Select Committee on European Communities Report


Letter from Lord Tordoff, Chairman of the Committee, to Mrs Glenda Jackson CBE MP, Parliamentary Under-Secretary of State, Department of the Environment, Transport and the Regions

  Thank you for your Explanatory Memorandum (EM) dated 25 June on the above proposals which was considered by Sub-Committee B at its meeting on 23 July. Your EM raises a number of issues of concern to the Committee.

  First, in paragraph five of your EM you state that "there are currently 600-700 non-EU nationals currently employed on ferry services run by four Member States". We would be interested to know which these four Member States are. Secondly, in paragraph 16, you state that the employers' side has reservations about the proposal. We would like to know which organisations were consulted and what were their responses? Thirdly, in paragraph five of the Regulatory Impact Assessment you suggest that the impact of this proposal is likely ultimately to be passed on to the consumer. The Committee shares your concern on this matter and would appreciate further explanation of this argument and its likely financial consequences.

  Furthermore, we are concerned that the proposal raises issues of competition and safety which are not fully dealt with in your EM. We would like to know whether parallels can be drawn with this proposal and regulations in other transport industries. Lastly, we would appreciate clarification of why this proposal is being brought under Article 84(2) when it appears largely to be an instrument of social policy rather than transport policy.

  We look forward to receiving clarification on these matters. In the meantime, this letter maintains the scrutiny reserve.

24 July 1998

Letter from Glenda Jackson CBE MP, Parliamentary Under-Secretary of State, Department of the Environment, Transport and the Regions, to Lord Tordoff, Chairman of the Committee

  Thank you for your letter of 24 July requesting clarification for your Committee on certain points raised in the Explanatory Memorandum (93118/98) on the above proposals which I submitted on 25 June 1998.

  You ask which EU states currently employ non-EU nationals on their services. The Commission communication mentions that there are four, but is not specific: we however believe these to be the UK, Denmark, Germany and the Netherlands. As regards consultations, the Commission has held meetings with representatives from both sides of the industry. We do not have access to the details of their discussions, but the Commission has stated that while the trade unions were supportive of the measure, the owners' organisations were generally opposed. Trade union support seems to come from their belief that the measure will protect jobs. The arguments employed by the owners are likely to be similar to those put to the Department by the European Community Shipowners' Association, namely that the proposal runs counter to liberal free trade principles, may lead to retaliatory action in international traffic and is likely to involve considerable legislative complications.

  The safety arguments contained in the Commission's proposal are relatively low key, as this is not the primary purpose of the legislation. The essential argument is that seafarers who are employed on terms and conditions which would be unacceptably low by European standards may work to lower standards. Conversely, a better employment package is likely to lead to a better all-round performance, which improve regard for matters of safety. The UK would support this view.

  On the issue of competition, it seems unlikely that this proposal will make much impact on regular EU passenger routes, as all services will be bound by the same rules and any price increases will not be of an order to affect the competitive balance with other modes of transport. There may, however, be questions about the effects on combined freight and passenger services. Some Member States are concerned that the proposal may have adverse consequences for the competitiveness with freight only services. This is difficult to quantify until the precise application of the proposed legislation has been settled.

  The cost to individual travellers on passenger ferries seems likely to be minimal, as few non EU nationals are currently employed on passenger services and those who are generally occupy the post requiring least skills and commanding least remuneration. Rounding up a small number of salaries by a relatively small amount is not likely to lead to price rises of any more than a marginal nature. The Commission explains that the proposal is designed principally to prevent a possible future switch to cheap third country labour by individual Shipowners in a competitive market.

  There can be no comparison with other transport modes as there is no other transport sector where third country nationals are in competition for employment with nationals of EU states on any significant scale. Passenger ferries are uniquely labour-intensive in the passenger transport field and represent a far greater potential loss of local employment opportunities than would be the case in any other transport mode.

  Finally, you asked why the proposal was being brought forward under Article 84(2). The advice from Department legal services is that Article 84(2) may be used as it allows the Council to make appropriate provision in respect of sea transport. When exercising this power, article 75(1) applies. Article 75(1) provides that for the purpose of implementing the common transport policy (article 74) the Council shall take certain specified measures and "any other appropriate provisions".

  The proposals are directed towards enhancing the single market in maritime services by guaranteeing that the terms and conditions of employment of seafarers will, as a minimum, be in line with the level of social standards generally applicable in the Community. Thus the proposals are directed towards ensuring the competitiveness of maritime transport services and the protection of employment of Community seafarers. As such they are appropriate provisions for implementing the common transport policy in that sector.

26 August 1998

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