27.10.2007   

EN

Official Journal of the European Union

C 256/62

1.1

The EESC agrees with the proposed repeal of Regulation 954/79, as it is the inevitable consequence of the repeal of Regulation 4056/86 laying down a block exemption for liner conferences. The EESC notes that these two Regulations have constituted a legal package.

1.2

Regulation 954/79 deals with the accession to or ratification by Member States of the United Nations Convention on a Code of Conduct for Liner Conferences — hereinafter referred to as the UNCTAD Liner Code or the Code. In this respect, it is notable that the UNCTAD Liner Code has been ratified by 81 countries including the new locomotives of world trade (i.e. China, India, Russia and Brazil) as well as Australia, Canada, Japan, Nigeria, Mexico, Indonesia, Saudi Arabia and Singapore. The Code has also been ratified by sixteen EU Member States. Furthermore, liner shipping carries 60 % of the overall value of international trade mainly by containers. Hence, a repeal of Regulation 954/79 (as well as of Regulation 4056/86) will undoubtedly have implications which should not be underestimated.

1.3

The EESC particularly invites the Commission to clarify the legal position of EU liner carriers internationally following a repeal of Regulation 954/79. Indeed, in view of the importance of an integrated EU maritime policy for the role of the EU in the world economy and considering the importance of shipping, including EU shipping, in EU and worldwide trades, the EESC is of the opinion that extra vigilance is required in the handling of such repeal and careful consideration needs to be given to its repercussions, both at European and international level. As to the underlying Commission's proposal to repeal Regulation 954/79, the EESC is of the opinion that it fails to take into account the following two parameters: a) the discrimination between EU liner carriers which may result from such repeal and which should be avoided (in line with Art. 12 EC Treaty) and b) the competitiveness of EU liner carriers (including short sea operators) which should be safeguarded (in line with the revised Lisbon Strategy).

1.4

In line with its past opinions and those of the European Parliament, the EESC urges the Commission to tackle the consequences (political, legal and practical) which would arise from the repeal of Regulation 4056/86 as well as of Regulation 954/79 in order to avoid any adverse implications to European shipping interests at the international level.

1.5

It is understood that the Guidelines explaining the application of EC competition rules to maritime transport, which will apply to liner shipping services after the prohibition of liner conferences to and from the EU as of 18.10.2008, would mainly allow liner operators to carry out a self-assessment of their agreements under EC competition law. Consequently, the EESC believes that it is unlikely that these Guidelines will deal with the international (political, legal and practical) consequences of a repeal of Regulation 4056/86 and of Regulation 954/79. However, the EESC as well as the European Parliament have repeatedly asked the Commission in their past opinions to analyse these consequences and take them into consideration when establishing a new regime in the future. The EESC therefore wishes to be consulted in due course on the draft Guidelines concerning the application of EC competition rules to maritime transport and to be given the opportunity to express an opinion thereon.

1.6

Whilst agreeing with the repeal of Regulation 954/79, the EESC fails to understand the urgency of proceeding to the repeal before the international repercussions of recent European policies relating to liner shipping are properly gauged and addressed.

2.1

The containerised liner shipping industry is a vital factor for the European economy. Container transport by sea accounts for around 40 % of EU-25 external in value terms. The worldwide largest three liner operators are European, and the routes connecting Asia and Europe, jointly with the routes connecting Asia and the USA, are by far the most important trade routes (1). Moreover, there are some 150 international liner conferences worldwide, 28 of which operate on routes to and from the EU. Member States with carriers operating scheduled liner services include, amongst others, Denmark, Germany, France, Italy, the U.K., the Baltic countries and Cyprus. According to the latest available data (2), 60 % of the overall value of international maritime trade and 25 % of the 5.9 billion tonnes transported by sea are carried by scheduled services, including liner conferences.

2.2

The current proposal aims to repeal Council Regulation (EEC) No 954/79 of 15 May 1979 concerning the ratification by Member States of, or their accession to, the United Nations Convention on a Code of Conduct for Liner Conferences. The present proposal is a result from the abolition of Regulation (EEC) No 4056/86 laying down a block exemption for liner conferences by virtue of Council Regulation (EC) No 1419/2006 of 25 September 2006. Regulation 1419/2006 also extends the scope of amends Regulation (EC) No 1/2003 to include cabotage and international tramp services.

2.3

The UN Convention on a Code of Conduct for Liner Conferences (Geneva, 6 April 1974) was drafted under the auspices of the United Nations Conference on Trade and Development (UNCTAD) with the aim of setting out a harmonised international framework for the operation of shipping conferences. The UNCTAD Liner Code was adopted to meet the legitimate aspirations of developing countries for greater participation of their carriers in the transportation of liner cargoes. It was the outcome of protracted multilateral negotiations between developed and developing countries (3). Its cargo sharing formula between carriers of countries at the two ends of the trade and carriers of third countries was devised to stem protectionist trends Regulation 954/79 aimed at making the Code mechanisms compatible with the principles of the EC Treaty.

2.4

Member States having ratified or acceded to the UNCTAD Liner Code include: Belgium, Bulgaria, Czech Republic, Denmark, Finland, France, Germany, Italy, Malta, Netherlands, Portugal, Romania, Slovakia, Spain, Sweden and the United Kingdom. Norway, an EEA member, has also acceded to the Code.

2.5

When discussing the repeal of the liner conference system in the EU, the European Parliament underlined in two opinions (2005, 2006) the following: ‘Enforcement of the Regulation (4) (repealing Regulation 4056/86) will create a conflict of law as regards the accession of certain Member States to the UNCTAD Code of Conduct for Liner Conferences. It is recommended that the Member States should withdraw from the Code, although they cannot be obliged to do so. In view of this situation, a clear-cut procedure needs to be put in place in order to deal with such conflicts of international law as might arise. The Commission should present to the European Parliament a transparent overview of the position of third countries (China, USA, Canada, Japan, Singapore and India) as regards the EU's new policy on liner services (acceptance, adjustment, opposition, negative effects) and their willingness to adapt their own systems. The Commission should investigate thoroughly the commercial and political implications of a denouncement of the UNCTAD Code. The Commission should examine whether it is necessary to amend or repeal other EC legislation, such as Regulation (EEC) No 4055/86 of 22 December 1986 applying the principle of freedom to provide services to maritime transport between Member States and between Member States and third countries (5)’. Moreover, the European Parliament ‘Calls upon the Commission (6) not to abolish Article 9 of Regulation (EEC) No 4056/86 (which provides for negotiations to be held in the event of a conflict between Community law and the law of third countries) especially in view of the Commission's intention to revise competition law in respect of maritime transport’. However, contrary to the recommendations of the European Parliament, Article 9 has been repealed altogether with Regulation 4056/86 whilst the requested thorough assessment of the legal and political impact of repealing the liner conference system in the EU seems to be lacking as yet.

2.6

The EESC also discussed the repeal of Regulation 4056/86 and adopted two Opinions thereon notably in 2004 and 2006. Furthermore, in 2006 the EESC reserved its position to see whether the proposed repeal of Regulation 4056/86 would have a sustainable effect. According to it, ‘the conference system is still subject to multilateral and bilateral agreements to which the EU Member States and the Community are contracting parties’. The EESC, also noted that ‘the Commission recognises that — as a consequence of these agreements, the date of repeal of the following provisions of Regulation 4056/86 (i.e. Articles 1(3), points (b) and (c), Articles 3 to 8 and 26) should be postponed for a period of two years, in order to denounce or revise these agreements with third countries’. The EESC believed that ‘the Commission should also take into account the interests of small and medium-sized businesses in repealing Regulation 4056/86. Small and medium-sized businesses constitute the backbone of the EU economy and they play an important role in the context of the revised Lisbon Strategy. Markets should remain open to the current and potential competition, including small and medium-sized shipping operators’. The EESC, finally, maintained that ‘although consolidation may have positive effects for EU industry (efficiency gains, economies of scale, cost savings), caution is needed to avoid that consolidation — which may follow from the repeal of Regulation 4056/86 — results in fewer players in the relevant markets, i.e. less competition’.

3.1

The proposed Regulation contains two articles only, i.e. Article 1, repealing Regulation 954/79 and Article 2 relating to the entry into force of the new Regulation, i.e. on 18 October 2008.

4.1

The EESC has followed closely competition rules for maritime transport and particularly the issue of liner conferences for over two decades and divergent views were thereby expressed as to the merits of a withdrawal of the block exemption for liner conferences. However, following the repeal of Regulation 4056/86 by virtue of Regulation 1419/2006, liner conferences to and from the EU will be prohibited as of 18 October 2008.

4.2

Regulation 4056/86 and Regulation 954/79 constitute a legal package with the latter being adopted due to the ratification of the UNCTAD Liner Code by certain EU Member States. Consequently, the repeal of Regulation 4056/86 has entailed the need to repeal Regulation 954/79. As a result, the EESC — which originally objected to the repeal of Regulation 4056/86 but later was compelled to accept it whilst warning about its repercussions — cannot but agree to the proposed repeal of Regulation 954/79 for the sake of simplification of EU legislation. Nevertheless, as with the repeal of Regulation 4056/86, the EESC would like to stress — once again — that serious consideration needs to be given to any possible legal and/or political repercussions (and potentially adverse effects) the proposed repeal of Regulation 954/79 might entail. However, the EESC notes that the proposal to repeal Regulation 954/79 seems to lack — once more — an assessment of potential political, legal and practical problems that might result from a repeal. Whilst the necessity for a repeal is not questioned, as it, is inevitable given the repeal of Regulation 4056/86, the EESC maintains the view and repeats one more that any possible repercussions thereof — political, legal and practical — should be properly addressed by the EU.

4.3

The UNCTAD Liner Code and the liner conference concept are mentioned in the acquis communautaire and in other legal instruments adopted by the EU. For instance, it forms the basis of Regulation 4055/86, Regulation 4058/86 (7) as well as Regulation 823/2000 on liner consortia. Furthermore, the Code is also specifically mentioned in some bilateral agreements, such as the EU/Russia Agreement (Art. 39(1)(a) and the EU/Algeria Association Agreement of 2005 (Art. 34 § 3).

4.4

When repealing Regulation 4056/86, the European Commission indicated that they would issue Guidelines in order to explain how EC competition rules apply to maritime transport, including liner shipping services. As regards such services, the Guidelines should assist liner operators after 18 October 2008 (i.e. the date by which liner conferences will be prohibited on trades to and from the EU) to carry out a self-assessment of their agreements under EU competition rules (i.e. Arts 81-82 EC Treaty). However, it remains to be seen whether these Guidelines will include solutions for any potential legal problems that would arise at the international level from a repeal of Regulation 954/79. For the time being, the EESC understands that the draft Guidelines are of a very general nature thereby, lacking the required legal certainty the shipping industry is expected to carry out a self-assessment. Moreover, it is understood that the draft Guidelines do not address the international implications of the repeal of Regulation 4056/86 or Regulation 954/79. The EESC therefore expresses the wish to be consulted in due course so as to closely monitor further developments and, if need be, to provide assistance and/or expertise in the drafting process of the final Guidelines.

4.5

The EESC believes that the key question to be addressed is whether the proposed repeal of Regulation 954/79 would also entails a legal obligation to denounce the UNCTAD Liner Code. The EESC notes that the European Commission did not examine this issue in the Explanatory Memorandum to the proposal to repeal Regulation 954/79. However, it is understood from the Commission that in its view, Member States which are Contracting Parties to the Code would not have a legal obligation to denounce the Code. In such case,, the legal landscape after the repeal of Regulation 954/79 would be as follows: EU Member States will not have to denounce the Code but they will no longer be able to apply it on trades to and from the EU. However, the Code will continue to apply in other continents. At the same time, EU Member States which have not yet ratified the Code will after 18 October 2008 no longer be in a position to do so, as it is explained in the Explanatory Memorandum to and stipulated in the fifth recital of the proposal to repeal Regulation 954/79. Consequently, if a Member State which is not a Contracting Party to the UNCTAD Liner Code would wish to accede thereto with an aim at safeguarding the interests of its liner carriers operating in non EU trades, this Member State would thus be precluded from doing so.

4.6

Against this background, the following legal paradox might arise after 18.10.2008: carriers of Member States that are a Contracting Party to the LinerCode but that do not denounce the Code would still benefit from the provisions thereof in relation to rights of crosstraders, outsiders as provided in Article 2 § 4(a) and (b) and Resolution 2. On the other hand, carriers of Member States that are not a Contracting Party to the Code and that will not allowed anymore to ratify or accede to the Code after 18 October 2008 would not benefit from its provisions. Consequently, the following questions arise: would it be possible to adopt a proposal which would include a discrimination between EU carriers, contrary to Art. 12 of the EC Treaty? Moreover, would such a situation not affect the competitiveness of EU businesses within Europe and/or worldwide, contrary to the renewed Lisbon Strategy? Would such situation not illustrate the need for a horizontal approach of EU policies, in particular transport and competition policies with regard to maritime transport, as envisaged by the Green Paper on a Future Policy for the Oceans?

4.7

The EESC strongly advocates the EU not to underestimate the international implications which would arise from the repeal of the liner conference system. The EESC notes that other jurisdictions are — time being — maintaining their anti-trust immunity systems. Some third country States have expressed concerns about the repeal of the liner conference system in the EU. In this respect, reference can be made to a recent statement of the Asian Shipowners Forum (Bussan, Korea 29.5.2007):

‘The members noted recent developments in Australia, China, Hong Kong, Japan and Singapore, but noted with concern the EU's decision to abolish its block exemption for liner conferences. The delegates affirmed the ASF's long-standing position that the antitrust immunity system is indispensable for the health of the shipping industry and its ability to encourage the investments needed to support the growing demands of international trade and the system benefits the whole trading industry. It was agreed that carriers should make continuous efforts to seek the understanding of related parties such as shippers and governments for the important role of carrier agreements in supporting trade. The ASF noted that ASF member Associations, KSA, JSA and SSA, in particular, made written submissions to the European Commission and the relevant bodies expressing their opposition against the abolishment of the anti-trust law immunity system; and, further, KSA, received a reply from the EC to the effect that it would eliminate the Regulation 4056/86 but plan to prepare an alternative while keeping intact the Consortia Regulation that is one of the two axes of the anti-trust immunity systems’. The EESC takes note of the statement of the Asian Shipowners' Forum as an illustration of the need to assess — or at least to give proper consideration — to the international impact of repealing the liner conference system in the EU on a worldwide basis and for a globalised economy, in line with numerous similar requests made by the EESC and the European Parliament.

4.8

In light of the above considerations, the EESC strongly believes that the present issue cannot be examined only through the competition law perspective. The political and maritime transport policy dimensions of repealing the liner conference system in the EU and thereby also of Regulation 954/79 cannot be underestimated. Therefore, the EESC fails to understand the urgency of the Commission proposal to repeal Regulation 954/79 since the international repercussions of the EU's policy on competition rules for maritime transport and in particular of repealing the liner conference system, have not yet been addressed properly, despite multiple requests thereto, including from the EESC.

5.1

Regarding the current status of ratifications of the Liner Code, the EESC notes that the Explanatory Memorandum to the Commission proposal to repeal Regulation 954/79 refers to thirteen EU Member States as Contracting Parties to the UNCTAD Liner Code, whilst — in reality — sixteen EU Member States are Contracting Parties to the Code following ratification by Romania, Bulgaria and Malta.

Regulation 954/79 provided certain reservations to safeguard the interests, inter alia, of third country shipping lines (cross traders). However, the proposal to repeal this Regulation does not provide for such safeguarding measures. In this respect, the liner shipping interests of EU carriers operating between other continents (where the Liner Code is applicable) should not be underestimated. It is also noteworthy that the UNCTAD Liner Code is ratified by 81 countries including the new ‘locomotives’ of world trade, i.e., China, India, Russia and Brazil (BRICS) as well as Indonesia, Mexico, Nigeria, Saudi Arabia, Australia, Canada, Japan and Singapore.