Documents considered by the Committee on 10 February 2016 - European Scrutiny Contents

1 Ports

Committee's assessment Politically important
Committee's decisionNot cleared from scrutiny; recommended for debate on the floor of the House (decision reported 21 July 2015)
Document details(a) Proposal for a Regulation establishing a framework on the market access to port services and the financial transparency of ports; (b) Proposal for a Regulation establishing a framework on market access to port services and financial transparency of ports: General approach
Legal baseArticle 100(2) TFEU; ordinary legislative procedure; QMV
Document Numbers(a) (34955), 10154/13 + ADDs 1-5, COM(13) 296

(b) (36373), 13764/14, —

Summary and Committee's conclusions

1.1 With a proposed Regulation, published in May 2013, the Commission sought to establish a regulatory framework to improve the efficiency and competitiveness of all EU ports. In October 2014 the Transport Council adopted a Presidency compromise text as its General Approach for trilogue discussions.

1.2 Given the significance of a Regulation for the UK ports industry, particularly the potential harm for the industry's interests, the predecessor Committee and we have repeatedly urged that the two documents be debated on the floor of the House. Regrettably the Government has refused to accept this recommendation. Instead it has twice scheduled a debate in European Committee. The first, in September 2014, was adjourned after acrimonious exchanges about the lack of relevant documentation, particularly in relation to texts inappropriately marked Limité. The second, scheduled for 12 January, was cancelled at short notice.

1.3 The Government now tells us that the European Parliament's Transport and Tourism Committee has adopted a report as the proposed European Parliament First Reading text for the proposed Regulation, but that it is not yet clear whether this will result in trilogue discussions or a Second Reading text. The Government also gives us an assessment of the Transport and Tourism Committee's text compared to the Council's General Approach text.

1.4 As for the outstanding debate recommendation the Government says that it hopes to schedule a debate soon. But it suggests that the timetable for the next stage of discussions might be a factor in deciding the timing of that debate and asks for any view we might have on this. The Government does not suggest whether it is planning a floor or European Committee debate.

1.5 We are grateful to the Government for the information it provides on where matters now stand on negotiation of the proposed Regulation.

1.6 As for a debate, it now appears plain what the European Parliament position, whether in a document for trilogue discussions or as a Second Reading text, is likely to be as compared with the Council's General Approach text. We intend to give port employers and unions the opportunity to comment before we report further.

1.7 We do not suggest that the debate should be a retrospective scrutiny of Government activity in relation to parliamentary scrutiny of the proposal. Rather it should be an opportunity for Members to determine the appropriate Government approach to further negotiation of the proposed Regulation, in the light of the Council's General Approach and the Transport and Tourism Committee's text, neither of which are satisfactory. As for the Limité issue, while we do not suggest that this should be a major focus of the debate, we think Members might wish to remind the Government of this aspect of the EU's democratic deficit.

Full details of the documents: (a) Proposal for a Regulation establishing a framework on the market access to port services and the financial transparency of ports: (34955), 10154/13 + ADDs 1-5, COM(13) 296; (b) Proposal for a Regulation establishing a framework on market access to port services and financial transparency of ports (First reading): General approach: (36373), 13764/14, —.


1.8 With a proposed Regulation, document (a), published in May 2013, the Commission sought to establish a regulatory framework to improve the efficiency and competitiveness of all EU ports. The predecessor Committee noted the significant concern of the UK ports industry and recommended the proposal for debate on the floor of the House before the October 2014 Transport Council. But, the Government refused that request and a debate by European Committee A in September 2014 was adjourned without substantive discussion.

1.9 Very shortly before the October 2014 Transport Council meeting the then Presidency presented a revised text of the proposed Regulation for the Council to resolve the outstanding issues and to adopt a General Approach at its meeting on 8 October. The Government explained to the predecessor Committee the substance of the General Approach, document (b), agreed by the Council and why it thought this a relatively good outcome for the UK. However, the ports industry and Unite, on behalf of port workers, confirmed that they remained opposed to the proposed Regulation.

1.10 The predecessor Committee commented that it was very regrettable that the Government had not arranged for this matter to be debated before the Transport Council meeting. However, it recommended that both the original document and the new one be debated, not as an exercise in pointless retrospective scrutiny of Government activity in Council consideration of the proposal, but in order to determine the appropriate Government approach to trilogue negotiation of the Council's general approach. It emphasised again that, given the importance of the issues, the debate should be on the floor of the House. In July 2015 we endorsed that debate recommendation, including that it should be on the floor of the House. Subsequently a debate in European Committee A was scheduled for 12 January last, but the Government cancelled this arrangement.

1.11 In addition to expressing its concerns about the substance of the proposals, the predecessor Committee noted that there had been problems in the scrutiny of them because highly relevant Council documents were subject to Limité restrictions. It recognised that on this occasion the Government had made an effort to ensure that some Limité documents were made available to it. But it commented forcibly that it remains a fact, that the Council, whether at Ministerial or working group level, is a legislature, as recognised by the frequent references to it and the European Parliament as the "co-legislators". The predecessor Committee emphasised that, as a legislature in a democratic society, the Council should operate transparently, in particular abandoning the constant resort to Limité markings, and should be very vigorously urged to do so by any UK Government.

1.12 When we last considered these proposals, in early January, the Government outlined to us, in advance of the scheduled European Committee debate, developments in the European Parliament's consideration of the proposal and sought to justify its continued refusal to have this matter debated on the floor of the House. We were grateful for the information provided to us and noted that the web links provided would help Members preparing for the European Committee debate. However, we were greatly concerned that the Government had continued to deny the House a floor debate on such an important issue and found the comment that "there will be some disappointment that it has again been scheduled in European Committee A", to put it mildly, disingenuous. As for the Limité issue, while we did not suggest that this should be a major focus of the debate, we thought Members might wish to remind the Government of this aspect of the EU's democratic deficit.

The Minister's letter of 8 February 2016

1.13 The Minister of State, Department for Transport (Mr Robert Goodwill), recalling that he had told us in early January that the European Parliament's Transport and Tourism (TRAN) Committee was due to vote on its amendments to the proposal on 25 January, now tells us that:

·  the vote went forward and TRAN Committee adopted its report on this dossier;

·  the proposed amendments which some MEPs had put forward to reject the proposal were not supported by the TRAN Committee, and in essence the Committee voted in favour of the proposed compromise amendments of the Rapporteur, Knut Fleckenstein MEP;

·  in a separate vote, however, the Committee fell short (by a single vote) of the required majority to grant the Rapporteur a negotiating mandate;

·  this means that there will be some delay before informal trilogue discussions can take place to try to achieve a First Reading deal between the positions of the European Parliament and of the Council;

·  at the moment it is expected that the decision on whether to grant a negotiating mandate will now be considered by the European Parliament in a plenary session, during March; and

·  if the European Parliament decides against granting a mandate, the proposal will instead move to the Second Reading process.

1.14 The Minister then gives us, as follows, offer some commentary on the TRAN Committee's amendments, in relation to the Council's General Approach of October 2014, noting that, in general, the Committee's report moves in a similar direction to the General Approach in several important respects, as compared with the Commission's original proposal.

1.15 He comments first that:

·  the TRAN Committee report would limit the scope of the second Chapter, and by retitling this as "Organisation of port services", recognizes the primacy of the port as the primary competitive unit, which fits well with the structure of the UK industry;

·  the scope of this Chapter would exclude pilotage (which under the General Approach would also be excluded by a national derogation);

·  cargo-handling and passenger services would also continue to be excluded;

·  the TRAN Committee report greatly dilutes or removes requirements in relation to organization and procurement of port services, in particular by deleting Article 7 and replacing it with Article 6.3a specifying very broad-brush requirements for a selection procedure where the number of providers is limited;

·  the General Approach also much reduces prescriptiveness in this respect as compared with the original proposal, which was based on Directive 2014/23/EU, which governs the award of concessions contracts;

·  the TRAN Committee amendments do not include the competitive market exemption (CME) clauses included in the General Approach;

·  a new sub-article is, however, proposed for Article 6.1, which would exempt ports which intend to act as internal operators of a service, but are not contracting authorities within the meaning of the Directive 2014/24/EU, which governs public procurement, (broadly speaking, that is to say, if they are in the private sector) from the remainder of Article 6 on limitation of numbers;

·  some Members of this House supported Government efforts on behalf of the ports industry to secure a wider set of exemptions based on the public procurement Directive definition and will share the disappointment that this did not find its way into the TRAN Committee amendments;

·  the proposed Article 6.1 is, however, welcome in its own right and establishes the relevance of this definition for the future trilogue negotiations; and

·  the need for the CME in relation to Article 9.3 (internal operator providing the same service at someone else's port) is potentially avoided, in UK circumstances, by limiting the applicability of the article to a port operating under a public service obligation.

1.16 The Minister comments positively on a number of other matters, saying that:

·  like the General Approach, but by inclusion in an article rather than by recital, the TRAN Committee report would preserve confidential negotiations;

·  it would not confer upon the Commission the power to make Delegated Acts instructing ports how to modulate their charges;

·  it would also limit restrictions upon internal operators to requirements under public service obligations only, so excluding the open port obligation;

·  like the General Approach, the TRAN Committee amendments would continue to require greater transparency of public funding, which the Government regards as a useful precursor to seeking greater stringency on State Aids and hence fairer competition with unsubsidised UK ports;

·  both the TRAN Committee amendments and the General Approach would allow ports greater flexibility than the original proposal in how to undertake consultation, for example not stipulating that a consultative committee be formed but leaving it to ports to decide how best to discharge the requirement;

·  the TRAN Committee proposes a new recital encouraging EU ports to make provision for pilotage exemption certificates (PECs) — this does not directly affect the UK, as there is already an established system, but the Government broadly supports the wider use of PECs with appropriate safety provisions; and

·  like the General Approach, the TRAN Committee amendments would allow greater flexibility than the original proposal in relation to supervision (in effect, enforcement) — it would avoid the need to create a new regulatory body, and would be more compatible with the UK's devolution settlement.

1.17 The Minister continues that many of the TRAN Committee amendments, like the General Approach, eliminate the worst features of the original Commission proposal. He says that there remain, however, some areas in which the TRAN Committee text does not meet the Government's objectives. He cites for example, some of the provisions on employment and training which would reduce ports' and their suppliers' flexibility, and certain safeguards in the General Approach which are not replicated. The Minister explains that:

·  the Government's provisional assessment is that TRAN Committee amendments to Article 10 would alter transfer of undertakings obligations inappropriately;

·  such obligations, concerning employees' acquired rights, are made under Directive 2001/23/EC, the Transfers of Undertakings Directive, following painstaking negotiations in a wider employment law context;

·  the Government therefore regards these amendments as problematic both in terms of the legal base and the impact on genuine competition by service providers, as distinct from the transfer of staff from one undertaking to another by acquisition;

·  the TRAN Committee has added a new Article 10a on training and labour protection, which reflect in part what UK ports, as responsible and safety-conscious employers, already generally do well;

·  there are, however, also elements that could, for example, unreasonably constrain ports' ability to manage fluctuations in demand or which could have other and probably unintended consequences; and

·  the TRAN Committee has not included a counterpart to the recital in the General Approach which confirms that the UK's open port duty is not to be regarded as a public service obligation for the purposes of the proposed Regulation — this is an important point which the Government intends to secure in future discussions.

1.18 Turning to the next stages in negotiation of the Minister says that:

·  in the Government's assessment, despite the vote on the mandate, the TRAN Committee outcome, and in particular the lack of support for amendments to reject the proposal, confirms the view that this proposed Regulation as a whole is relatively unlikely to be voted down by the wider European Parliament;

·  it is therefore all the more essential that the Government be fully engaged in future negotiations, and it intends to continue to work hard to influence them;

·  to that end, the Department for Transport will continue to work with the ports industry, not least to provide hard evidence of impacts of proposed amendments, which may be required at short notice, especially if compromise proposals throw up new challenges during the trilogue process;

·  the Government remains determined to see to it that the vital interests of UK ports and shipping, and of their customers and employees, are safeguarded; and

·  the UK ports industry is decentralized, largely unsubsidized and successful — it has invested to facilitate trade and economic growth and the Government must ensure that it can continue to do so.

1.19 As for debating the proposed Regulation the Minister says that:

·  the Government hopes to see the debate on the proposal scheduled soon;

·  it expects that there will be more clarity shortly on whether the European Parliament is likely to give the Rapporteur a mandate to enter into trilogue discussions, or whether the proposal will instead go through a Second Reading;

·  the emerging timetable for the next stage in negotiations is a factor in the planning of the debate, as are the views we have previously expressed that it should take place ahead of trilogues; and

·  the Government would take into consideration any further views on this that we might have.

Previous Committee Reports

Sixteenth Report, HC 342-xv (2015-16), chapter 3 (6 January 2016), Fourteenth Report, HC 219-xiv (2014-15), chapter 1 (15 October 2014), Twelfth Report, HC 219-xii (2014-15), chapter 2 (10 September 2014), Tenth Report HC 219-x (2014-15), chapter 1 (3 September 2014), Fifth Report HC 219-v (2014-15), chapter 2 (2 July 2014), Twenty-third Report HC 83-xxi (2013-14), chapter 9 (20 November 2013) and Sixth Report HC 83-vi (2013-14), chapter 2 (19 June 2013).

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Prepared 18 February 2016