BRUSSELS GOES SOFT ON PORTS

Thursday 24 January 2008

INTRODUCING ‘soft law’ measures, rather than immediately imposing hard legislative liberalisation, is a vast improvement on the previous proposals coming out of Brussels.

According to Prof Van Hooydonk, the renowned specialist in port law from the University of Antwerp, it demonstrates a new attitude from the European Commission.

Describing himself as a privileged witness and insider, the professor has been one of the key players in the policy forming process.

He argues that a softly-softly approach is sometimes the best way forward.

“While the previous port packages were based on a profound distrust of the port sector and suggested that it was rife with unjustified limitations of market access, abuses of dominant positions, the present proposal acknowledges the overall efficiency of the port sector.”

The stringent legislative liberalisation measures contained in the first two port packages completely missed the point, he argues.

This time, the fundamental aim of the new ports policy is to support rather than to regulate the industry, Prof Van Hooydonk stresses.

“The new Communication has abandoned the unwise anti-port negativism and the dogmatic liberalisation perspective of the previous proposals.”

The European Commission’s Communication is not just a difference in tone, “but a fundamental reversal of objectives”, and this should be applauded.

In addition, the new approach covers a broad range of important port policy issues instead of focusing on market access for port service providers, he adds.

“The latter is probably of much less importance and urgency than, let’s say, environmental obstacles to maintenance and expansion projects.”

A second major improvement is that the new Communication builds on the results of six thorough consultation workshops with representatives of the port and shipping sector, which were held between December 2006 and May 2007.

“These workshops were not just a matter of ritual; the suggestions put forward by stakeholders were also acted upon,” Prof Van Hooydonk says.

Prof Van Hooydonk certainly expects the Communication to get the industry thumbs up. “Although several stakeholders are still preparing their response, it would surprise me if this Communication would not find broad acceptance throughout the sector.

“Let’s also hope that the commission will resume this open dialogue when additional policy instruments such as state aid and environmental guidelines are prepared.”

The main feature of the new Communication is probably that the commission has embraced a ‘soft law’ instead of a legislative approach.

Prof Van Hooydonk dismisses criticism that this ‘soft law’ approach is unable to bring about legal certainty for port authorities, port users and investors.

“For ports, soft law is a much better alternative than legislation.”

He had already suggested the soft law option in various publications and at events in 2000, and again in 2005. “I am happy that, after seven years, the commission was eventually convinced by the merits of the concept.”

The tough measures of the first two port packages were misguided, he claims. “The EU port sector is very competitive, with a high level of investment, state-of-the-art facilities, almost endless substitutable alternatives for users and very low rates.”

He stressed it was wrong to impose on this well-performing sector a rigid liberalisation regime — including an ill-defined self-handling concept — adopted from the airport sector, where, unlike ports, complaints from users abound.

In the ports sector there exists a whole body of case law that could be codified into a port-specific guidance instrument, comparable to the interpretative communication on concessions from 2000.

Soft law would have the advantage of being flexible and adaptable to local circumstances, thereby respecting the subsidiarity principle, Prof Van Hooydonk says.

Criticism that soft law will have no impact on daily operations and be unable to bring about real changes is “unwarranted”.

Firstly, an interpretative communication on ports will influence the making of laws, regulations and contracts by national administrations, port authorities and port users.

Secondly, soft law issued by the commission will guide EU and national courts and competition authorities when decisions of ports and other authorities are challenged, he says.

Soft law can, therefore, be a very efficient tool in enforcing EU standards on competition, freedom to provide services, freedom of employment and the like, Prof Van Hooydonk says.

The major bottleneck for changes is not the lack of legislation, because EU and national competition law is in place; the obstacle is rather that port users and investors hesitate to challenge some isolated illegal situations before courts.

They can be afraid that they may disturb good relations and ongoing operations in ports.

“Soft law guidance may put courage into interested parties,” Prof Van Hooydonk says.

However, the big question mark is whether the current Communication already contains sufficient guidance to serve as a soft law instrument.

If Prof Van Hooydonk does have a criticism it is that the soft law approach should be elaborated upon more thoroughly.

“More guidance is needed in the field of concessions and port dues, clarifying existing case law and of the individual decisions of the commission.”

In the environmental field, the European Commission has announced a port-specific guidance instrument on the Birds and Habitats Directives.

“I welcome this proposal, for it was one of the recommendations I made in my 2006 study on this matter on behalf of the European Commission.”

Such guidance is necessary because of the “massive legal uncertainty for project proponents that exists now”.

There are some caveats however, Prof Van Hooydonk warns. The guidance should be port-specific, that is, addressing typical port management-related difficulties and basic issues of port economics. This presupposes input of port-based know-how in the drafting process and extensive consultation with the sector.

One should also be aware of the risk that, through an environmental Communication, environmental policymakers will set the priorities of port development.

As a matter or urgency, it is good to know that DG Environment has announced it will tackle the matter as a priority in 2008, he said.

“Ultimately, everything will depend on the contents of the guidance. It must be balanced, reconcile environmental constraints with economic imperatives and principles of good port management, restore legal certainty for investors and speed up decision-making processes.

“If that is not possible, a legislative intervention would appear unavoidable.”

Prof Van Hooydonk endorses ESPO’s proposal to continue to look into the possibility of a reinforcement of the legal status of port expansion plans and projects anyway. He refers to proposals in his study on the impact of environmental law on ports.

A key element of the Communication is, of course, the announcement of Commission State Aid Guidelines in 2008.

“State Aid Guidelines have been demanded by the port and shipping sector for years. It is time that such guidelines are finally adopted.”

In his view, they should simply endorse earlier decisions of the Commission in individual cases, such as the Flemish Seaports case.

Through the Flemish regional government, Belgium was the first Member State to voluntarily adapt its financial regime of ports policy to the trends of the 1997 Green Paper on Seaports and Maritime Infrastructure.

“These new, very transparent rules on public port investment which limited public funding of commercial projects were fully approved by the commission and could serve as a model for other member states.

“In line with the general drift of the new Communication, I would however strongly advocate timely consultation with stakeholders before state aid guidelines are adopted”.

The Communication also proposes measures for an improvement of the public image of ports, including a structured dialogue between ports and cities.

“I am proud that the commission proposes to hold an EU open ports day and to issue guidance on the reconciliation of ISPS requirements with tourism and recreation in ports.”

These were two of the professor’s own suggestions made in his book Soft Values of Seaports.

This issue has been picked up in many other places, including the professor’s home town, Antwerp, where the port authority will publish a study on it in early 2008.

The Flemish government has also made it a priority and the proposals fit into the new EU maritime policy proposals as well, he stressed.

• Prof Van Hooydonk was invited by the commission to contribute as the only neutral external expert to the consultation workshops with the industry where the current proposals were prepared, and several of his own policy recommendations were adopted by the commission.