PROBLEMS OF THE EUROPEAN STEEL INDUSTRY

by Altiero Spinelli

SUMMARY: The European Parliament carries out a review - on the basis of motions for resolutions presented by the Socialist, Christian Democrat and Liberal Groups - (which long since became something of a periodical exercise) of the situation of the steel industry in the Community.

Spinelli kept a close watch on the problems in the industry throughout his term as Member of the Commission responsible for the Community's industrial policy. In "Speeches in European Parliament, 1976-1986", Pier Virgilio Dastoli Editor. (EP, 21 April 1977)

Mr President, when we speak of the steel crisis I do not think that we should lump everything together and consider the crisis in the steel sector as the same sort of crisis as those affecting, for example, the textiles and shipbuilding industries.

The steel industry is traditionally very sensitive to general production trends and, in comparison with other industries, fluctuates both upwards and down-wards in an extreme and often erratic manner.

In the present situation, obviously, the fundamental reason for the crisis in the steel industry is that it is caught up in the general recession affecting the entire economy. This, however, is basically a conjunctural crisis, There is a clear need for greater rationalization efforts now than were made during the years of plenty, but we should not be thinking in terms of giving a new dimension to the European steel industry in order to leave more space for other industries. We can be certain that there will be a recovery in steel production, both in Europe and other countries, because world economy which is constantly expanding will inevitably require growing quantities of steel.

If, for example, we consider that India is now producing half as much steel as France, we should also recall that India has 500 million inhabitants and that it is probable that in a few years' time it will be producing more than France; indeed, it is probable that the time will come when India will produce more than the entire Community as its internal requirements increase.

It is, however, obvious that rationalization measures are needed. We shall, nevertheless, have to approach the problem differently from how we tackled the coal sector, for example. In the case of coal there was an extremely long period during which consumption was reduced in favour of oil.

Today, of course, it can be said that we were rather short-sighted in what we did. However, while in the coal sector there was a trend towards reducing production and manpower, we should regard the situation in the steel sector as cyclical. The measures that are now called for should therefore be aimed at modernization, recovery and making the industry more competitive, although they should include conservation to help us overcome short-term difficulties.

In the longer term there may well be a case for adopting the Commission's scheme for requiring the iron and steel industry, during periods of high economic activity, when profits are high, to set aside funds - on their own account and not paying them to the Community or the State - which would be used for reorganizing the industry in more difficult times.

The Commission is today using all the means at its disposal in an attempt to master the situation. Nevertheless I feel that there are some things about which the Commission would do well to inform Parliament in detail in view of the fact that the iron and steel industry, in addition to being susceptible to violent fluctuation, also has a tendency to create monopoly situation and to defend them, in comparison with other industries extremely jealously. It is forced into these monopoly or cartel situations partly as a result of the extremis of the cylces it goes through and partly by the fact that it is an industry which can relatively easily fall into the hands of a limited number of owners.

The ECSC Treaty, on the one hand, makes the Commission responsible for ensuring that cartel or dominant position situations do not arise and, on the other, recognizes that there may be crisis situations, such as the present one, in which price and quantity controls may have to be authorized. But the Treaty lays down that these provisions can be invoked or withdrawn by the Commission and not by the industry itself or its organizations.

We are of course well aware - I noticed it when I was in the Commission and I am sure Mr Davignon will also have found it out - that many industrialists are extremely reticent about Community measures, preferring to take them themselves. They talk about the defence of liberty, competition, the independence of decision-making; what they actually want is private monopoly rather than public control.

Last year, in fact, if I am not mistaken, part of the Community steel industry tried to set up a major cartel. After the Commission had drawn attention to the dangers of this plan, a large association was set up comprising all the iron and steel industries - called Eurofer - and if my information is correct the Commission, in establishing minimum prices, made this organization itself responsible for ensuring that the prices were respected.

This really set the cat among the pigeons, which is why I think - without wishing to make any jugdment myself at this time, since I do not have all the necessary information - that the Commission would do well to submit to Parliament as soon as possible a report on this Eurofer organization, on its relations with the Commission, on the conformity or otherwise of this organization with the provisions of the Treaty and, in particular, with Article 65 of the ECSC Treaty, which calls for a watch to be kept on the creation of monopoly situations.

I have made this point in the form of an amendment to the motion for a resolution.