The European Scrutiny Committee has made further
progress in the matter referred to it and has agreed to the following
POLITICALLY IMPORTANT: FOR DEBATE
COMMUNITY POSTAL SERVICES
Draft Directive amending Directive 97/67/EC with regard to the further opening to competition of Community postal services.
||Articles 47(2), 55 and 95 EC; co-decision; qualified majority voting
|Basis of consideration:
||SEM of 8 December 2000 and Minister's letter of 15 January 2001
|Previous Committee Report:
||HC 23-xxviii (1999-2000), paragraph 10 (1 November 2000)
|Discussed in Council:
||22 December 2000|
||For debate in European Standing Committee C
1.1 Directive 97/67/EC established a harmonised
regulatory framework for the Community postal sector. It also
defined the process for further liberalisation of the postal market,
including a decision on the next step to apply with effect from
1 January 2003.
1.2 On 1 November 2000 we reported on a
Commission proposal setting out two liberalisation steps, the
first in 2003 and the next in 2007. The Commission's intention
was that liberalisation should be regulated in such a way as to
ensure the continued provision of a universal service at a uniform
tariff. Under the 1997 Directive, the provision of a universal
service is protected by so-called reserved area limits in which
a single universal provider can enjoy a monopoly. The 1997 reserved
area limits included an upper weight limit of 350 grams and a
price limit of five times the price of the fastest standard tariff
for any item in the first weight step.
The 1997 Directive opened up about 3% on average of the postal
revenues of public operators in the EC letters market providing
universal services. The Commission's new proposal would reduce
the weight limit to 50 grams and the price limit to two and a
half times the fastest standard tariff for the first weight step.
The Commission estimated that this would open up about 16% of
the protected markets to competition. It proposed a further review
between 2003 and 2007, leading to further liberalisation (undefined)
from 2007 onwards. In our Report, we noted that the new Postal
Services Commission (POSTCOM) had a mandate to come forward later
this year with proposals for the further liberalisation of the
UK postal services market, consistent with maintaining universal
service. The Government told us that it had asked POSTCOM to advise
on the reduction in limits for the restricted service which could
be achieved without putting at risk the universal service at a
uniform tariff. Pending that advice, the Government considered
that the weight limit reduction should not go below 150 grams.
1.3 In our Report, we recognised that this
proposal raised sensitive political and social as well as commercial
considerations and indicated that we were disposed to recommend
a debate. We deferred a final decision until our sister Committee
in the Lords had completed its enquiry into the Commission's proposal.
The Lords Committee published its report on 18 December 2000.
We were also aware that the proposal would be discussed at the
Telecommunications Council on 22 December. We asked the Minister
to let us know the views of other Member States and to address
a number of questions we raised. We also asked to see a copy of
the Regulatory Impact Assessment.
The Government's response
1.4 In his Supplementary Explanatory Memorandum
of 8 December 2000, the Parliamentary Under-Secretary of State
for Competitiveness at the Department of Trade and Industry (Mr
Alan Johnson) responded to our request.
1.5 The Minister confirmed that any further
liberalisation of postal services would have no implication for
the status of the Post Office as a public organisation. He noted
that there was no correlation between post office ownership and
liberalisation; for example, the Swedish and Finnish post offices
which operate in fully liberalised markets continue in public
ownership. He recalled that the Postal Services Act 2000 gave
powers to the new Postal Services Commission to ensure the universal
service and to license postal operators within a reserved area.
This, he said, would ensure a level playing field between all
universal service providers. His comments on our other questions
are set out below.
"Cost of postal services for individual consumers.
The Committee also noted that full liberalisation in Sweden, whilst
not affecting the dominant position of the Swedish Post Office,
has coincided with significant real increases in costs, particularly
for domestic consumers (compared to a fall in real costs in the
UK over the same period). It has to be noted that some of the
increase in postal tariffs for consumers in Sweden arose from
the introduction of 25% VAT on postal services. The Postal Services
Commission is looking closely at the experiences of other countries,
including Sweden, in determining its approach to liberalisation
where its primary objective is to promote the interests of consumers
and to maintain the universal service at a uniform tariff. They
will also be looking at a price control regime for postal services
in the UK, drawing on the experience of regulators of other utilities.
"Impact of reduction in reserved area on
the universal service. The Committee also commented on oral
evidence from the Postal Office to the Lords Committee which said
that a weight reduction for the universal service limit to 50
grams would open up to competition about 30% of its business in
volume and 40% in revenue, with a potential loss of revenue of
about £350 million and expressed concern about the effect
that might have on the discharge of its universal service obligation.
It is because of these concerns that we are looking to the Postal
Services Commission to advise on the best way forward within the
UK market to ensure the scope and timing of liberalisation is
such that consumers have the full benefits without the universal
service being undermined.
"Compensation funds. The Committee commented
that the Post Office did not consider the proposed use of compensation
funds (to be paid for by competitors in the universal service
area) would be practical. Current European legislation provides
for licensing regimes outside the reserved area and allows for
compensation funds to be introduced to support the universal postal
service. However in the UK the market outside the reserved area
is fully open to competition and the Government is not convinced
that compensation funds will be practical in the UK postal market
or an effective alternative to the mechanism of a reserved area.
"Views of other Member States. The Committee
asked about the views of other Member States. Those generally
in favour of the Commission's proposals or of even more rapid
liberalisation are Finland, Sweden, Denmark, Germany, Netherlands,
and Austria. Those that favour a more gradual approach are France,
Greece, Luxembourg, Spain, Portugal, and Italy. Ireland and Belgium
have been less specific in their views of the detail of the proposals."
1.6 The Minister also enclosed a preliminary
Regulatory Impact Assessment. This document reiterated that, whilst
the Government accepted that a reduction of the reserved area
limits to 150 grams in 2003 was unlikely to impact adversely on
the universal service, it would want to have advice from the Postal
Services Commission before going further. It noted that the Postal
Services Commission was undertaking wide-ranging consultations
with businesses and organisations, which were not yet complete.
1.7 The Minister also wrote to us on 15
January 2001 about the outcome of the Telecommunications Council
on 22 December. He says that:
"There was a substantive debate about how to
reduce the limits to the reserved area for post. Discussion focused
on Presidency proposals that sought to reconcile the original
draft Directive from the Commission, the different views of Member
States and the opinion of the European Parliament. One of the
key areas of contention was whether it was possible to set now
a date and timetable for full liberalisation of the postal market.
The Presidency concluded that an agreement was not yet possible
and discussions will therefore continue under the Swedish Presidency".
1.8 In our earlier report, we noted the
wide division of opinion on the Commission's proposal. In that
connection, we note not only the views of a number of Member States
but also that the European Parliament is very strongly opposed
to the Commission's proposal to reduce the weight limit to 50
grams because of the perceived risk to the universal service and
the potential social consequences (for example, putting at risk
the maintenance of accessible and affordable services in rural
areas). The EU's Economic and Social Committee reached a similar
view. On the other hand, those Member States which have already
embarked on liberalisation take a different view about the risk
and support the Commission's approach. We note that it was not
possible to reach agreement on various compromises at the Telecommunications
Council, including a limit of 150 grams which the Government has
told us it would regard as acceptable. The evidence submitted
to our sister Committee in the Lords during their inquiry on this
proposal showed a similar sharp division. At a more technical
level, we are also aware of disagreements about the right approach
to assessing the possible financial impact on traditional providers,
such as the UK's Post Office, which could result from further
liberalisation. The Government itself said to the Lords Committee
in its evidence that it was unable to state what the financial
impact would be on the Post Office of a reduction to 150 grams.
1.9 Other areas of the Commission's proposal
are also contentious for example, its proposal relating
to allowing operators providing "special services" to
compete within the reserved area limits. The Post Office clearly
thinks that this development would create a "Trojan horse"
with the potential of undermining the provision of a universal
service. We note that our sister Committee in the Lords did not
share that view.
1.10 We appreciate the problem facing
the Government in reacting to the Commission's proposal, or possible
compromises, when it is waiting for the comments of the Postal
Services Commission, which we understand may not be available
until later in the year. It will now be for the Swedish Presidency
to take forward the discussions on the Commission's proposal.
Sweden is a strong advocate of rapid liberalisation. We recognise
that there will be strong views in the House as elsewhere over
this proposal. In general, the Government has been a strong advocate
of liberalisation in areas of traditional state provision, but
we can understand why it has concerns about such a development
in postal services. We note the importance the Government has
attached, as part of its wider agenda, to maintenance of the rural
sub-post office network and its commitment to the provision of
universal banking services linked to that network. We accordingly
recommend the proposal for debate in European Standing Committee
C. Such a debate should help to ensure that the Government is
aware of the range and strength of opinion on this subject. It
will also provide an opportunity to explore some of the related
issues, such as:
- the right approach to be taken to costing
the possible impact on the Post Office of any further liberalisation
step (different approaches produce quite radically different outcomes);
- the perceived risk in the Commission's proposal
regarding special services; and
- the arguments about the timing and procedure
of any further liberalisation after 2003.
ESTABLISHMENT OF PERMANENT CESDP BODIES
Council Decision setting up the Political and Security Committee.
Council Decision on the establishment of the EU Military Committee.
Council Decision on the establishment of the EU Military Staff.
||Article 28(1) EU and Article 207 EC
||Foreign and Commonwealth Office
|Basis of consideration:
||Minister's letter of 19 January and EMs of 22 January
|Previous Committee Report:
|Discussed in Council:
||7-9 December 2000
||For debate on the Floor of the House (with the Presidency Report on Common European Security and Defence Policy)
2.1 On 9 February 2000, we cleared three
draft Council Decisions establishing the three interim bodies
associated with strengthening the Common European Security and
Defence Policy (CESDP).
These three bodies, the interim Political and Security Committee,
the interim Military Body and the interim Military Staff, were
established in March 2000.
Presidency Report on Strengthening the CESDP
2.2 On 28 November 2000, the Minister of
State at the Foreign and Commonwealth Office (Mr Keith Vaz) submitted
an Explanatory Memorandum on a draft of this Presidency report
which included draft texts on the establishment of the three bodies.
We cleared it on 29 November.
The Presidency Report was agreed at the Nice European Council.
The Minister's letter
2.3 The Minister wrote on 19 January saying
that there had been pressure for swift implementation and that
the Swedish Presidency was aiming to get agreement at the 22 January
General Affairs Council on three Decisions establishing the three
bodies. These are be known as the Political and Security Committee
(PSC), the European Union Military Committee (EUMC) and the European
Union Military Staff (EUMS).
2.4 The Minister says that:
"The Government is eager to support the strengthening
of the common foreign and security policy and the common European
security and defence policy. These draft Decisions reflect the
objectives of what was originally a United Kingdom initiative,
and the Government welcome them. I hope you will understand therefore
that the Government will find it difficult to argue in isolation
against the adoption of the Decisions for the length of time normally
needed for Parliamentary scrutiny, and, since the legal base of
the Decisions provides for them to be agreed by simple majority,
that is therefore best to agree it at this month's General Affairs
The Council Decisions
2.5 The Minister notes in his letter that
the Presidency report included detailed recommendations on the
role and functions that the bodies might take on in their permanent
form. These roles and functions, defined in the annexes to the
Decisions, which implement them, are taken from the Presidency
report. The Minister describes them and comments on them as follows:
The Council Decision on the Political and Security
"This Decision creates the Political and Security
Committee, replacing the Interim Political and Security Committee,
as the main forum for the preparation of advice to the General
Affairs Council on common foreign and security policy matters."
2.6 It makes clear that the Committee:
" will deal with all aspects of the
common foreign and security policy, including the common European
security and defence policy;
" will draw up opinions for the Council
to help define policy;
" provide guidelines to other Committees
on matters falling within the common foreign and security policy
" receive the opinions and recommendations
of the Military Committee and the Committee for Civilian Aspects
of Crisis Management; and
" take responsibility, under the
auspices of the Council, for the political direction of the development
of military capabilities.
"In the event of a crisis, the Committee will
examine all the options which may be considered as the European
Union's response, and propose to the Council the political objectives
to be pursued by the European Union and recommend a cohesive set
of options aimed at contributing to the settlement of the crisis.
The Committee will also exercise the political control and strategic
direction of the European Union's military response to a crisis.
"The draft Treaty of Nice envisages a new legal
basis for the Political and Security Committee, and for the Committee
to take relevant decisions on the political control and strategic
direction of a crisis management operation. This provision will
not enter into force until the draft Treaty of Nice has been ratified
by all Member States".
Council Decision on the European Union Military
2.7 The Decision provides for the mission
and functions of the Committee to be those defined in Annex IV
to the Presidency report, which is attached to the Decision. Its
mission is to provide the PSC "with military advice and recommendations
on all military matters within the EU. It exercises military direction
of all military activities within the EU framework." This
includes military direction to the European Union Military Staff
2.8 The EUMC is to be "the source of
military advice based on consensus". The Decision states
that "It is the forum for military consultation and co-operation
between the EU Member States in the field of conflict prevention
and crisis management."
2.9 The EUMC will act within guidelines
from the PSC, particularly with regard to a number of its functions
specified in the Annex. These include the EU's military relationship
with non-EU European NATO Members, the other candidates for accession
to the EU, other states and other organisations, including NATO.
2.10 The Decision will enter into force
from the date of its adoption but will be applicable from the
date at which the Chairman is appointed by the Council.
Council Decision on the European Union Military
2.11 The EUMS will be formed from military
personnel seconded from Member States to the General Secretariat
of the Council. Its mission and functions are those defined
in Annex IV to the Presidency report, which is attached to the
Decision. Its mission is:
".... to perform 'early warning, situation assessment
and strategic planning for Petersberg tasks including identification
of European national and multinational forces' and to implement
policies and decisions as directed by the European Union Military
Its role is to support the EUMC "over the full
range of Petersberg tasks, for all cases of EU-led operations,
whether or not the EU draws on NATO assets and capabilities".
2.12 The EUMS is to take into account the
"to ensure coherence with NATO's Defence Planning
Process (DPP) and the Planning and Review Process (PARP) of the
Partnership for Peace (PfP) in accordance with agreed procedures".
2.13 The Decision will apply as from a date
established by the Secretary General/High Representative, and
in principle before the end of June 2001.
The Government's view
2.14 The Minister says that the Government
supports all three proposals. He makes the point that the establishment
of these bodies does not imply that the European Union has acquired
a military operating capability. The Presidency report made it
clear that a separate Council decision would be required for the
EU to declare itself operational in this area. He adds:
"To this end, Nice also tasked the Swedish Presidency
to pursue discussions with NATO with a view to establishing the
permanent arrangements between the EU and NATO".
2.15 On the PSC the Minister comments that
this "will help to give the EU the extra capacity it needs
in order to conduct a comprehensive and responsive foreign policy".
He says that the Government has argued for some time for the creation
of a permanent committee based in Brussels to act as the primary
forum for preparation of advice to Ministers on common foreign
and security policy matters.
2.16 The Minister comments that the EU Chiefs
of Defence Staff are likely to make their recommendation for the
first Chairman of the EUMC in late March 2001, with a Council
decision to follow in April or May.
2.17 As for the EUMS, the Minister says
that, as he noted in his Explanatory Memorandum on the Presidency
report, the Government considers that the EU needs a small, permanent
military secretariat staff to provide the link between the EU
Military Committee and the military resources available to the
EU, from Member States and from NATO.
2.18 The provisions of these Decisions
were, substantially, agreed at the Nice European Council, when
it accepted the Presidency's report on strengthening the Common
European Security and Defence Policy. We considered that report
on 29 November, on the basis of unofficial texts and an Explanatory
Memorandum and letter from the Minister, both dated 28 November.
He told us that the documents would be deposited once they were
available in their final form. They were published on 4 December
but the Government has yet to make them available to us. We ask
it now to do so, under cover of a letter from the Minister in
which he informs us in general terms of what action is to be taken
to follow up on the section of the report dealing with arrangements
concerning non-EU European NATO members and other EU candidate
and to follow up on Annex VII on Standing Arrangements for
Consultation and Co-operation between the EU and NATO.
2.19 The Minister explained in his letter
of 28 November that endorsement of the report at Nice would represent
political agreement to the proposals. It would be followed up
by proposals for Council Decisions to put the content of the report
into effect. These Decisions were adopted on 22 January, without
us having any further opportunity to consider them. We understand
that the Government had not expected such swift action by the
2.20 We accept that the Decisions implement
proposals which we were given an opportunity to consider before
endorsement at Nice. We regret, however, that there was no opportunity
for them to be debated. We ask the Minister to be more alert in
future to the requirements of the House and to keep a closer watch
on fast-moving issues, such as those in the area of Common Foreign
and Security Policy, informing this Committee at an earlier stage
of significant proposals, if necessary only in outline before
even unofficial texts are available.
2.21 We now recommend that these documents
be debated on the Floor of the House, together with the Presidency
report on strengthening the Common European Security and Defence
Policy, which on 29 November we recommended for debate in European
Standing Committee B.
1 E.g. in the UK, five times the postage cost for a
letter sent first class. Back
Further Liberalisation of Community Postal Services:
Report of the Select Committee on the European Union; HL Paper
6 (2000-01). Back
-; (20932) -; (20933) - ; see HC 23-viii (1999-2000), paragraph
18 (9 February 2000). Back
- ; see HC 23-xxxi (1999-2000), paragraph 3 (29 November 2000). Back
Release: Brussels (04-12-2000) - Nr. 14056/2/0. Back
34 to 37 refer. Back