31988Y0728(02)

Resolution of the ECSC Consultative Committee on the quota system (adopted at the 272nd Session held on 20 and 21 June 1988 by votes 62 for, 12 against and 9 abstentions) (88/C 198/05)

THE CONSULTATIVE COMMITTEE:

- after having taken note of the Commission's intention to propose to the Council of Ministers the abrogation of the application of Article 58,

1. recalls that:

- as to products of category I, an improvement in demand has, indeed, taken place from the second half of 1987 onwards both in the Community and in export markets although the level of demand which existed before the introduction of the quota system has not yet been reached.

However, it is feared that this improvement may only have a short or medium term effect.

Indeed, there is the risk of an inversion of this tendency, all the more so since certain exceptional situations due to which demand had increased to an exceptional extent are disappearing.

- as to products of categories II and III, demand continues to be absolutely unsatisfactory in spite of a temporary reduction in third country imports which had allowed for a partial increase in prices.

2. stresses that:

- as to products of category I, a structural capacity excess is persisting even if it is temporarily masked by a favourable development of demand.

- for products of categories II and III

- in spite of great efforts undertaken by the producers to reduce drastically and rapidly excess capacities

- the utilization rate remains absolutely unsatisfactory and is weighing on the financial results of the companies.

3. fears that in such a situation, the abrogation of the quota system proposed by the Commission:

- will cause an increase in deliveries with potentially severe consequences for prices if the market turns down.

- may slow down the current restructuring process which can only be carried out successfully inside regulated markets.

- may create conditions which increase the danger of public subsidies, more or less masked, being paid to various companies.

- may interrupt the producers' policy of self-discipline which is the basis for future cooperation and integration on Community level.

4. urges the Commission to take into account these observations and, in particular, the problems not yet solved with regard to restructuring, and to propose to the Council:

- to extend the present quota system for the products of categories II and III;

- to maintain a system of surveillance on the grounds of Article 46 for the products of category I in order to avoid the consequences listed in point 3 and to adopt an appropriate procedure to restore rapidly the elements of a system based on Article 58 should the Council decide to abrogate the present system;

- to reinforce all measures to avoid an increase of imports from third countries;

- to adopt all measures necessary to carry on the restructuring policy and to avoid negative consequences caused by remaining distortions in competition;

- subsidiarily, to envisage putting into cold storage the quota system which could be reactivated in the event of a change in economic trends.

5. stresses the fact that, very often, the restructuring process implies decisions which are linked to social and regional problems for which the political organisms, rather than the producers, are responsible.

In the past, the Council has acknowledged this matter of fact.

6. asks that the Commission and the governments consider the strategic interests of the Community steel industry rather than short term solutions which are not justified by the actual development of facts.