 6. 1984, p. 1.                                     O   OJ No L 228, 13. 8. 1981, p. 14.
(2) OJ No L 350, 27. 12. 1985, p. 40.                                   (6) O J N o L 141,28. 5. 1986, p. 1.
(») OJ No L 271, 15. 10. 1980, p. 9.                                    O   O J N o L 7 3 , 2 1 . 3. 1975, p. 1.
(4) O J N o L 2 7 , 31. 1. 1984, p. 9.                                  (8) OJ No L 350, 27. 12. 1985, p. 6.
 ---pagebreak--- 10.10.87                                Official Journal of the European Communities                               No C 272/17
Whereas, in view of the coming reform of the structural            Commission Decision N o 2320/81/ECSC and the end
funds under Article 130D of the EEC Treaty, the choice             of 1989 entails major job losses in the industry.
of regions in the present Community programme and the
criteria on which this choice is based should be
consistent with the approach to be followed in the                 The Commission shall take its decision within three
abovementioned reform,                                             months of the date on which the Member State
                                                                   concerned submits an application in respect of the areas
HAS ADOPTED THIS REGULATION:                                       eligible for the Community programme. Applications
                                                                   shall be seht to the Commission by 30 April 1990 and
                                                                   shall be supported by the requisite information, notably
                           Article 1
                                                                   concerning job losses in the steel industry; such infor-
A Community programme within the meaning                   of      mation shall be consistent with that provided under
Article 7 of the Fund Regulation that contributes to      the      Decision No 1566/86/ECSC
conversion of certain declining industrial regions in     the
Community adversely affected by restructuring of          the
steel industry is hereby established.
                                                                                                Article 4
                           Article 2                               The fund may participate, under the Community
                                                                   programme, in operations such as those defined in
The purpose of the Community programme shall be to                 Article 4 of Regulation (EEC) No 2616/80, with the
contribute, in the areas concerned, to the removal of              exception of point 2. For the purposes of this Regulation,
obstacles to the development of new, job-creating                  this latter provision shall read as follows:
economic activities. To this end, the programme shall
provide for the implementation of a series of consistent,
multiannual measures aimed at improving the infra-                       'Infrastructure contributing to the creation, the
structure arid the physical and social environment in the                development and the adaptation of job-creating
areas concerned, as well as the establishment of new                     productive activities.'
activities, the growth of small and medium-sized
enterprises and the development of innovation.
The Community programme shall thereby seek to                                                    Article 5
provide a better link between the Community's objectives
for the conversion of regions and the objectives of the             1.     The Community programme shall be financed
Community's policy for the steel industry.                          jointly by the Member State concerned and the
                                                                    Community. Assistance from the fund, which may not
                                                                    exceed 55 % of the total public expenditure taken into
                           Article 3
                                                                    account in the programme, shall be provided from the
 1.     The Community programme shall apply to areas                appropriations entered for this purpose in the general
 satisfying the following criteria:                                 budget of the European Communities. The Community
                                                                    contribution, by type of operation, may not exceed the
 (a) minimum number of jobs in the steel industry;                  rates fixed in Article 5 (1) of Regulation (EEC) No
                                                                    2616/80, with the exception of points (b) and (k).
 (b) industrial employment dependent in large measure
      on the steel industry;
 (c) major job losses in the steel industry;                        For the purposes of this Regulation the provision in the
                                                                    said Article 5 (1) (b) shall read as follows: 'for infra-
 (d) socio-economic situation in the region in which the            structure operations provided for in Article 4 (2): 50 %
      area concerned is located characterized by par-               of public expenditure.'
      ticularly marked employment difficulties.
 2.     As soon as this Regulation has entered into force,          In the case of operations relating to interest subsidies on
 the Community programme shall apply to the areas in                Community global loans, the cost shall be borne by the
 Spain which satisfy the criteria specified in paragraph 1,         Community. The rate and the period of subsidy applied
 namely:                                                            shall correspond to those fixed by the Commission for
 — the region of Asturias and the areas covered by a                global loans as part of the procedures and conditions for
                                                                    granting conversion loans pursuant to Article 56 of the
      national regional aid scheme in the provinces of
                                                                    ECSC Treaty.
     Alava and Vizcaya.
 3.     The Community programme shall apply, subject to
 a decision by the Commission, to areas in all Member                2.     Where the Community programme concerns areas
 States which satisfy the criteria specified in paragraph 1          in Portugal, the level of the Community contribution
 and in which restructuring of the steel industry carried           provided for in paragraph 1, with the exception of the
 out within the framework of the Community's general                 last indent, shall be increased until 31 December 1990 by
 objectives for steel between the date of expiry of                  20 percentage points, subject to a ceiling of 70 %.
 ---pagebreak--- No C 272/18                               Official Journal of the European Communities                                10.10.87
                            Article 6                                (a) in respect of the areas referred to in Article 3 (2),
                                                                          within six months of the date of entry into force of
1.     All or part of the aid may be in the form of a                     this Regulation;
capital grant or an interest subsidy.
                                                                      (b) in respect of the areas referred to in Article 3 (3),
2.     The fund contribution to interest subsidies on                     within six months of the date of the Commission
Community global loans may not be less than 20 % of                       decision to be adopted pursuant to the said
the total contribution to the programme. The budget                       paragraph 3.
commitments in respect of such subsidies shall not be
made in annual instalments but shall be determined by                     Where the Commission's decision relates to an area
the Commission for each loan, subject to its being                        referred to in Article 3 (2) or covered by a
granted, when adopting the decision to make a global                      Commission decision within the meaning of Article 3
loan under the ECSC budget.                                               (3), the programme of assistance shall be adapted
                                                                          accordingly.
3.     The following shall be eligible for fund assistance in
respect of operations referred to in Article 4: public                2.    The duration of the programme of assistance may
authorities, local and regional authorities, other bodies,            not extend beyond 31 December 1992.
businesses, cooperatives or self-employed persons
carrying on a productive activity.                                                               Article 8
4. (a) Aid granted under the Community programme                     The amount of fund assistance may not exceed the
        shall not be combined with aid granted for the                amount laid down by the Commission when adopting
        same project under specific Community measures                the programme agreement referred to in Article 13 (1) of
        introduced pursuant to former Fund Regulation                 the Fund Regulation.
         (EEC) No 724/75 or to Regulation (EEC) No
         3634/85;                                                                                Article 9
    (b) In addition, the aid referred to in Article 5 (1) (c)         This Regulation shall be re-examined and if necessary
         and (e) of Regulation (EEC) No 2616/80 and,                  amended to accord with the revision of Regulation
        where it benefits businesses directly, the aid                (EEC) No 1787/84 provided for in Article BOD of the
         referred to in Article 5 (1) (g) of the said Regu-          -EEC Treaty.
         lation may not have the effect of reducing the
         share of expenditure met by recipient businesses                                       Article 10
         to less than 20 °/o of total expenditure.
                                                                      This Regulation shall enter into force on the day
                            Article 7                                 following its publication in the Official Journal of the
                                                                      European Communities.
 1.    The programme of assistance drawn up by the
 competent authorities in the Member State concerned                  This Regulation shall be binding in its entirety and
 shall be sent to the Commission:                                     directly applicable in all Member States.
 ---pagebreak--- 1 0 . 1 0 . 87                                 Off icial J o u r n a l of the E u r o p e a n C o m m u n i t i e s        N o C 272/19
                                                                        ANNEX        III
                                        Information memo on the ECSC budget and the ECSC reserves
               1.    INTRODUCTION
                    The legal base for the ECSC's financial and budgetary activity is provided in the second indent of
                    Article 5 and in Articles 49 to 56 of the Treaty of Paris under which the ECSC is empowered to
                    borrow on the capital markets in order to place financial resources at the disposal of undertakings and
                    to impose levies on the production of coal and steel in order to finance specific non-repayable aids.
                    All the ECSC's financial and budgetary operations are covered by the financial statements which the
                    High Authority approves every year.
                    At 31 December 1986 the balance sheet totalled 9 189 million ECU and the borrowings outstanding
                    amounted to around 7 000 million ECU. The total of loans raised in 1986 was 1 517 million ECU and
                    the out-turn of the 1986 budget 329 million ECU.
                    The two types of ECSC financial operations — non-repayable aids and loans to finance investments
                    — are backed by two key elements: the ECSC budget and the ECSC reserves.
               2.   T H E BUDGET SYSTEM
               2.1. In the ECSC budget the year's resources finance the legal commitments entered into that year. The
                    funds held to cover commitments awaiting payment and the counterpart to the ECSC reserves are
                    invested to yield revenues, most of which (after deduction of amounts allocated to reserves to
                    maintain the ECSC's international credit rating (triple A)) is used under the guise of the disposable
                    balance of the annual profit and loss account to provide extra ECSC budget revenue for the following
                    year. Maintaining this approach makes it possible to provide additional resources and to safeguard the
                    Community's financial base at a time when the industries are facing severe problems.
                    It should be stressed that the level of this revenue depends on market interest rates and on the ECU
                    rate for the various currencies. The ECSC cannot do much to anticipate movements in market rates
                    since it is not entitled to engage in currency arbitrage operations.
                    This budget system was endorsed by Parliament's Committee on Budgetary Control in the context of
                    the latest grant of discharge to the ECSC.
               2.2. The ECSC budget's main resources are:
                    (a) the levy on coal and steel production
                         Since 1980 the levy rate has been 0,31 %, and, if this rate remains unchanged, the levy yield for
                         the next five years should be somewhere between 140 and 180 million ECU, with the real value
                         probably declining.
                         On the basis of preliminary estimates for 1988, the extra revenue for each increase of 0,01 % in
                         the levy rate would be rather less than 5 million ECU.
                    (b) the disposable balance from the annual profit and loss account
                         As already noted, the disposable balance from the annual profit and loss account is made available
                         for the following year's budget. Most of it is entered directly into the budget ('), but a small
                         amount is normally placed at the start of the year in a reserve for budgetary contingencies to be
                         drawn on to meet resources shortfalls or extra demands for aid.
                         For the next five years, the estimate of this contribution may be between 120 and 140 million
                         ECU, although an estimate of this type is of course heavily dependent on the behaviour of the
                         markets.
               (') Net prior-year balance.
 ---pagebreak--- No C 272/20                                Official Journal of the European Communities                                         10.10.87
                 (c) additional resources, usually of modest amounts, are provided by the cancellation of legal
                     commitments already entered into, revenue from fines and other minor items (miscellaneous).
                 From the above, it may be estimated that from 1988 onwards the ECSC budget's total ordinary
                 resources will be between 250 and 300 million ECU, well below the 1986 figure of 329 million
                 ECU (l), unless the Commission decides to increase the levy rate.
           2.3. Apart from the contribution of 5 million ECU to the general budget for the ECSC's administrative
                 expenditure, ECSC budget expenditure is limited to three types of non-repayable aid:
                 (a) Social aids to coal and steel workers made redundant (redeployment aid).
                     Until 1984 the ECSC financed additional special social programmes connected with the re-
                     structuring of the coal and steel industry by means of a transfer from the general budget to the
                     ECSC budget.
                 (b) Aid for research projects, the results of which are made available within the Community.
                 (c) Interest subsidies on ECSC loans in priority areas, mainly for loans to create jobs in areas affected
                     by the restructuring of the coal and steel industries (conversion loans under Article 56 of the
                     ECSC Treaty).
           2.4. As regards resource allocation, in recent years over half the annual ECSC budget has been allocated
                 to social expenditure (1985: 63 °/o; 1986: 52 %; 1987: 61 °/o) expenditure on research aids and interest
                 subsidies being more or less equally balanced.
                 The ECSC does not practice a 'fair shares' approach, but it will be noted that coal undertakings now
                 pay just over a quarter of the levy, while the coal sector at present receives about 60 % of traditional
                 redeployment aids, 50 % of interest subsidies and 40 % of research aids.
           3.    ECSC RESERVES
           3.1. The purpose of the ECSC reserves is to guarantee its borrowings on the capital markets. ECSC
                 borrowing operations are not backed by any special security and are guaranteed in the final instance
                 by the Member States as the founders of the ECSC in accordance with the general principles of
                 international law (2).
                 A description of the ECSC reserves and policy guidelines for the annual allocation of the net surplus
                 are contained in SEC(86) 1532 final which the Commission approved on 8 October 1986 and which
                 was sent to Parliament, the Council and the Court of Auditors in January 1987.
                 As set out in this document, the Commission's policy is, both on budgetary grounds (to take account
                 of the difficulties connected with the state of crisis in the steel sector) and for financial and legal
                 reasons (to safeguard the market finance instrument of ECSC undertakings), to allocate as much of
                 the annual net surplus as possible to the ECSC budget. With regard to the financial statements and
                 hence the level of reserves, the aim is simply to keep the main financial ratios at a level close to that of
                 the balance sheet at 31 December 1984.
           (') Exceptional non-recurring items, as listed in document COM(87) 289, will probably bring the 1987 budget total to
               around 400 million ECU.
           (2) For EEC and Euratom borrowings, on the other hand, the Member States offer a guarantee on a first demand basis.
 ---pagebreak--- 10.10. 87                               Official Journal of the European Communities                                  No C 272/21
               The need to maintain the financial ratios was set out in the detailed analysis conducted on the
               Commission's behalf by the international consultants Deloitte, Haskins and Sells (SEC(86) 780) which
               clearly shows that the ECSC reserves are not excessive and that they are at the lower end of the scale
               compared with similar institutions (for example, the ratio of reserves to total assets is 8 °/o for the
               ECSC and 12 % for the EIB).
               This view was accepted by Parliament's Committee on Budgetary Control in the context of the latest
               grant of discharge to the ECSC.
          3.2. The statistics in the Annex illustrate the Commission's new policy. An analysis of these figures shows
               that at the closure at 31 December 1986:
               — the amounts allocated to the guarantee fund dropped to a merely symbolic level of 5 million ECU
                   in 1986,
               — the absolute value of reserves remained roughly stable,
               — the amounts transferred to the ECSC budget as disposable balance increased considerably to the
                   exceptional level of 211 million ECU in 1986. This cannot happen again in future on the same
                   scale and was achieved only by mobilizing all the funds available.
          4.   CONCLUSIONS
               In conclusion, the ECSC budget is a simple instrument with a stable structure and a fixed pattern of
               resources and expenditure which has proved capable, within the given financial limits, of making a
               useful contribution to the life of the ECSC.
               The ECSC reserves and the current policy for allocating the net annual surplus will make it possible to
               channel loans to investment by ECSC undertakings while at the same time increasing the annual
               budget funds for financing non-repayable aids.
               Particular care must therefore be taken not to damage these time-tested systems (the ECSC budget
               and reserves) and thus jeopardize our future effectiveness.
               Any increase in ECSC resources in relation to the above estimate could be financed only through an
               increase in the levy or by taking in resources from outside the ECSC.
 ---pagebreak--- No C 272/22                                   Official Journal of the European Comunities                           10. 10. 87
                                                                    Annex
                                     Main statistics on the allocation of the ECSC's annual net surplus
                                                                         1983         1984           1985   1986 O
          Allocation to the guarantee fund (million ECU)                 40           40             20        5
                                            2
          Total allocation to reserve ( ) (million ECU)                  97           43             18    -11,5
          Contribution to budget as investment interest
          and contingency reserve                                       113,2        100           149,4     211
          Total free reserves after           allocation  (million
          ECU)                                                          490          530           538       526,5
                                                3
          Total reserves after allocation ( ) (million ECU)             697,74       740,64        758,53    754,5
          Free reserves
          Borrowings outstanding (%)                                      7,49         7,45           7,64     7,55
          Free reserves
          Total assets (°/o)                                               5,8         5,73           5,86     5,76
          Reserves
          Borrowings outstanding (%)                                     10,67        10,40          10,78    10,80
          Reserves
          Total assets (%)                                                 8,25        8,00           8,27     8,25
          (') Including exceptional contribution by Spain and Portugal.
          (') Including allocation to Guarantee Fund.
           (J) Including total free reserves.