De Palacio seeks to put rail liberalisation on fast track

Date: 18/11/1999

By Renée Cordes

EUROPEAN rail companies would be forced to open up their freight operations to international competitors as early as 2002 under bold proposals to be unveiled by Transport Commis-sioner Loyola de Palacio next week.

Encouraged by last month's unanimous agreement among EU governments on the need to press ahead with liberalisation after years of squabbling, De Palacio will call for wide-ranging reforms to foster greater price transparency, efficiency and competition in the Union's rail sector. She will also propose separate measures to harmonise technical standards across the Union.

The proposals amount to one of the Commission's most ambitious attempts ever to force railways to become more market-oriented after 150 years of domination by national governments.

If the full Commission throws its weight behind the initiative when it meets next Wednesday (24 November), EU transport ministers could approve the proposals as early as next month - handing Finland a significant victory before the end of its EU presidency.

"This is the last mode of transport to have any serious market access and it has suffered enormously as a result," said a Union official.

"All our research shows there is enormous potential for carrying out rail operations more efficiently, and I can see no reason why it cannot win back some traffic from road and eventually win some new traffic."

Rail currently accounts for less than 14% of EU freight traffic, a significant drop from nearly a third in 1970. Some large rail freight firms, impatient with the slow pace of regulatory reform, are already pressing ahead with ventures aimed at capturing a bigger slice of the market.

De Palacio's plan seeks to ensure that smaller undertakings anxious to gain access to rail freight lines are not left out in the cold. This would be done by, for example, requiring infrastructure managers to publish information on how competitors can gain access to their networks and charge rail companies comparable prices for such access.

The proposals would allow for three types of charging, taking into account additional costs such as environmental damage, provided that there was fair competition. Infrastructure managers would be allowed to charge those seeking access to their tracks a combined fixed and flexible rate, sector-specific levies or fees negotiated on a case-by-case basis.

The Community of European Railways has welcomed the move to liberalise the market, but called on the Commission to move ahead equally quickly to introduce similar charging systems for other forms of transport to ensure fair competition.

In a separate proposal, De Palacio aims to tackle more technical but no less cumbersome barriers to a single EU rail network. She will urge governments to give the Commission the authority to draw up plans to coordinate different train-signalling systems, rolling stock and other equipment specifications.