TRANSPORT - SPECIAL FEATURES

1. TRANSPORT - SPECIAL FEATURES •  Variety of modes involved •  Importance of social and environmental considerations •  Major implications for industrial costs •  Considerable infrastructural requirements •  Large state involvement •  Policy stance varies from country to country •  Difficulties in accurately assessing importance

2. TRANSPORT - SIGNIFICANCE • Key role in facilitating free movement of goods and services •  Size and scale of industry - linkages with other sectors •  Importance in terms of environment - responsible for 7% of community GNP (5% agriculture) - employs 6ml workers (1ml on railways) - involves 40% of public capital expenditure (11% private) - community owns 25% of world's fleet Ireland has an even greater dependence on transport (peripheral location) with heavier reliance on sea and air - 14% total household expenditure: over 60,000 directly employed (perhaps 150,000 in all)

3. TRANSPORT POLICY • Art 3(e) provides for inauguration of common transport policy •  Art 84 - provisions should apply to transport by rail, road and inland waterway - council to decide in due course if and how provisions should apply to air and sea • Requires common rules for all cross-border traffic (Article 75) •  Forbids discrimination in transport charges (Article 79) •  Calls for reductions in the costs of crossing frontiers (Article 81) •  Permits state subsidies for the coordination of transport or for public service obligations (Article 77) or as part of regional assistance Any measures concerning transport rates and conditions "shall take account of the economic circumstances of the carriers" (Article 80)

4. SCHAUS MEMORANDUM • A policy focusing on competitionThe establishment of a common market in transportThe pursuit of an active interventionist approach Council of Ministers failed to reach any consensus upon Memorandum or action Programme Commission prepared proposals in four areas1. The control of road and inland waterway transport capacity with the establishment of common rules of entry into industry - community quotas2. The adoption of a "forked tariff"3. To harmonise member states' technical, tax and subsidy regimes4. To co-ordinate investment in transport infrastructure and that each mode contributes fairly to the infrastructure cost it imposes Little progress made with proposals

5. CRISIS IN TRANSPORT • Little progress made in 60's and 70's - in Oct.'80, Commission proposed a list of 35 proposals to be implemented over next three years - failure to respond led European Parliament to instigate action against the Council under Article 175. In May '85, the ECJ issued a ruling agreeing with Parliament - this ruling and gathering momentum towards completion of SEM gave added urgency to the need for progress - subsequently in articles 129b-129d of Treaty on European Union, mention made of the trans-European transport networks. To achieve this objective requirtement to harmonise technical standards and contribute loan guarantees and interest rate subsidies to national programmes of common interest. Transport infrastructural projects are also eligible for support from Cohesion Fund that the Treaty established - Nouvelles Frontieres case very important in sparking a desire for change

6. OTHER ISSUES • Infrastructure - fixed capital of any transport system and includes the provision of ports, airports, roads and railway lines - attempt to identify state aids and subject them to community control e.g. standard establishing a standard accounting system for expenditure on infrastructure - Commission argued that prices should reflect marginal social cost (taking into account congestion, accidents, noise and pollution) Significant difficulties arising from such proposals which would have greatly increased costs e.g. roaf freight •  Finance and Investment Commission identified projects with important Community benefit for which finance would be made available (e.g. EIB and ERDF) - projects within a member state designed to eliminate bottlenecks in EU traffic - cross-frontier projects - projects fulfilling broad Community objectives - projects which standardise the EU transport network

7. ROAD FREIGHT MEASURES • Technical Measures - maximum weights and standards, safety measures   • Social Legislation - mutual recognition of driving periods etc. • Taxation - attempts to bring taxation more in line with each other • Community quota - increased by 40% each year from '87 - '92 • Abolition of remaining quota 1st Jan. 1993 - also abolition of frontier checks on goods crossing from one state to another • Cabotage introduced since Dec. '89 - still some limits apply • Easing of restrictions for international coach and bus passenger services

8. RAILWAYS • Have advantages in terms of energy saving, low use of space, safety and environment • Drop from 1/3 to 1/6 of total freight transportation since 1965 • Proposals for development of high speed rail network - TGV (French) and AVE (Spain) - ETR (Italy) • Global plan for railways - commercial operations, administrative procedures, improvement of finances, rail safety etc. • Development of combined road-rail transport • Facilitating activities outside national borders

9. SEA • 1/3 of internal trade and 90% of external trade carried by sea - tonnage halved between 1980 and 1988 due to competition • consultation procedures in shipping relationships with 3rd countries since 1977 • 1986 - proposals for gradual implementation of free movement of services and abolition of national preferences •  countervailing charges against unfair practices • 1989 - proposals to improve competitiveness - creation of community flag with advantages for those registering (i.e. cabotage rights) • Exceptions on shipping services to islands till '99 and Greece till 2004

10. INLAND WATERWAYS • Though declining in importance still significant in Central European countries with Rhine carrying 57% of freight • Overcapacity in sector due to fall off in heavy industry • National scrapping fund in each stae to reduce capacity of fleets • Ban on state aids for new vessels • Proposal on access to national markets by non-member states • Since january 200 the industry has been fully deregulated

11. AVIATION • Chicago Convention '44 - identified five main freedoms 1. The right to overfly states' territories 2. The right to land for technical reasons e.g. refuelling 3. The right to land to disembark passengers and cargo travelling from the country of the airline's registration 4. The right to pick up passengers and cargo for journeys to the country of an airline's registration 5. The right to transport goods and passengers between two countries other than the country of registration • Signatories of the Convention granted the first two rights to all other signatories, but the remaining rights were determined by bilateral agreements (e.g. the 1946 Bermuda Agreement between the UK and the US)

12. AVIATION (con) • IATA formed in 1945 • In 1989 of the 750 non-stop short haul flights in Europe, 71% had only one carrier and a further 24% only two - fares 45-75% above those in the US •  1979 - first clear commitment to competition - importance of charter airlines - growing liberalisation in US - regional initiatives - Nouvelles Frontieres case 1985

13. AVIATION (con) • 1st Aviation Package - 1987 - block exemptions for categories of agreements - measures to reduce capacity to fix fares (discounting allowed) - greater access in stages for new airlines (bi-lateral sharing additional airlines on routes on bilateral basis, fifth freedomrights) •  2nd Aviation Package - 1991 - extended block exemptions - commitment to end capacity sharing agreements •  3nd Aviation Package - 1993 - uniform criteria for air transport operators licence - EU opened to all licensed operators - Limited cabotage till 1997 (after which full cabotage) - all controls on fare levels removed - all controls on non-scheduled services removed

14. AVIATION (con) • Industry Restructuring - distortions from state subsidies remains - mergers - landing slots - air traffic control - air safety

15. IRELAND’S TRANSPORT INFRASRUCTURE • Problems - distance from major markets - isolation by sea - poor quality of infrastructure This leads to significantly higher transport costs for Irish operators • Heavy emphasis on transport in development plan of 90’s • Nearly £1bl earmarked for roads 1989 -93 • Access transport - airports, seaports, air and sea services • Inland transport Shuttle services • Implication of channel tunnel

16. 1992 WHITE PAPER • The integration of modes of transport so as to form aunified system • The integration of national transport networks into a coherent network structure - Certain social priorities - Transport volumes to rise 30% (1992 - 2000) - New links required - Channel Tunnel and high speed train services - Trans-European Networks