Opinion of the European Economic and Social Committee on the ‘Proposal for a directive of the European Parliament and of the Council establishing a Single European Railway Area’

COM(2010) 475 final — 2010/0253 (COD)

and the ‘Communication from the Commission concerning the development of a Single European Railway Area’

COM(2010) 474 final

2011/C 132/20

Rapporteur: Mr HENCKS

On 4 October 2010, the Council decided to consult the European Economic and Social Committee, under Articles 91 and 304 of the Treaty on the Functioning of the European Union, on the:

Proposal for a Directive of the European Parliament and of the Council establishing a Single European Railway Area

COM(2010) 475 final — 2010/0253 (COD) and the

Communication from the Commission concerning the development of a Single European Railway Area

COM(2010) 474 final.

The Section for Transport, Energy, Infrastructure and the Information Society, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 1 March 2011.

At its 470th plenary session, held on 15 and 16 March 2011 (meeting of 16 March), the European Economic and Social Committee adopted the following opinion by 168 votes to 21 with 13 abstentions.

1.   Recommendations

1.1   The EESC endorses the intention in the proposal for a recast directive for the first railway package of reducing differences in interpretation of legislation and eliminating the deficiencies of certain provisions in the body of railway legislation. However, the recast directive does not just amend existing provisions but also contains a substantial number of new regulatory provisions.

1.2   The EESC notes that the purpose of legislation on the Single Railway Area is to create a European railway area that is able to compete (sustainably) with other modes of transport. The EESC therefore supports all new provisions that serve this objective, while still having certain reservations about provisions that go beyond or fall very short of it.

1.3   The EESC regrets the fact that the proposal does not address either interoperability (although establishing a single European railway area is heavily dependent on progress in technical interoperability) or imbalances in the management of railway traffic, which frequently prioritises passenger trains at the expense of freight.

1.4   During a time of considerable budgetary constraints it will be necessary to find new sources of funding for railway infrastructure. Given that most funding from the European structural and social cohesion funds is earmarked for road infrastructure, while TEN-T funding is directed mainly at rail, the EESC can endorse the setting-up of a single transport fund only if that fund is neutral and ensures a level playing-field with respect to all transport modes. The EESC would like to see this funding explicitly provided for in the review of cohesion policy post-2014.

1.5   As regards other sources of funding, the EESC refers to proposals 15 and 16 of the communication Towards a Single Market Act, and also recommends exploring the option of setting up a compensation fund similar to those already existing in various network industries.

1.6   The EESC deplores the delay in creating the conditions to ensure a level playing-field between rail and other transport modes, and the absolute inadequacy of measures to internalise the external costs and effects of transport by taking external social costs into account when setting tariffs.

1.7   As regards conditions of access to railway service facilities, the EESC cannot endorse any requirement of legal, organisational and decision-making independence that would jeopardise current structures which cannot be replaced.

1.8   Nor can the EESC approve of provisions contained in the annexes of the proposal for a recast directive that are clearly essential being amended by the Commission through delegated acts.

1.9   Finally, the EESC considers that absolute priority should be given to general implementation of the European signalling and traffic management system (ERTMS) in conjunction with the European Train Control System (ETCS).

2.   Progress with legislation on the European Railway Area

2.1   The EU has been rising to the challenge of creating a single railway area that can compete (sustainably) with other modes of transport since the first directive of 29 July 1991 on the development of the Community's railways (91/440/EEC), which was followed by a White Paper entitled A strategy for revitalising the Community's railways.

2.2   Directive 91/440/EEC (subsequently amended and consolidated) deals with the management of railway infrastructure and all international rail transport services, both freight and passenger, by railway undertakings established or to be established within the Union, with the exception of undertakings whose activity is limited to the provision of solely urban, suburban or regional services.

2.3   The EU considers the common transport policy to be a cornerstone of the single market and is concerned to promote rail transport, emphasising its competitive advantages against other modes of land or air transport, notably with respect to energy consumption, pollution, environmental impact and safety. This is based on two principles:

The first railway package, in 2001, was followed by two further packages and a large number of directives and recommendations.

3.   Transposition of European legislation into national law

3.1   Significant problems and delays occurred in many Member States with the transposition into national law of the directives in the first railway package, which according to the Commission was not implemented or implemented only incompletely and incorrectly. The Commission initiated infringement proceedings in June 2008 against 24 of the 25 Member States concerned (Malta and Cyprus do not have railway networks).

3.2   Further to three Member States amending their national legislation, in October 2009 the Commission sent three reasoned opinions to 21 of the Member States concerning the outstanding infringements. On 24 June 2010, the Commission decided to bring proceedings before the Court of Justice of the European Union against 13 Member States, while clarifications were provided for the remaining eight Member States in receipt of a reasoned opinion.

3.3   The Commission laments above all the unfair competition situation resulting from the setting of access charges that are considered too high, discriminatory allocation of network capacity, the (historically) dominant position of network managers also operating rail services, and the lack of independent regulatory bodies.

3.4   However, the Commission recognises that development of free competition in the rail sector is also hindered in part by the ambiguity of the body of rail legislation and the weakness of certain provisions that require clarifications and adjustments to reduce differences in interpretation between the Member States.

4.   Gist of the Commission's recast directive

4.1   The proposal for a recast directive for the first railway package is intended to simplify and consolidate existing legal texts, eliminate cross-references, harmonise terminology and resolve problems relating to international passenger and freight transport, including cabotage.

4.2   The proposal for a recast directive also contains new provisions, of which the most important are:

5.   General comments on the recast directive

5.1   As the Commission correctly notes in its Communication Towards a Single Market Act (COM(2010) 608), transport is the ‘nervous system’ and one of the key pillars of a modern economy in terms of its capacity to convey goods and passengers as smoothly as possible to where they need or want to be at a given time.

5.2   However, this proposal for a directive does not address the imbalance in the management of railway traffic, where priority is often given to passenger trains. In this context, the EESC points to its proposals for introducing more flexibility in the allocation of train paths to freight. (1)

5.3   In its opinions the EESC has always supported the Union's efforts to establish the basic conditions for an efficient European rail passenger and freight transport sector that gives travellers, users and operators a service which is reliable, safe, sustainable and accessible, with transparent, competitive and affordable prices.

5.4   The EESC continues to believe that there are development opportunities for rail transport in a context of increased trade, road congestion and the increasingly pressing concern to protect the environment and reduce greenhouse gas emissions in the transport sector.

5.5   However, it is only too apparent that the directive under discussion, though it contains an impressive legal toolkit, falls far short of the objective of creating a European railway area that can strengthen its position in relation to other modes of transport.

5.6   After a long period of decline, the modal share of rail compared with other modes of land transport has stabilised somewhat during the last ten years, although the pace of change varies widely between the Member States. Only services on the high-speed networks can be claimed to have developed significantly, with the introduction or planned introduction of additional lines and an increase in the number of operators.

5.7   As far as freight is concerned, in the absence of a properly integrated network, operators must rely on the 15 existing or planned ‘international freight corridors’ (2) linking the main industrial regions of the EU, which provide an effective operational solution, though one that is limited to the international corridors.

6.   Problems and obstacles associated with developing the railway network and rail services

6.1   The railway network has not managed to meet customer expectations and quality requirements to the extent that it has been able to compete effectively with other transport modes, particularly in terms of prices, flexibility, journey times and punctuality. However, transforming existing structures to meet future requirements is not easy and has proven to take longer than expected. Therefore further measures are needed to promote the development of an effective EU rail infrastructure, establish an attractive rail market, remove administrative and technical barriers and ensure a level playing field with other transport modes.

6.2   The Committee notes that 24 of the 25 Member States have been, or still are, having problems transposing into national law EU railway legislation which they have previously approved. Of course, it falls to the Court of Justice where necessary to rule on whether a Commission complaint is well-founded. It is all too easy to blame network and rail service development problems on the suspected protectionist concerns of the Member States. The Committee believes that there are certain to be other underlying issues.

6.3   Rail infrastructure has the characteristics of a natural monopoly. It is important that this infrastructure be subject to real public control and that it have the requisite capacity and provision for cross-border coordination so as to allow seamless transport services throughout Europe and with neighbouring countries. Rail transport services also require an effective balancing between economic, social, labour, safety and environmental conditions on the one hand and economic and competition conditions on the other.

6.4   Moreover, the national policies of the Member States are more sensitive to the fears and grievances of the general public, since ‘the sense of disillusionment felt by some towards the internal market may also be the result of the perception that successive liberalisations have been carried out at the cost of the social rights acquired by various economic operators’, as the Monti Report puts it.

6.5   The provisions of the Treaties (i.e. Article 14 and Protocol 26 TFEU) and secondary legislation on services of general interest, as well as Article 93 TFEU, apply to transport in general, whereas Regulation 1370/2007 specifically concerns rail and road passenger transport services. The EESC deplores the Commission's failure to explicitly refer to these provisions and situate the sectoral issues of rail transport within this general dimension.

7.   Specific comments

7.1   Infrastructure financing

7.1.1   Establishing a single railway area depends not just on political will and the business dynamism of railway undertakings, but also on extending and modernising the network, replacing obsolete equipment, removing bottlenecks, ensuring technical interoperability, extending and harmonising security systems, etc., which require major investment in the network that cannot be expected to bring financial returns until very far into the future.

7.1.2   In the current economic climate of required public deficit reduction and budget balancing in Europe, Member States' latitude with regard to public investment is very limited, which also discourages private investors.

7.1.3   Investor interest is consequently focused mainly on the profitable infrastructure of high-speed networks and trans-European freight networks, while conventional rail transport is relatively neglected.

7.1.4   The draft directive would require the Member States to publish a rail infrastructure development strategy with a view to meeting future mobility needs based on sound and sustainable financing over a period of at least five years. Based on this strategy, the infrastructure manager in turn must adopt a business plan that includes investment and financing programmes. The regulatory body for the railway sector is required to issue a non-binding opinion on the business plan.

7.1.5   In addition, the Member States concerned are required, jointly with the existing publicly owned railway undertakings, to introduce appropriate mechanisms to help reduce the indebtedness of such undertakings to a level which does not impede sound financial management and to improve their financial situation.

7.1.6   The EESC welcomes the obligation for the Member States to introduce a multiannual programme of medium- and long-term investment in railway networks that would give managers and operators the planning certainty and flexibility that they need. However, the EESC believes that this obligation should be supported by new sources of funding, otherwise there is a risk that it will have no impact. The EESC would like to see such funding explicitly provided for in the review of cohesion policy post-2014. Given that most funding from the European structural and social cohesion funds is earmarked for road infrastructure, while TEN-T funding is directed mainly at rail, the EESC can endorse the setting-up of a single transport fund only if that fund is neutral and ensures a level playing-field with respect to all transport modes.

7.1.7   The EESC endorses the principle of multiannual contractual agreements (link between financing and outcomes, business plans) required under the draft directive, but considers the content of such agreements to be subject to the subsidiarity principle. These agreements should also contain provisions to ensure that cost savings are passed on to users in the form of lower tariffs.

7.1.8   In addition, the EU would not be able to require a Member State to select certain partners, in this case the regulatory body for the railway sector, to given an opinion on its investment programme, or to have that regulatory body check that the budget envelope envisaged for achieving infrastructure performance targets is adequate, or to produce documentary evidence if it is not following the recommendations of the regulatory body.

7.1.9   Public-private partnerships can be used to mobilise at least some long-term investment, subject to legislation being in place that creates a favourable EU framework for such partnerships, and provided a balance is struck between the diverging interests of public and private investors and that, in the interests of public service and safety, railway infrastructure assets remain public property.

7.1.10   In order to find adequate sources of funding, the EESC would consider it appropriate to discuss investment incentives in relation to proposals 15 (encouraging the creation of project bonds to finance European projects) and 16 (explore measures with the potential to encourage private investment – particularly in the long term – to make a more active contribution towards achieving the objectives of the Europe 2020 Strategy) in the communication Towards a Single Market Act.

Another source of railway infrastructure funding could be created by setting up a compensation fund along the lines of the one provided for under the postal directive, to which all users of the railway network would contribute, on terms to be fixed.

7.2   Internalising external costs and effects

7.2.1   Rail transport calls for initiatives coordinated between the EU, the Member States and subnational authorities to promote it in all cases where its comparative advantages can be realised.

7.2.2   In this respect, the Commission is right to emphasise the need to ensure ‘a level playing field with other transport modes’, in particular based on ‘measures to internalise the external costs of transport in a coordinated and balanced manner across modes so that the charges reflect the level of the external cost imposed on society at large’. However, the Commission proposals fall far short of the EESC's recommendations. (3)

7.2.3   The internal market and competition issues must be addressed first and foremost in the context of this intermodal competition, rather than just within the railway sector.

Until tariffs for using transport infrastructure reflect external, environmental and social costs, competition will be distorted to the detriment of rail transport.

7.2.4   The EESC is disappointed that although internalisation of environmental costs was recommended in the White Paper European transport policy for 2020: time to decide, a decision has not yet been taken on the matter.

7.2.5   To encourage railway undertakings to invest in more sustainable rail technologies, the proposal for a directive would introduce differentiated network access charges based on the noise emission characteristics of rolling stock.

According to the Commission (although this is not stated specifically in the proposal for a directive), this differentiation of charges will be applied by lowering access charges for companies that reduce the noise emissions of their rolling stock. Although this measure is commendable, the EESC nevertheless considers that it should only be applied if also compulsory (not merely optional) for other transport modes.

7.2.6   The EESC obviously welcomes this as a first step in the right direction, but fears that the impact in terms of reducing distortion of competition will be limited unless Member States are required, in accordance with the draft ‘Eurovignette’ directive, to apply not just an infrastructure charge but also a charge for all external costs.

7.3   Management of railway undertakings according to commercial principles

7.3.1   Under the draft directive, if a Member State directly or indirectly owns or controls a railway undertaking, its controlling rights in relation to management are limited to general policy and may not interfere with specific business decisions of the management.

7.3.2   The EESC considers that the directive should not make assumptions about the supervisory powers of management boards, given that, as shareholders in railway undertakings, Member States should have neither more nor fewer controlling rights than any private shareholder.

7.4   Conditions of access to services

7.4.1   Companies with a dominant position must be organised in a way that ensures their independence in legal, organisational and decision-making terms in order to guarantee non-discriminatory access to service facilities, i.e. stations (passenger stations, marshalling yards, train formation facilities, storage sidings), freight terminals, maintenance and technical and towing facilities, etc. operated by such companies.

7.4.2   The EESC regards such a requirement with respect to legal, organisational and decision-making independence as disproportionate in relation to the objective of non-discrimination; it jeopardises current activities and structures that could not be replaced.

7.4.3   The EESC believes it would be enough to require compliance with the current rules obliging operators of such service facilities to guarantee non-discriminatory and transparent access. This provision is more than adequate, since the controlling authority only intervenes in cases of non-compliance with the relevant legislation.

7.4.4   The EESC points out that the purpose of providing public financing for these service facilities was to meet public needs. Access to such services should therefore only be provided if it serves the public interest and in cases where the service facilities receive public funding.

7.5   Market surveillance

7.5.1   Under Article 14 of the draft recast directive, cross-border agreements between Member States must be notified to the Commission, although it is not specified which agreements are intended. The EESC would like the directive to specify that public service contracts are not referred to here.

7.5.2   The proposal for a directive would also give the Commission the power for an indeterminate period of time to adopt delegated acts allowing amendment of the provisions contained in the annexes to the directive.

7.5.3   Since some of the annexes cover certain essential points, whereas the Treaty only authorises use of a delegated act to supplement or amend non-essential elements of a legislative act, the EESC considers that the ordinary legislative procedure provided for in the EU treaties should be used here.

7.5.4   The basic principles of contractual agreements between competent authorities and infrastructure managers set out in Annex VII of the proposal for a directive include the principle that the contract should specify the rules for dealing with cases of major disruptions of operations, including a minimum service level in the case of strikes, if any.

7.5.5   So as to avoid any uncertain interpretation of national labour law in the Member States or any suggestion of encroachment on that law (and consequent breach of the subsidiarity principle), the EESC recommends stipulating that this denotes a minimum service in those Member States where such a service is provided for under national legislation.

8.   Gist of the communication on the Commission's rail strategy 2011-2015

8.1   The communication presents the Commission's railway strategy and further initiatives that it could take over the next five years, including:

9.   Comments on the communication on the rail strategy 2011-2015

9.1   Absolute priority should therefore be given, in the EESC's view, to general implementation of the ERTMS system in conjunction with the European Train Control System (ETCS). Since implementing this system will require substantial investment, financing through the European funds will be required.

9.2   The communication notes: ‘Since a very large part of domestic passenger services is provided under public service contracts, the Commission will also examine the conditions for awarding public service contracts for rail transport in Member States. An evaluation of the current practices under Regulation (EC) No 1370/2007, which entered into force in December 2009, is already underway.’

9.3   The EESC is surprised at the Commission's decision to evaluate a regulation that has only been in force since 3 December 2009 and which is only partially applicable because it contains many transitional provisions. The Commission's haste here must be considered a cause for concern, in view of the fact that it accepted certain clauses of Regulation 1370/2007 only after lengthy and difficult discussions with the European Parliament and the Council.

9.4   In view of this, the EESC calls for the provisions of Article 8(2) of Regulation 1370/2007/EC to be respected and for the Commission to produce a report on the implementation of that Regulation within six months of 3 December 2014. Any corrections should be made on the basis of that report.

9.5   The EESC points out that competition is not an objective per se, but a means of meeting objectives set by the EU. The treaties stress the need to reconcile competition rules with objectives of general interest. A detailed analysis is therefore required not just of the ‘rail market’ but also of the sub-markets it comprises, which have different features and may require different rules according to, among other things, their local, regional, interregional, trans-European, passenger and freight particularities (cf. Protocol 26). The specific nature of rail transport may also necessitate initiatives relating not to competition, but to cooperation between railway undertakings.

(1)  OJ C 27, 3.2.2009, p. 41.

(2)  OJ L 276, 20.10.2010, p. 22.

(3)  See OJ C 317, 23.12.2009, p. 80.