The thorny road to EU ports liberalisation

In March 2016 the European Parliament voted on a revised EU Ports Services Regulation that hopes to make European ports more competitive and increase financial transparency. After two previously failed attempts to pass the legislation and some opposition, the latest version was approved. So what was the trajectory of this controversial proposal and what changes will it now bring?


Eu ports

An overhaul of European ports has been in the making since 2001 and the draft legislation has seen dramatic changes to its text over the past 11 years.

Initially, the EU Ports Regulation aimed to fill the gaps identified by the Commission in its 2007 Communication on the European Port Policy, which flagged up threats on port performance and hinterland connections across the continent, the lack of transparency in the use of public funding, as well as market access restrictions and issues on the organisation of labour in ports.

Following two failed attempts at passing it through Parliament, in 2014 rapporteur Knut Fleckenstein was tasked with writing up a new legislative text, for which he received over 700 amendments from colleagues of all parties. His revised proposal came before Parliament on 8 March 2016, where it was voted in plenary with 451 MEPs voting in favour and 243 voting against.

In essence, the new Ports Services Regulation (PSR) gravitates around "flexible organizational models and more discretion to Member States" in their access to the port services market, as MEP Rosa D'Amato described it, as well as increased transparency in public funding and an open social dialogue between port stakeholders, unions and employees.

Despite the attempt to reach a satisfactory compromise, European shipowners as well as a number of MEPs expressed their dissatisfaction with the new proposal.

"Shipowners are puzzled by the fact that the chapter on the 'organisation of ports' still remains an empty box," the European Community Shipowners' Association (ECSA) said in a statement.
Similarly, member of the Parliament's transport and tourism committee Boguslaw Liberadzki wrote in an op-ed: "We have finished up with a proposal that is divorced from the core principles that should determine the approval of any legislation by Parliament."

The need for a revamp: PSR addresses ports challenges

One common ground between opposing sides is recognising the importance of European ports, as well as the need to modernise their operations.

According to EU statistics, 74% of goods entering or leaving Europe go by sea, while 1.5 million workers are employed in European ports, with the same amount employed indirectly across the 22 EU maritime member states.

In 2014 the European Commission estimated that the volume passing through EU ports will increase by 50% by 2030 and cautioned that "all ports across the trans-European network will be needed to help accommodate this growth."

"74% of goods entering or leaving Europe go by sea."

"If nothing is done an opportunity will be missed to increase options available to transport operators and shippers and create growth and jobs in coastal areas and across the Union as a whole," the Commission's Ports 2030 document reads.

In response to the challenges, the initial PSR had drawn up a strategy combining legislative and non-legislative measures that focused on connecting ports to the trans-European network, modernising port services, attracting investment to ports, encouraging innovation and promoting social dialogue.

It was its approach to modernising ports services, however, that sparked resistance.
The regulation originally tried to introduce "common rules to ensure supervision by an independent authority of the port service charges levied by operators" and established the "freedom to provide services in ports, except for cargo handling and passenger services".

It was estimated that this regulation would "lead to a competitive and transparent award of port services" and save the European economy up to €10bn by 2030.

Criticism erupts over ports liberalisation proposal

The PSR's aim to establish free market access for the supply of port services such as mooring, bunkering, towage or pilotage ran into opposition soon after its launch, with MEPs insisting that "a single system would not be appropriate, as the EU port system includes many different models for the organisation of port services".

Fleckenstein's amendment to the proposal, which passed through Parliament in March, ensured that "existing port management models established at national level in the member states can be maintained."

"We have been able to dismiss the forced free market access to port services," he said.

"Especially for safety and security concerns, ports must be able to decide on the organisation of port services. For the first time in the course of the long discussions on the port package we have the ports, the terminal operators and the unions on board."
However, not everyone agreed.

"The decision of investing in larger tonnage is and should remain a commercial one."

Speaking for the ECSA, the association's Secretary General Patrick Verhoeven said: "Whilst the initial proposal of the Commission lacked in ambition, the text has now been weakened further and is even introducing additional restrictions.

"Despite the fact that these elements are certainly a step in the right direction, the text that is on the table remains unsatisfactory and leaves a lot to be desired."

The decision to enhance transparency in funding was generally better received, although some were of the opinion that the regulation is too weak even on this count.

"On financial transparency, the one valid point it does contain, it still does not do enough to ensure much needed legal certainty for the sector due to the strong link between financial transparency and the Commission's envisaged state-aid guidelines and block exemptions for the ports," said rapporteur Keith Taylor, while calling for a rejection of the report.

The Danish Ports Association also accused Fleckenstein's report of taking an "overly simplistic view" of the decision to invest in larger tonnage in anticipation for an ever growing world market.

"Basically, the decision of investing in larger tonnage is and should remain a commercial one," the association's Director of EU Affairs Simon Bergulf said.

Next steps for the PSR

Addressing the highly contentious liberalisation of port services, the European Parliament conceded that "the port management models established at national level can be maintained".

After this and other amendments to the draft regulation were approved, the Parliament mandated the negotiators to start talks with the Council on the final wording of the text. The decision means the draft report will move forward to negotiations with EU member states and the European Commission.

"The UK shipping sector vouched to retain their opposition to the regulation."

The UK shipping sector vouched to retain their opposition to the regulation as it moves forward.

The UK Major Ports Group (UKMPG) Chairman James Cooper said they will "continue to defend investment, jobs and growth [...] and remain confident that this unwanted (and unjustified) piece of legislation will ultimately be defeated."

Following the vote, Fleckenstein said: "Whether the result will be satisfactory after negotiations with the [EU] council depends largely on the council's willingness to accept that competitiveness goes hand-in-hand with social working conditions, and on whether the commission's draft for state aid rules concerning ports is reasonable."