Commission Decision No 2794/80/ECSC of 31 October 1980 establishing a system of steel production quotas for undertakings in the iron and steel industry

• Published date: 31 October 1980
• Subject Matter: Information and verification,Steel industry,Conjunctural policy,Production quotas
• Official Gazette Publication: Official Journal of the European Communities, L 291, 31 October 1980

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Commission Decision No 2794/80/ECSC of 31 October 1980 establishing a system of steel production quotas for undertakings in the iron and steel industry

Official Journal L 291 , 31/10/1980 P. 0001 - 0029

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( 1 ) OJ NO L 268 , 11 . 10 . 1980 , P . 25 .

( 2 ) OJ NO C 264 , 11 . 10 . 1980 , P . 2 .

( 1 ) OJ NO L 246 , 27 . 9 . 1977 , P . 1 .

COMMISSION DECISION NO 2794/80/ECSC

OF 31 OCTOBER 1980

ESTABLISHING A SYSTEM OF STEEL PRODUCTION QUOTAS FOR UNDERTAKINGS IN THE IRON AND STEEL INDUSTRY

THE COMMISSION OF THE EUROPEAN

COMMUNITIES ,

HAVING REGARD TO THE TREATY ESTABLISHING THE EUROPEAN COAL AND STEEL COMMUNITY , AND IN PARTICULAR ARTICLES 47 AND 58 THEREOF ,

CONSIDERING THE FOLLOWING POINTS :

1 . DECLINE IN DEMAND

IN THE THIRD QUARTER OF 1980 , DEMAND FOR STEEL FELL ABRUPTLY BOTH ON THE COMMUNITY MARKET AND ON THE WORLD MARKET , TOTAL ORDERS FALLING SHARPLY BY 20 % IN THE THIRD QUARTER OF 1980 COMPARED WITH THE THIRD QUARTER OF 1979 , A QUARTER IN WHICH ORDERS WERE ALREADY AT A LOW LEVEL ; ORDERS FROM THE COMMUNITY MARKET FELL BY 25 % . OWING TO THE ECONOMIC DOWNTURN , THE OUTLOOK FOR THE FOURTH QUARTER OF 1980 AND THE FIRST QUARTER OF 1981 IS SUCH THAT A RECOVERY IS UNLIKELY .

2 . EXISTENCE OF A PERIOD OF MANIFEST CRISIS

THE UTILIZATION RATE OF COMMUNITY STEEL UNDERTAKINGS , WHICH WAS APPROXIMATELY 70 % IN THE SECOND QUARTER OF 1980 , FELL TO 58 % IN SEPTEMBER , THE LOWEST RATE EVER RECORDED IN THE COMMUNITY . THE UNDERTAKINGS ' FORECASTS INDICATE THAT THE RATE WILL FALL AGAIN IN THE FOURTH QUARTER , POSSIBLY TO BELOW 55 % . THE FACT THAT THE REDUCTION IN PRODUCTION VARIES A GREAT DEAL FROM ONE UNDERTAKING OR REGION TO ANOTHER IS CAUSING ECONOMIC AND SOCIAL IMBALANCE BETWEEN UNDERTAKINGS AND REGIONS .

BETWEEN JANUARY AND SEPTEMBER 1980 , THE FALL IN DEMAND RESULTED IN A SLUMP IN STEEL PRICES IN THE COMMUNITY , THEY FELL BY 13 % WHILE PRODUCTION COSTS INCREASED BY 5 % IN THE SAME PERIOD . THE FINANCIAL SITUATION OF THE UNDERTAKINGS DETERIORATED FURTHER , THEREFORE , AND IRREPARABLE DAMAGE TO THE STRUCTURE OF THE EUROPEAN IRON AND STEEL INDUSTRY IS LIKELY TO RESULT .

THE COMMISSION THEREFORE CONSIDERS THAT THE EUROPEAN IRON AND STEEL INDUSTRY IS NOW IN A SITUATION IN WHICH THE ATTAINMENT OF THE OBJECTIVES SET OUT IN ARTICLE 3 OF THE TREATY , IN PARTICULAR THE MODERNIZATION AND RESTRUCTURING OF PRODUCTION , THE IMPROVEMENT OF WORKERS ' CONDITIONS AND ORDERLY SUPPLIES TO THE COMMON MARKET , IS SERIOUSLY JEOPARDIZED . THE COMMUNITY IS THEREFORE CONFRONTED WITH A PERIOD OF MANIFEST CRISIS .

3 . THE MEANS OF ACTION PROVIDED FOR IN ARTICLE 57 ARE NOT SUFFICIENT TO COPE WITH THE CRISIS .

THE COMMISSION CANNOT TAKE STEPS TO INFLUENCE GENERAL CONSUMPTION IN THE PRESENT ECONOMIC SITUATION .

THE STEEL UNDERTAKINGS HAVE INCREASINGLY FAILED TO FULFIL THEIR INDIVIDUAL DELIVERY COMMITMENTS AND HAVE REFUSED TO COMMIT THEMSELVES FOR THE LAST QUARTER OF 1980 . THE INDIRECT COURSES OF ACTION AVAILABLE TO THE COMMISSION HAVE PROVED INEFFECTIVE OR INSUFFICIENT IN THE PRESENT SITUATION .

IT IS THEREFORE NECESSARY TO INTERVENE DIRECTLY , BY MEANS OF BINDING MEASURES RELATING TO PRODUCTION , IN ORDER TO RESTORE BALANCE BETWEEN SUPPLY AND DEMAND .

THE COMMISSION MUST THEREFORE ESTABLISH A SYSTEM OF PRODUCTION QUOTAS IN ACCORDANCE WITH THE PROVISIONS SET OUT IN ARTICLE 58 .

IN THE SAME CONTEXT THE COMMISSION HAS MADE PROPOSALS TO THE COUNCIL FOR SUPPORT MEASURES AND ADDITIONAL BUDGETARY RESOURCES TO ASSIST WORKERS IN THE IRON AND STEEL INDUSTRY .

4 . DETERMINATION OF QUOTAS

THE QUOTAS SHOULD BE SET ON A QUARTERLY BASIS TO ENABLE THE UNDERTAKINGS TO DRAW UP THEIR PRODUCTION PROGRAMMES AND ALSO TO ENABLE THE COMMISSION , WHEN SETTING NEW QUOTAS FOR THE FOLLOWING QUARTER , TO TAKE ACCOUNT OF FLUCTUATIONS IN SUPPLY AND DEMAND AND OF EXPERIENCE GAINED . FURTHERMORE , AS THE DEMAND SITUATION ON THE MARKETS FOR THE VARIOUS CATEGORIES OF ROLLED PRODUCTS IS NOT IDENTICAL , DIFFERENT QUOTAS SHOULD BE SET FOR THE VARIOUS GROUPS OF PRODUCTS AND ALSO FOR CRUDE STEEL .

THESE QUOTAS SHOULD BE CALCULATED ON THE BASIS OF THE RESPECTIVE REFERENCE PRODUCTION FIGURES OF EACH UNDERTAKING . THE PERIOD SHOULD BE SUFFICIENTLY RECENT TO REFLECT ACTUAL STRUCTURES ; IS SHOULD BE SUFFICIENTLY LONG TO MAKE IT POSSIBLE TO SELECT MONTHS NOT AFFECTED BY TECHNICAL INCIDENTS OR STRIKES . IT IS THEREFORE APPROPRIATE THAT THE REFERENCE PERIODS SHOULD CONSIST OF THE MONTHS OF THE QUARTER IN QUESTION WITH THE HIGHEST PRODUCTION FIGURES , IN THE PERIOD FROM JULY 1977 TO JUNE 1980 .

HOWEVER , IF DURING THAT PERIOD THE AVERAGE RATE OF UTILIZATION OF THE PRODUCTION CAPACITY OF AN UNDERTAKING - ON ACCOUNT OF THE BASES SELECTED TO DRAW UP ITS VOLUNTARY DELIVERY PROGRAMMES - WAS SUBSTANTIALLY BELOW THE COMMUNITY AVERAGE , ACCOUNT SHOULD BE TAKEN OF THIS AND THE REFERENCE PRODUCTION SHOULD BE ADJUSTED ACCORDINGLY .

ACCOUNT SHOULD ALSO BE TAKEN OF NEW FACILITIES BROUGHT INTO SERVICE AFTER JUNE 1980 , CONCERNING WHICH THE COMMISSION HAS NOT ISSUED AN UNFAVOURABLE OPINION , FOR THE CORRESPONDING INVESTMENT PROGRAMME .

SIMILARLY , TO ENSURE THAT THE SYSTEM OF PRODUCTION QUOTAS DOES NOT COMPRISE THE RESTRUCTURING SUCCESSFULLY CARRIED OUT BY CERTAIN UNDERTAKINGS SINCE THE BEGINNING OF THE CRISIS , THE REFERENCE PRODUCTION LEVELS SHOULD BE ADJUSTED IN THE LIGHT OF THE ACTUAL MARKET SITUATION OF THESE UNDERTAKINGS .

THE QUOTAS SHOULD BE IMPOSED ON ALL STEEL UNDERTAKINGS WITHIN THE MEANING OF ARTICLE 80 OF THE TREATY , WITH THE EXCEPTION OF SMALL UNDERTAKINGS THE OUTPUT OF WHICH DOES NOT AFFECT THE MARKET IN ANY SIGNIFICANT WAY , AND OF UNDERTAKINGS OF WHICH THE PRODUCTION OF ECSC PRODUCTS IS CONFINED TO LIQUID CASTING STEEL ON ACCOUNT OF THE LIMITED ACTIVITY OF THE COMMISSION IN THIS SECTOR .

THESE SMALL UNDERTAKINGS SHOULD , HOWEVER , BE SUBJECTED TO THE OBLIGATIONS CONCERNING STATISTICAL REPORTS .

PRODUCTION ABATEMENT RATES WILL BE CALCULATED IN ORDER TO ADJUST PRODUCTION TO THE DEMAND EXPECTED IN THE QUARTER IN QUESTION . THE SAME PRODUCTION ABATEMENT RATES WILL BE APPLIED TO THE PRODUCTION FIGURES OF EACH UNDERTAKING IN ORDER TO ENSURE THAT THE REDUCTION IN PRODUCTION IS SHARED OUT EQUITABLY .

IT IS CLEAR FROM STUDIES CARRIED OUT BY THE COMMISSION , IN CONJUNCTION WITH THE UNDERTAKINGS AND THEIR TRADE ASSOCIATIONS , THAT THE CHANGE IN THE LEVEL OF DEMAND WILL DICTATE A LARGER RATE OF REDUCTION IN THE FIRST QUARTER OF 1981 THAN HAS BEEN FIXED FOR THE FOURTH QUARTER OF 1980 .

IT IS NECESSARY TO IMPLEMENT THE QUOTA SYSTEM AS QUICKLY AS POSSIBLE AND TO AVOID CERTAIN UNDERTAKINGS GAINING PROFIT FROM ABNORMAL INCREASES IN PRODUCTION DURING OCTOBER 1980 . THE UNDERTAKINGS BECAME AWARE OF THIS NEED BY 7 OCTOBER AT THE LATEST , ON...