COMMON POLICY IN THE STEEL SECTOR AND INDUSTRIAL AID POLICY

by Altiero Spinelli

SUMMARY: The European Parliament considers Community action in the steel industry and in the industrial sector and in particular the implementation of financial measures proposed by the Parliament and accepted by the Commission in the 1978 budget. The debate focuses on a report by the Committee on Economic and Monetary Affairs and oral questions by Spinelli. "Speeches in European Parliament, 1976-1986", Pier Virgilio Dastoli Editor. (EP, 25 April 1979)

Mr President, Article 375 of the budget for the financial years 1978 and 1979 provides for an appropriation - not enormous, but still appreciable empowering the Commission to grant structural aid in certain sectors, and thus enabling it to carry out an industrial aid policy.

Now, it is an established rule of this Parliament - repeatedly expressed in Committee and in plenary session - that authorization by Parliament is enough, so that stricly speaking the proposed regulation is unnecessary. However, it seemed useful to our committee to base it in this case on Article 375 of the budget, so that the granting of such aids might have a stable legal basis. In this connection there is disagreement between the Committee on Economic and Monetary Affairs, of which I am the rapporteur, and the Committee on Budgets, which in giving its opinion to our Committee stressed the point which I have just explained, and concluded by rejecting the draft regulation precisely on the grounds that it is unnecessary.

As a concession to the views of the Committee on Budgets, while maintaining the position - which we are not authorized to change - of the Committee on Economic and Monetary Affairs, the committee chairman, Mr Pisani, and I have proposed an amendment which reaffirms Parliament's established rule, while admitting that in this case a regulation would be useful if not absolutely necessary. On the merits of the regulation itself, the starting point is essentially the observation - which I would call almost commonplace - that current changes in the international division of labour, resulting from various causes among others, the changes in price of some essential raw materials and changes in demand structure throughout the world - have aggravated the situation and even caused production surpluses in some sectors. To recover their competitiveness, these industries must therefore be restructured; in many cases this restructuring can involve a reduction of manpower and in some cases also a drop in production. For thi

s reason conversion measures are also necessary, so as to give workers the opportunity of finding employment in other undertakings. Restructuring and conversion measures, although they are fairly easy at times of economic growth when there is greater mobility of labour and it is easier to find capital, are rather difficult at times of stagnation or recession, under the terrible threat of unemployment and when it is more difficult to find investment capital precisely when it is required for financing restructuring measures. That is why all the member countries, to a greater or lesser, more or less legitimate, but still significant extent, follow a policy of state aids to promote and facilitate the necessary restructuring and conversion measures. Obviously a policy of this kind is not in itself sufficient. Such a policy is meaningful only if accompanied by a general policy of reviving the economy and stimulating new growth. This must be the final aim - although it is not the specific theme of this report - sin

ce otherwise very little would be achieved by a policy of mere restructuring.

In view of the existing level of interdependence among the Member States, the degree of harmonization in their policies, including their policy towards the rest of the world, the commitment of the Community to further integration of economic policies, and finally the need for these structural measures, an additional Community policy is necessary to prevent these measures from having an ultimately disintegrative effect on the economic system, with disastrous consequences for each Member State.

The Community, for its part, must continue to improve the Common Market, remove technical barriers, make public works contracts completely open and implement all the measures envisaged by the Treaty of Rome which have not yet been completely realized. But financial aid is also necessary to facilitate the convergence of the various policies on certain conversion and restructuring measures. To this end, it is useful - though not, I repeat, necessary - that the Community should have a permanent legal basis for these aids. The formula suggested by the Commission in its proposals is a budget item enabling it to grant interest rebates and investment premiums. This method seems suitable precisely because it mobilizies a certain amount of capital by the incentive which these rebates and investment premiums provide.

The Commission was right to vary the rates of the rebates. However, it seems to us that the rates it has fixed - normally 3 %, and 5 % for aids to especially disadvantaged regions or to small and medium-sized undertakings, is not the best formula, because it has the paradoxical effect that in the countries and situations and at the times when it is possible to obtain capital at low interest rates, a rebate of 3 % or 5 % is given, which in practice reduces to almost nothing or very little the rate of interest payable, whereas when there is a shortage of capital and interest rates are therefore high, the 3% rebate makes virtually no difference.

We therefore think the regulation should be amended so as to provide equitable conditions for industries which have to pay higher interest rates because their situation makes it more difficult for them to find capital. Otherwise we would be giving aids precisely to those whose need is less rather than those whose need is greater. The Commission, in its draft regulation, envisages that the sectors to benefit from aids should be chosen by the Council on a proposal from the Commission. We ask that the opinion of Parliament and of the Economic and Social Committee should also be sought.

Finally, the Commission proposes that an Advisory Committee be set up. We must acknowledge that this time the Commission has taken a small step in the direction demanded by Parliament since it proposes to consult the Advisory Committee on requests for rebates. If the Advisory Committee does not agree, the Commission is obliged to reconsider its decision. The practical role of an Advisory Committee is precisely this - to ring a warning bell, and advise further consideration.

On this aspect the Commission has at long last made the right proposal which we have long been awaiting. But when it comes to the measures to implement these guidelines, the Commission once more proposes an Advisory Committee which is such only in name, since in fact it has a veto. Indeed, the Committee can not only block the Commission's decision, but can even take it out of the Commission's hands by transferring the decision-making power to the Council. Parliament cannot accept this, and we therefore propose an amendment along the lines I have indicated.

We are pleased that the Commission is obliged to submit a report every year to the Council and Parliament. We think this report should not confine itself to indicating the extent of Community aids, but should contain a description and assessment of the size and type of structural projects carried out by Member States and the Community, so that in the light of these figures Parliament can work out the policy to be followed.

I should like to add that we think it necessary - and American and Japanese experience confirms this - to entrust the task of long-term analysis and research on restructuring problems to a technological forecasting unit - perhaps the European Communities Institute for Economic Analysis & Research, which has not yet come into being because of the Council's dilatoriness. In order to carry out restructuring properly, the Community and especially the Commission need to have such a research unit at their disposal.

We therefore urge the Commission to adopt the two fundamental amendments which I have put forward, and with this reservation we approve the Commission proposal.