Transport & environmental policy (74092-1)

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Transport & environmental policy

Our modern world is heading towards creation of more and more regional blocks in order to achieve greater stability and prosperity in all areas. The European Union, one of the strongest regional blocks, has its economic policies as its main concern how to achieve stronger cooperation, integration and prosperity within the organization. The main discussion of this paper will be the EU Transport and Environmental policy. The main purpose of this essay is to introduce main concepts and workings of both policies separately and then evaluate how these are applied in reality. However the main concepts based on the previously mentioned ideas will be to stress out the importance or need of both policies and what have been their major successes and failures so far. At the end the main task will be to analyze and make a conclusion, for both policies together, what should be done better and what would be the possible directions of those in the future.

Transport Policy

For the EU’s goal to have an efficient and dynamic economy and cohesive society the crucial issue is to move goods and people as quickly, cheaply and efficiently as possible. This concept is reflected by proper transport policy. The basis of the Transport policy within EU is reflected in articles 74 to 84 of the Treaty of Rome (1957). These articles set the rules that call for the following points: common set of rules that would govern the transport policy within EU; for promotion of public transport services there have to be state aids to support it; to have as low costs as possible; introduce several means of transport (road, water, sea and air transport). Why it is actually important to have an effective transport policy within the EU? The main reason for this is, that transport as a growing industry has a significant importance in the economy of the EU. In other words if EU wants to have a integrated and prosperous economy it has to built up an effective transport system. Therefore the main concern of transport with regards to the economy involves several important aspects: support the process of Single Market; promote sustainable development; creating appropriate infrastructure to reduce disparity among regions; provide and improve safety; establish relations with third countries etc. At the end it is also important to mention that EU system of transport does not necessarily stop at EU borders, it might continue even further if a non member country has an agreement with the EU concerning the transport issues.

Over time the demand of transport means and services has changed rapidly within EU. There were several factors contributing to such changes: shifting of manufacturing away from many of originally urban sites; the great increase in sector of services; greater mobility among professional people; increase in incomes therefore more use of transport is created etc. What this change actually means in reality? Firstly, the new transporting network (beginning of 20th century) was created and is used by all states apart from Spain. Secondly, in general since last two decades there has been major increase in transport, which created a new mobility within the EU. The transport of passengers increased over 85% (fastest change in air transport). However despite many disadvantages (pollution, traffic jams etc.) road transport has achieved the greater increase and currently dominates in the area of transport means.

By the completion of Single Market the transport policy was heading towards the advancement. The main concern, again, was to create a set of rules where within the Single Market the transport would be efficiently provided and also the competition would be present as well. The main worries concerning the Single Market issue were not to allow the creation of monopolies, not distorting competition, managing of structural changes and ensuring that all means of transport will cover their costs (even causing the environmental damage). These issues were more or less solved but mainly two issues have been the center of debate concerning the impact of Single Market. The first one is the road haulage, mainly because it is the most common of means how to transfer goods. The second is the civil aviation (which grows constantly) and is the main means of passengers’ long-distance travelling.

The road haulage is one of the major concerns of the EU transport policy because it is the major means of transporting goods within the region. Firstly, this area has been the main concern for the transport policy mainly because it is the most important mode of transport and both “international and domestic freight transport have been subjected to a variety of controls and restrictions in terms of prices and entry into market” (Barnes, Barnes 84). How much restricted control is applied varies from one country to another. For example while Germany applied strict regulatory controls, UK used more liberal approach towards such issue. However the main principle of international haulage is characterized by the use of so-called quota system, meaning that hauliers have to obtain the permit to be able to undertake international journeys. One form of permit is so called Bilateral permit, which is mainly about two particular member states who make a bilateral agreements about the amount of haulage licences to be granted to non-domestic carries. Another form is Multilateral permit, which allowed unlimited journeys within the EU region. This one became especially important over the last two decades and was given even wider scope by the EU. Secondly, because of fairness among domestic and non-domestic hauliers there was the introduction of payment for usage of roads (1250 ECU per year, Euro-regional tax disc). Thirdly, because there are other issues in which a member states differ (weight that trucks might carry) there was the introduction of weight allowed to be carried by trucks that could vary as much as 30 % depending on particular member state. Finally, the new agreements created more competitive environment within the EU. Trucks could obtain loads for tour journeys so that they are more often fully loaded. However, the road haulage now days takes highest percentage of modes of transport even though it causes the highest pollution and therefore most harm to the environment. Main concern that it should be joined if not substituted by other modes of transport (such as rail, inland waterways, air, sea etc.) that are more ecological. The best way to achieve this would be through incentives, targeted advertisement emphasizing for the need of usage of other means of transport.

The civil aviation form of transport is the other crucial area because it is the constantly growing and most common means of transport of passengers for the long-distance travelling. It is important to mention that prior to 1990s the air transport was highly regulated and in most cases state-owned. However due to increasing importance of global competition the aviation industry switched from being a infant industry to being a provider of mass service, mainly privately owned. The major breakthrough came in 1986 with the so-called “Nouvelles Frontieres judgement of ECJ, which confirmed that competition rules did apply to the air transport sector as well. Competition rules applied under Article 85 of Treaty of Rome, which takes into consideration the anti-competitive agreements; and Article 86, which concerns the abuse of dominant market positions (Barnes, Barnes 89). The main features of liberalization of aviation services came in years 1987, 1990 and introduces the following concepts: free pricing for scheduled airfares; rules against predatory pricing were strengthened; entry into industry was easier; allowed duly licensed air carries to operate virtually all routes between airports in the EU. Most importantly, the liberalization of air transport is the part of completion of Single Market in service sector and is believed to bring the prosperity mainly because the possible threat of oligopoly is reduced, price of the air travel will fall, there will be available grater availability of flights (more efficient transport area) and finally there will be provided new spirit for competition between existing airlines.

One of the important concerns with regards to the air travel services is the amount of state aid given to the particular airlines. During the period of 1991 to 1994 there was a great amount of state aid given to the European airlines in order to improve the situation within the area of air transport. However the state aid was inefficiently used by many airlines. The main example was the French “Air France” that had a loss of 440 million Euro in a first half of 1993, and recognized a need of financial help from the state. However after it had received the help from state the actual loss at the end of 1993 turned out to be 1 billion Euro. Other airlines argued that giving a state aid to companies that show significant level of loss deprives them for any possibility of gaining the help from state if they need it and prevents them from equal treatment and opportunities. Therefore after a successful discussion the EU Commission has changed the criteria for giving the aid to airlines and the outcome has brought following points: the state aid is given on “one last time” basis; the remaining airlines that are not privatized should do so; careful monitoring of restructuring process; government should not participate in commercial decisions of airlines and so on and so forth. What is important to mention concerning this issue is mainly that if transport policy has to work properly in this sector there has to be emphasis on coordination of infrastructure of industry. EU could possibly help the process by providing enough funding but at the same time there has to be a will of national governments to encourage competitive practices.

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