INTERVIEW WITH ETIENNE DAVIGNON, FORMER INDUSTRY COMMISSIONER (1977-1984) : 'COMMISSION STILL HAS THE RIGHT OF INITIATIVE'.

Position:Interview

Etienne Davignon was industry commissioner during the first steel crisis. Given the state of "manifest crisis" in the sector, he set up a steel production quota scheme in October 1980, as allowed under the ECSC Treaty. Davignon analyses today's crisis for Europolitics. As he sees it, Europe's difficulty taking action is not caused by a lack of instruments since the Commission has the right to initiate legislation. So it is more a question of will than of capacity.

How is today's steel crisis different from the one in the 1970s and 1980s?

The causes are different but the result is the same: production over-capacity compared with demand. This over-capacity is affected by low growth. So we are seeing a structural factor made worse by a cyclical factor, in other words exactly the same situation as at the time, with comparable causes, namely that semi-finished products cost less outside Europe. The only difference is that, in the 1970s, a technological factor came into play: the introduction of electric steelworks.

China and India are exporters and are taking over large parts of the European industry. Does this concentration impact the situation?

No. I don't think that is affecting the market. In one respect, it makes restructuring simpler. The question is whether this is done in a coordinated way or brutally. But it's simple common sense that if you have to get 15 people to agree on how to move from situation A to situation B, it is not necessarily easier than if you have only two or three.

Our political leaders seem at a loss If we still had the ECSC Treaty today, under which production could be limited, would that have helped resolve part of the crisis?

That's a delicate matter because you can't isolate this element from others in the treaty. Under the ECSC Treaty, the Commission had an obligation to carry out economic analyses and to determine the level of production in terms of the state of the economy. The ECSC Treaty was still influenced by the post-war spirit of planning: it was not a dirigiste treaty but it was a planning' treaty.

Another factor of difference is that the ECSC was the only European treaty that had own resources in the true sense of the term. It was covered by levies on industry, traders and consumers. This obviously creates a completely different situation in the sense that, on the one hand, you had the ban on state aid for the steel sector but it was compensated on the other by the fact that Europe could decide to step...

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