Coal and the. Common Market By GEORG TUGENDHAT The first
question which arises, of course, is: in the event of Britain joining the EEC would our coal automatically enjoy Community status, or would we have to become members of the European Coal and Steel Community? The Rome Treaty, which is the basis of the EEC, does not abrogate the Paris Treaty which consti- tuted the High Authority. It is difficult to imagine that the coal and steel producers who are now subject to the regulations of the High Authority would accept a situation in which their British competitors were not bound by the same rules.
Assuming, however, that this hurdle is over- come and Britain enjoys freedom of movement for her coal within the Community, what then is the outlook in this market? According to the forecasts recently published by the High Authority, production is expected to fall by more than 10 million tons per annum over the next few years, thus bringing the average contribution of coal in the energy market down to 50 per cent. Over most of the Community, coaras a fuel for rail and giver transport is being rapidly replaced by electricity and oil. The domestic coal market is shrinking under the impact of liquid and gas- eous fuels. There remain, in fact, only the big industrial consumers; that is, power stations, gas works, the heavy industries and so forth. In the iron and steel industries the experts of the High Authority foresee a further fall in the consump- tion of coal despite an increase in output, be- cause thanks to technical improvement the consumption of coal per ton of crude steel is expected to fall from 924 kgs. in 1960 to 893 kgs. in 1961. Oil and natural gas are expected to replace coal to an increasing extent even in the metallurgical field. The advance of oil within the Community has already reduced the demand for coal and conse- quently there exist heavy coal stocks and an excess productive capacity. Stocks at the mines totalled approximately 29 million tons at the end of last month and after a slight fall during the winter months they are again rising. In Germany, Holland and more recently in France the mines have been reorganised, unproductive scams have been shut down and productivity per mine- worker has risen by between 16 and 20 per cent. Everywhere mine managements are increasing their efforts to sell coal. In Germany the Ruhr mines have now received permission from the High Authority to set up a single selling unit, a proposition which was strongly opposed by the High Authority and other producing members of the Coal and Steel Community.
In the coming years the Member States of the EEC will finish the building of a new river and canal system which will completely revolutionise transport ;thin the Community. 1,250-ton barges will be able to ply between Hamburg, Bremen, Marseilles, Basle and Vienna. The coal and iron-ore mines of Lorraine will be linked by the Moselle Canal to the Ruhr. Dutch and French shipping interests have introduced the Mississippi transport system of push-barges to the Seine and the Rhine, a system which enables one barge to push 9,000 tons as against a maximum pulling load of 1,500 tons. The Dutch and Belgium Governments have already an- nounced plans to widen their principal canals for the use of the new system. When the new har- bour works are completed at Ghent, Antwerp, Bremen and Rotterdam, these ports will be able to accommodate the largest of coal carriers. Boats up to 60,000 tons loading capacity are believed to be under construction, mostly on account of NICHOLAS DAVENPORT is on holiday and will resume his articles shortly.
big German consumers so as to ensure for them the lowest possible ocean freight rates for a long time ahead. These developments will further enhance the competitive position of the inland mines in the home and export field and they will also improve the flexibility of the big consumers, i.e.. steel works, etc., at these ports.
With whom will the NCB have to compete for the European market? Germany is now the largest exporting Member State. In 1960 its exports totalled approximately 15 million tons. The biggest importer was Italy, which consumed just over 10 million tons of coal in 1960 and is expected to increase imports during the current year. But in contrast to other Member States, Italy, which has only an insignificant domestic coal production, has for years past pursued a policy of purchasing in the cheapest market. During all this time the US has been offering coal at the lowest price. In consequence, US prices have become dominant; and in spite of all representations, emanating mostly from Bel- gium and Germany, the Italian attitude to energy prices has remained totally intransigent, Italy's only concession to Common Market interests being confined to granting preferential treatment to German and Belgian coal at strictly competi- tive prices. Although in Germany, Belgium and Holland various measures have beep taken to restrict the importation of American coal, its prices continue to dominate these markets.
The pressure from the consuming countries to put themselves on a par with their American competitors and those in Italy and Scandinavia is increasing steadily. In Germany the present measures designed to protect Ruhr coal are sup- posed to terminate at the end of 1962. The coal industry there is already demanding a continua- tion of these measures or some other form of protection in its fight against oil, natural gas and coal imports from the US. An official inquiry into the future of the German coal industry has just been concluded and a report is shortly expected. The Ministry of Economic Affairs has already let it be known that it, will oppose any return to planning or high energy prices, but this is an election year and it is unlikely that any final decision will be made by the present government.
In short, the European coal market is shrink-
ing and there is every sign that this trend will continue. Competition has become very tough and in many instances completely ruthless. It is an open secret that the so-called official coal prices have lost all their meaning and that secret rebates to big consumers are the order of the day. British coal will have to meet this competition. Furthermore, freedom of coal movements will clearly have to be granted to everyone. In this event, the NCB will also have to face competition from German and Dutch coal in Britain (which the NCB can do, from the low-cost coalfields).
It is possible that Mr. Robens's optimism was influenced by his, knowledge of a strong move- ment which exists within the Community and which aims at basing its energy requirements upon coal to a larger extent than now contem- plated. The adherents to this policy hope that the accession of the UK to the EEC will greatly strengthen support for these ideas, and that it will be possible to formulate an EEC policy which by greatly protecting Community coal resources will render it more independent of imported fuels. In view of the present temper of the consumers such a movement is unlikely to gain ground unless the coal industry in return for protection is able to guarantee them prices which will compare favourably with those paid elsewhere. Consumers will be all the more insistent because US coal concerns have offered coal on twenty- year contracts at guaranteed and highly com- petitive prices.
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