Directive 2007/58/EC the Commission presents a report on the implementation of the provisions regarding the opening of the international rail passenger transport market accompanying the Communication on the fourth Railway Package.

Transposition : although all Member States were delayed as regards transposition (the deadline was 4 June 2009), by now all of them have taken national legislative measures to comply with the Directive. International rail passenger services including cabotage rights have been liberalised in the EU as from 1 January 2010.

Implementation: the interpretation of Article 10 (3a) and the provisions concerning the principal purpose of a rail service and the economic equilibrium of services under a public service contract being compromised proved to be the most difficult for Member States. In this field, the Commission adopted an interpretive Communication and will adopt implementing acts on the basis of the Directive establishing a Single European Railway Area .

Limitation of cabotage rights : several Member States decided not to use any of the options provided by the Directive to limit new international services or cabotage rights. Even where national law grants the possibility of limiting cabotage, practical application of those provisions remains minimal. Concession-based limitation seems to be the most efficient of the safeguard clauses to protect the interests of operators providing services on a route that may be interesting for cabotage. However, this used only by the Netherlands.

Development of the service : the report shows that the implementation of the Directive resulted in very few new services launched so far and makes an attempt to analyse the reasons for that. It notes that when trying to enter the international rail passenger market, new operators are often facing barriers linked to inadequate implementation

of previous railway packages or loopholes in previous EU legislation. Infringement procedures, the recast of the First Railway Package and the proposals for the Fourth Railway Package are expected to contribute to the solution of these problems.

The report goes on to note that in any event, most segments of the international rail passenger market are barely profitable and therefore unattractive for operators. The experience from opening the rail freight market shows that new operators (even subsidiaries of incumbent railway undertakings in other Member States) prefer domestic services to international ones as traffic flows are larger and domestic traffic is easier to organise. The Commission's proposals to open up domestic rail passenger markets and to expand competitive tendering in the framework of the Fourth Railway Package (see 2013/0028(COD) and 2013/0029(COD) ) should give a boost to the development of international services. The analysis of the experience gained from the opening of the international rail passenger market since 2010 seems to confirm that new international services are likely to spread from domestic market opening rather than the other way round.

PURPOSE: to follow up the reform of the rail sector by opening up international rail passenger services within the European Union to competition (third rail package).

LEGISLATIVE ACT: Directive 2007/58/EC of the European Parliament and of the Council amending Council Directive 91/440/EEC on the development of the Community’s railways and Directive 2001/14/EC on the allocation of railway infrastructure capacity and the levying of charges for the use of railway infrastructure.

CONTENT: the Council adopted the three legislative proposals composing the third rail package, namely:

this Directive on the development of the Community’s railways; a directive on the certification of onboard personnel ensuring the operation of locomotives and trains (see COD/2004/0048 ); a regulation on rail passengers’ rights and obligations ( COD/2004/0049 ).

The three legal acts were adopted pursuant to the joint draft texts agreed by the Council and the European Parliament through an exchange of letters on 20 and 21 June 2007, in the framework of the conciliation procedure.

The Directive on access to rail services allows the opening up of international rail passenger services by 2010 and includes the right for international trains to provide cabotage services, namely the right to pick up and set down passengers at any station located along the route of an international service, including stations located in the same Member State.

So that the opening up of international rail passenger services does not lead to the opening up of the market for domestic passenger services, the Directive states that the right of access only applies to international services, whose principal purpose is the transport of passengers between stations in different Member States. Member States may exclude from the scope of this Directive any railway service carried out in transit through the Community and which begins and ends outside the Community territory.

The Directive is a fair balance between the opening up of the market, on the one hand, and the protection of public transport services, on the other. To reach this balance, the text provides for:

a procedure which makes it possible to determine whether the opening-up of the market for international rail passenger services compromises the economic equilibrium of public transport services; a clarification of the rules for granting the right of access; and a rule enabling Member States to impose a levy on international rail passenger services. In line with the expectation of the European Parliament, the rules governing the levy on international rail passenger services, aiming to finance public transport services, specify that the total revenue raised from such a levy shall not endanger the economic viability of the rail passenger transport service on which it is imposed, and that the compensation paid may not exceed the total cost incurred in the relevant public service obligations.

Member States may also limit the right to pick up and set down passengers at stations within the same Member State on the route of an international passenger service where an exclusive right to convey passengers between those stations has been granted, under a concession contract awarded before 4 December 2007, on the basis of a fair competitive tendering process. This limitation may continue for the original duration of the contract, or 15 years, whichever is the shorter.

Concerning the committee procedure, the Directive allows measures necessary for the adaptation of the Annexes of Directive 91/440/EEC and Directive 2001/14/EC to be adopted in accordance with the “regulatory procedure with scrutiny”.

In 2012, the Commission will present a report on the application of the Directive, which will evaluate the development of the market, including the degree of preparation of a further opening up of passenger rail services. It shall also analyse the different models for organising this market and the impact of this Directive on public service contracts and their financing. In this report, the Commission shall, if appropriate, propose complementary measures to facilitate any such opening and assess their impact.

ENTRY INTO FORCE: 04/12/2007.

TRANSPOSITION: 04/06/2009.

The European Parliament adopted a resolution on the joint text approved by the Conciliation Committee regarding the proposal amending Council Directive 91/440/EEC on the development of the Community's railways and Directive 2001/14/EC on the allocation of railway infrastructure capacity and the levying of charges for the use of railway infrastructure. It approved the joint text by 541 votes in favour to 66 against with 20 abstentions.

The key points of the agreement reached can be summarised as follows:

Comitology : measures necessary to adapt the annexes of Directive 91/440/EEC and Directive 2001/14/EC will be adopted in accordance with the 'regulatory with scrutiny' procedure; Levy : in line with the EP second reading position, provisions governing the levy on international rail passenger services to finance public rail passenger services include the stipulation that 'the total levies imposed shall not endanger the economic viability of the rail passenger service on which they are imposed'; and that the compensation paid shall not exceed the total cost incurred in discharging the relevant public service obligations. Reporting obligations : the Parliament achieved its goal of ensuring that, when the Commission reports in 2012 on the implementation of the Directive, it will also be obliged to assess the development of the market including the state of preparation for a further opening-up of the rail market and, if appropriate, propose additional measures to bring about further liberalisation of rail market access.

The Council decided not to accept all the European Parliament's second reading amendments to three legislative proposals, which form a so-called third railway package:

- proposal for a directive amending Council directive 91/440/EEC on the development of the Community's railways;

- proposal for a directive on the certification of train crews operating locomotives and trains on the Community's railway network;

- proposal for a regulation on international rail passengers' rights and obligations.

It accordingly decided to convene the Parliament-Council conciliation committee with a view to negotiating a joint text.

The Commission can accept in their entirety or partly most of the amendments adopted by the European Parliament in second reading. The agreed amendments aim to clarify the proposal made by the Commission, introduce additional reporting requirements and modify certain comitology provisions based on Council Decision 2006/512/EC of 17 July 2006 amending Council Decision 1999/468/EC.

Other amendments accepted concern:

Levy to finance public services : these amendments clarify the scope of such a levy and the conditions of raising it.

Length of framework agreements : this amendment introduces a recital on the proposed provision in the Directive to extend the standard duration of framework agreements in the case of specialised infrastructure and substantial long term investment to 15 years.

Reporting requirements : these amendments modify the reporting requirements of the Commission. Impact assessment of the directive in small countries of the EU : two other amendments suggest focussing the 2012 report on the state of preparation for the opening of the market for national passenger services and require another report in 2018 on the application of the compromising economic viability test of public services through cabotage as well as of the reciprocity clause. The Commission can agree on assessing in 2012 the state of preparation for the opening of the market for national passenger services. However, it considers that the two assessment items proposed for the report in 2018 should be advanced to the 2012 report. The two amendments require redrafting as the reference to domestic rail passenger market opening is not relevant anymore due to the fact that it has not been voted by the Plenary.

Comitology procedure : these amendments align the comitology provisions of Directive 91/440/EEC as amended by this Directive to Council Decision 2006/512/EC of 17 July 2006.

On the other hand, the Commission rejects the amendment which deletes recital 8. The Commission considers the enumeration in recital 8 of criteria and procedural aspects for the assessment of whether the principal purpose of a cabotage service is international transport as important for the transparency of the procedure. The Commission cannot agree to a certain amendment as it does not make sense to grant new Member States the right to postpone opening of national rail passenger markets by 5 years if this Directive does not open domestic rail passenger markets at all.

The European Parliament voted on the "third rail package" - three separate reports on opening up rail networks to competition (COD/2004/0047), minimum rights for passengers (COD/2004/0049) and a European licence for train drivers (COD/2004/0048.). Wide differences remain between Parliament and the Council, and this legislation is now expected to go to conciliation.

In this report on the development of the railways by Georg Jarzembowski (EPP-ED, DE), it should be noted that the Transport Committee had called for domestic railways to be opened up to competition by 2017. (Please see the summary dated 19/12/2006.) However, this position did not receive sufficient support in the vote in plenary and therefore no liberalisation can be expected on this front in the foreseeable future. Regarding competition in international railways, Parliament voted to accept the date of 2010 contained in the Council's common position.

Other main amendments were as follows:

-Parliament was opposed to the Council's further limitation on the opening-up of networks , under which new, open-access international services with intermediate stops could not be used to pick up and set down passengers in the same Member State. Parliament therefore rejected the provisions in the common position specifying that the right of access would be granted only to those international services whose principal purpose is to carry passengers between stations located in different Member States;

- Member States may authorise an authority responsible for rail transport to impose a levy on railway undertakings providing an international passenger service for the operation of routes which fall within the jurisdiction of that authority and which are operated between two stations in that Member State. In that case, railway undertakings providing a domestic transport service shall be subject to the same levy on the operation of those routes. The levy is intended to compensate the authority for discharging public service obligations in the context of a public service contract. The total levies imposed shall not endanger the economic viability of the international passenger service on which they are imposed;

-the proposed levy that Member States could raise on passenger services in their territory, to help finance public service obligations, should be imposed in accordance with the principles of "fairness, transparency, non-discrimination and proportionality";

-in order to create specialised infrastructure, such as high-speed railway lines, railway undertakings require planning and legal certainty commensurate with the substantial long-term investment involved. It should therefore be possible for such undertakings normally to conclude framework agreements with a term of up to 15 years. Directive 2001/14/EC should be amended accordingly;

-the application of the directive should be evaluated on the basis of two reports, to be submitted by 31 December 2012 and 1 January 2018 respectively, rather than just one as originally proposed. In the first report, the Commission should specifically analyse the state of preparation for the opening of the market for national passenger services and, possibly, proposing flanking measures to facilitate this step.

The committee adopted the report by Georg JARZEMBOWSKI (EPP-ED, DE) amending the Council's common position under the 2nd reading of the codecision procedure. MEPs in the committee reintroduced in modified form a number of proposals adopted by Parliament at 1st reading, which had been rejected by the Council.

In particular, the committee again insisted that rail networks be opened up to competition not only for international passenger services, as agreed with the Council, but also for all other types of passenger service, which the Council had been unable to accept. It modified the target date proposed by Parliament at first reading for domestic passenger services (2012) to 2017. However, the committee stipulated that Member States which joined the EU on or after 1 May 2004 should have the right to postpone the 2017 target date for national passenger services by up to 5 years, and it said that the evaluation report on the implementation of the Directive should take account of the impact on the small countries of the Union, which would be particularly affected by liberalisation.

MEPs disagreed with some of the limitations on access proposed by the Council in order to protect regional passenger services, arguing that regional services were already adequately protected by the new Article 10(3b) of Directive 91/440/EEC. They said that Member States' right to limit access on services covered by one or more public service contracts, including where this limitation resulted in restricting the right to pick up and set down passengers at any station, may be imposed only where the exercise of the right of access would compromise the "economic viability" of a public service contract. They were also opposed to the Council's further limitation on the opening-up of networks, under which new, open-access international services with intermediate stops could not be used to pick up and set down passengers in the same Member State. The committee therefore rejected the provisions in the common position specifying that the right of access would be granted only to those international services whose "principal purpose" is to carry passengers between stations located in different Member States.

MEPs also stipulated that the proposed levy that Member States could raise on passenger services in their territory, to help finance public service obligations, should be imposed in accordance with the principles of "fairness, transparency, non-discrimination and proportionality".

Lastly, the committee reiterated that the application of the directive should be evaluated on the basis of two reports, to be submitted by 31 December 2012 and 1 January 2018 respectively, rather than just one as originally proposed. In the first report, the Commission should specifically analyse "the state of preparation for the opening of the market for national passenger services" and propose further measures where necessary.

The Commission considers that the Common Position does not undermine the essential objectives and the underlying approach of its proposal, and can therefore support it. It makes the following comments on the principal points:

- on the rights to openly access the infrastructure for rail passenger services, the Commission supports the opening schedule as defined in the Common Position as it allows all market actors to prepare for market opening. The Commission can accept the reciprocity clause since it is strictly transitional in nature and formulated in such a way as to avoid incompatibility with Community law. The Commission also agrees with the Common Position that the right of access should only be granted to those international services, which have as a principal purpose the carriage of passengers between stations located in different Member States. In this manner, an access right for international passenger services, which includes cabotage, could not be abused and lead to the opening of the market for domestic passenger services;

- on the mechanisms and procedures to safeguard public transport services , the

Commission agrees with the three additional elements as they either enhance the clarity of the provisions or state what is possible under Community law anyway;

- the Commission comments on Parliament’s proposal, taken up by Council, to complement the opening of the market for international rail passenger services, and in particular for services using specialised infrastructure, with arrangements for more stable and predictable climate for investments . The Commission supports the position of the Council which reflects appropriately the generally long amortisation periods for such specialised rail infrastructure.

The Council has included eight amendments made by the European Parliament, either literally or in principle, in its common position. A central issue of the Council's discussions on the market opening proposal was its relation with the revised proposal on public passenger transport services by rail and by road. Consequently, at a Council meeting of 5 December 2005, a Political Agreement on the Rail Market Access proposal could only be reached by addressing the relation between both proposals and giving guidance to several elements of the Public passenger transport services proposal in a Statement to the minutes made by the Council and the Commission.

The Council, by qualified majority (abstention by Hungary), made some changes to the proposal:

- opening the market for international rail passenger services: by agreeing to grant, by 1 January 2010, the right of access to the infrastructure of all Member States to railway undertakings for the purpose of operating international passenger services, the Council follows the compromise reached with Parliament at the time of the conciliation procedure on the Second Railway Package. However, the Council wants to leave Member States more time to prepare for market opening, by allowing them to grant the right of access by 1 January 2012 at the latest. Consequently, the Council does not agree with Parliament's view to open international rail passenger services by 2008, and all other forms of rail passenger services by 2012. The Council, however, took over the Parliament’s proposal of a reciprocity clause that Member States could apply which would open their market before 2010;

- right to pick up and set down passengers in the same Member State: the Council wants to avoid a situation where a right of access for international rail passenger services, which include cabotage, leads to the opening of the market for domestic rail passenger services. Therefore, the Common Position allows granting the right of access only to those international services, which have as a "principal purpose" the carriage of passengers between stations located in different Member States. In the Common Position, a procedure is foreseen for determining the purpose of international service for which access is requested;

- safeguarding public transport services: the Council has added three elements to the Commission proposal: a procedure for determining whether opening the market for international rail passenger services compromises a public transport service; a clarification on the modalities for granting the right of access; and a provision which allows Member States to charge a levy on international rail passenger services. With regard to the procedure, an important element is an objective economic analysis undertaken by the regulatory body of the impact of the international rail passenger service on public transport services. The Council has taken this idea from a Parliamentary amendment;

- framework agreements: like Parliament, the Council feels it necessary to complement the opening of the market for international rail passenger services with arrangements for a more stable and predictable climate for investments in the infrastructure for these services, and in particular for services using specialised infrastructure. Consequently, the Council modifies the provisions with regard to framework agreements in Directive 2001/14/EC. Where the Parliament proposes to allow for services using specialised infrastructure, which require substantial and long-term investment framework agreements with a duration of 10 years, the Council is of the opinion that a 15 years' duration is more appropriate;

- transit: the Common Position clarifies that the transport services of goods and passengers, which begin and end in third countries and which transit Community territory, are not included within the scope of the proposal. Lithuania made a Statement in the minutes on the issue of transit;

- concession based system: the Council is in favour of allowing Member States, for a transitory period, not to provide full open access to international rail passenger services in cases where the right to use certain rail routes has already involved a sufficient test of market value through the principle of competition for the rails.

- exemption from implementation for Malta/Cyprus: taking into account the fact that Malta and Cyprus do not have a railway system, and that the prospects of them having one are very limited, the Council exempts these two Member States from the obligation to implement the Rail Market Access Directive.

The Council has included eight amendments made by the European Parliament, either literally or in principle, in its common position. A central issue of the Council's discussions on the market opening proposal was its relation with the revised proposal on public passenger transport services by rail and by road. Consequently, at a Council meeting of 5 December 2005, a Political Agreement on the Rail Market Access proposal could only be reached by addressing the relation between both proposals and giving guidance to several elements of the Public passenger transport services proposal in a Statement to the minutes made by the Council and the Commission.

The Council, by qualified majority (abstention by Hungary), made some changes to the proposal:

- opening the market for international rail passenger services: by agreeing to grant, by 1 January 2010, the right of access to the infrastructure of all Member States to railway undertakings for the purpose of operating international passenger services, the Council follows the compromise reached with Parliament at the time of the conciliation procedure on the Second Railway Package. However, the Council wants to leave Member States more time to prepare for market opening, by allowing them to grant the right of access by 1 January 2012 at the latest. Consequently, the Council does not agree with Parliament's view to open international rail passenger services by 2008, and all other forms of rail passenger services by 2012. The Council, however, took over the Parliament’s proposal of a reciprocity clause that Member States could apply which would open their market before 2010;

- right to pick up and set down passengers in the same Member State: the Council wants to avoid a situation where a right of access for international rail passenger services, which include cabotage, leads to the opening of the market for domestic rail passenger services. Therefore, the Common Position allows granting the right of access only to those international services, which have as a "principal purpose" the carriage of passengers between stations located in different Member States. In the Common Position, a procedure is foreseen for determining the purpose of international service for which access is requested;

- safeguarding public transport services: the Council has added three elements to the Commission proposal: a procedure for determining whether opening the market for international rail passenger services compromises a public transport service; a clarification on the modalities for granting the right of access; and a provision which allows Member States to charge a levy on international rail passenger services. With regard to the procedure, an important element is an objective economic analysis undertaken by the regulatory body of the impact of the international rail passenger service on public transport services. The Council has taken this idea from a Parliamentary amendment;

- framework agreements: like Parliament, the Council feels it necessary to complement the opening of the market for international rail passenger services with arrangements for a more stable and predictable climate for investments in the infrastructure for these services, and in particular for services using specialised infrastructure. Consequently, the Council modifies the provisions with regard to framework agreements in Directive 2001/14/EC. Where the Parliament proposes to allow for services using specialised infrastructure, which require substantial and long-term investment framework agreements with a duration of 10 years, the Council is of the opinion that a 15 years' duration is more appropriate;

- transit: the Common Position clarifies that the transport services of goods and passengers, which begin and end in third countries and which transit Community territory, are not included within the scope of the proposal. Lithuania made a Statement in the minutes on the issue of transit;

- concession based system: the Council is in favour of allowing Member States, for a transitory period, not to provide full open access to international rail passenger services in cases where the right to use certain rail routes has already involved a sufficient test of market value through the principle of competition for the rails.

- exemption from implementation for Malta/Cyprus: taking into account the fact that Malta and Cyprus do not have a railway system, and that the prospects of them having one are very limited, the Council exempts these two Member States from the obligation to implement the Rail Market Access Directive.

The Commission informed the Council of the current state of play in its informal contacts with the United States Administration, following which a number of delegations intervened.

The President summarised the results of the exchange of views as follows:

"The Council welcomed the progress reported by the Commission in its informal talks with the United States. Whilst recognising that there could be no guarantee of success, Ministers were unanimous in their support for a prompt resumption of formal negotiations, judging that conditions were now in place for making progress towards an agreement with the US at substantial mutual benefit. Such an agreement could be staged, provided there was a commitment to completion, and would need to deliver real benefits for both sides. The Commission had the Council's full support and the Presidency would work closely and urgently with the Commission to achieve a result."

The European Parliament adopted the report by Georg JARZEMBOWSK I (EPP-ED, DE) amending the Commission’s proposal. (Please see the summary of 19/04/2005.) Parliament called for the complete opening of rail services to competition from 2012, rejected the European Commission's proposal on the quality of rail freight services, and significantly extended the scope of the proposal on passengers' rights. These are the most notable provisions in reports on the third European rail package. (The package consists of four legislative proposals. Please see COD20040048, and COD20040049.)

Parliament decided not to block the decision-making process, having secured guarantees from the British Presidency that the EU Council of Ministers will consider the package as a whole. Parliament had considered not adopting a resolution, since it was concerned at the package was being broken up by the Council as a means of burying the Directive on the liberalisation of passenger services.

This resolution provides for the liberalisation of international passenger transport from January 1, 2008 at the latest, and the liberalisation of domestic passenger services from January 1, 2012. This is more ambitious than the Commission’s proposal which called for the opening of international passenger transport to competition by 2010. In addition:

- Member States should remain free to anticipate the grant of access rights to railway undertakings and international groupings for national and international passenger transport services. The use of such rights may temporarily be confined to railway undertakings, and their directly and indirectly controlled subsidiaries, that hold a licence in the Member States where analogous conditions for access to the railway infrastructure apply. This reciprocal clause would prevent rail enterprises that continue to operate as monopolies in their own country from benefiting from open markets in other member states.

-In order to create specialised infrastructure, such as high-speed railway lines, railway undertakings require planning and legal certainty commensurate with the substantial long-term investment involved. It should therefore be possible for such undertakings normally to conclude framework agreements with a term of 10 years. Directive 2001/14/EC must be amended accordingly. Framework agreements will in principle be of aduration of five years and shall be renewable for periods equal to their original duration. The infrastructure manager may agree to a shorter or longer period in specific cases. Periods longer than five years must be justified by reference to the existence of commercial contracts, specialised investments or risks. For services using specialised infrastructure and which require substantial and long-term investment, framework agreements may be of 10 years' duration. Any period longer than 10 years shall be permissible only in exceptional cases, in particular where there is large-scale, long-term investment, and particularly where such investment is covered by contractual commitments including a multi-annual amortisation plan

- The application of the Directive will be evaluated on the basis of two reports to be presented by the Commission two years after the dates of opening up the market in international and national passenger services, respectively . These reports will include first evaluations by the Commission of the impact of the first and second railway packages on public service quality standards, social standards of employees and environmental performance. Furthermore the Commission must present an impact assessment on the opening of the networks for national passenger services by 31 December 2005.

The European Parliament adopted the report by Georg JARZEMBOWSK I (EPP-ED, DE) amending the Commission’s proposal. (Please see the summary of 19/04/2005.) Parliament called for the complete opening of rail services to competition from 2012, rejected the European Commission's proposal on the quality of rail freight services, and significantly extended the scope of the proposal on passengers' rights. These are the most notable provisions in reports on the third European rail package. (The package consists of four legislative proposals. Please see COD20040048, and COD20040049.)

Parliament decided not to block the decision-making process, having secured guarantees from the British Presidency that the EU Council of Ministers will consider the package as a whole. Parliament had considered not adopting a resolution, since it was concerned at the package was being broken up by the Council as a means of burying the Directive on the liberalisation of passenger services.

This resolution provides for the liberalisation of international passenger transport from January 1, 2008 at the latest, and the liberalisation of domestic passenger services from January 1, 2012. This is more ambitious than the Commission’s proposal which called for the opening of international passenger transport to competition by 2010. In addition:

- Member States should remain free to anticipate the grant of access rights to railway undertakings and international groupings for national and international passenger transport services. The use of such rights may temporarily be confined to railway undertakings, and their directly and indirectly controlled subsidiaries, that hold a licence in the Member States where analogous conditions for access to the railway infrastructure apply. This reciprocal clause would prevent rail enterprises that continue to operate as monopolies in their own country from benefiting from open markets in other member states.

-In order to create specialised infrastructure, such as high-speed railway lines, railway undertakings require planning and legal certainty commensurate with the substantial long-term investment involved. It should therefore be possible for such undertakings normally to conclude framework agreements with a term of 10 years. Directive 2001/14/EC must be amended accordingly. Framework agreements will in principle be of aduration of five years and shall be renewable for periods equal to their original duration. The infrastructure manager may agree to a shorter or longer period in specific cases. Periods longer than five years must be justified by reference to the existence of commercial contracts, specialised investments or risks. For services using specialised infrastructure and which require substantial and long-term investment, framework agreements may be of 10 years' duration. Any period longer than 10 years shall be permissible only in exceptional cases, in particular where there is large-scale, long-term investment, and particularly where such investment is covered by contractual commitments including a multi-annual amortisation plan

- The application of the Directive will be evaluated on the basis of two reports to be presented by the Commission two years after the dates of opening up the market in international and national passenger services, respectively . These reports will include first evaluations by the Commission of the impact of the first and second railway packages on public service quality standards, social standards of employees and environmental performance. Furthermore the Commission must present an impact assessment on the opening of the networks for national passenger services by 31 December 2005.

The committee adopted the report by Georg JARZEMBOWSKI ( EPP-ED , DE ) amending the proposal under the 1st reading of the codecision procedure:

- the legislation should also cover national passenger services and not just international ones, as proposed by the Commission. International passenger services should be opened up to competition by 1 January 2008, rather than 1 January 2010 as stated in the proposal. Moreover, railway undertakings should be granted access to the infrastructure "for the purpose of operating all other types of passenger service" by 1 January 2012. When operating an international passenger service, railway undertakings should have the right to pick up and set down passengers at any station "between the points of departure and destination";

- Member States should also remain free to grant access rights at an earlier date to railway companies and international groups for national and international passenger transport services;

- the committee proposed a new Article 1a specifying that framework agreements should in principle be concluded for a period of 5 years but that, for services using specialised infrastructure (e.g. high-speed lines), such agreements could be of 10 years' duration. In this way, railway undertakings would be guaranteed the necessary degree of certainty when making the substantial and long-term investment needed for specialised infrastructure;

- whereas the proposal provided for the Commission to present just one report, by 31 December 2012, on the implementation of the provisions on granting access, the committee proposed that the Commission submit two reports, by 31 December 2009 and 31 December 2013 respectively: the first relating to international passenger services and the second to all other types of passenger service, including in each an assessment of the allocation of train paths and the effects on public service contracts.

Lastly, the committee said that its report, together with the other three reports on the third railway package, should not be voted on in plenary unless it was certain that the Council was going to deal with all four proposals and, moreover, was willing to submit a common position on the revision of the 1969 regulation on public service requirements.

COMMISSION’S IMPACT ASSESSMENT

For further information about this issue, please refer to the summary relating to the Commission’s proposal COM(2004)0139 on the full opening of the rail transport market for passengers.

1- POLICY OPTIONS AND IMPACTS

During the first and second reading discussions on the second railway package, the European Parliament insisted on a full opening of the rail transport market, not only for freight, as put forward by the Commission in its proposals and accepted by the Council, but also for passengers. The latter, however, had not been proposed by the Commission and this amendment was rejected by the Council. However, the European Parliament insisted on the introduction of market opening measures for passenger transport, and increased pressure on the Commission and the Council.

The Commission considered several options and policy instruments to achieve the White Paper aims in respect to passenger transport as set out in the White Paper.

1 .1- Option 1 : Opening of the market for international passenger services only, without cabotage (where international trains pick up passengers and set them down in the same Member State) . In this option, railway undertakings will get access to the network of the Member States to operate services between two or more Member States. Railway undertakings will not be allowed to carry passengers between stations located in the same Member State. Links covered by an international public service contract will be excluded. The international, non-stop service between Brussels and Paris, the Thalys, is an example of a service allowed under this option. Embarking and disembarking in the same Member State will not be allowed.

1.2- Option 2 : Opening of the market for international passenger services with cabotage . As in the first part of option 1, but railway undertakings are allowed to carry passengers between stations served by the international service in one Member State. Links covered by a national or an international public service contract are excluded. The railway undertaking is not allowed to operate services within a Member State only. An example could be an international service between Brussels and Cologne, which is allowed to carry passengers between Belgium and Germany, as well as within Belgium or Germany, provided none of the passengers is transported from and to destinations covered by a public service agreement.

1.3- Option 3 : Opening of the market for international passenger services with cabotage . As in the first part of option 1, but railway undertakings are allowed to carry passengers between stations served by the international service in one Member State. Links covered by a national or an international public service agreement are included. The railway undertaking is not allowed to operate services within a Member State only. An example could be an international service between Brussels and Cologne, which is allowed to carry passengers between Belgium and Germany, as well as within Belgium or Germany, regardless whether the passengers transported from and to destinations covered by a public service agreement.

1.4- Option 4 : Opening of the market for international and national passenger services . Railway undertakings will get access to the network of the Member States to operate regardless whether or not borders are crossed. Links covered by a national or an international public service contract will be excluded.

1.5- Option 5 : Opening of the market for international and national passenger services . Railway undertakings will get access to the network of the Member States to operate regardless whether or not borders are crossed. Links covered by a national or an international public service contract will be included. This is the full market opening option.

1.6- Option 6: The ‘Business as usual’ option . No changes to the current regulatory framework.

For all 6 options, the existing regulatory framework concerning capacity allocation, safety, certificates, licenses and interoperability will remain fully applicable. This means that railway undertakings must be in the possession of a European licence as well as a safety certificate allowing them to operate services with the rolling stock they own or lease and the staff they employ. Railway undertakings must also obtain the capacity to run their services.

Several policy instruments were taken into consideration to implement the above-mentioned options:

a) A Regulation to be adopted by the European Parliament and the Council of Ministers, containing provisions allowing for the implementation of any of the first 5 options mentioned above. The provisions of a Regulation are directly applicable and do not require further implementation in the Member States, but its main inconvenience is that it requires a further modification of the already existing legal framework, notably the amended Directive 91/440;

b) Amendment of Directive 91/440: this Directive already defines the framework conditions for access to the rail infrastructure in the Member State . The main requirement to implement the second option mentioned above is a slight modification of these framework conditions, whilst maintaining the institutional framework put in place by the rail acquis;

c) Self-regulation by the railway sector itself. Market access in the railways sector as in all other network sectors has always been regulated by the legislator, and not left to the good will of the industry itself. The Community of European Railways (CER) recognised that this should be a political decision.

CONCLUSIONS : The most logical and appropriate instrument to implement any of the options 1 to 5 is the amendment of Directive 91/440 , as it has been used for all the other segments of the rail market.

The extended impact analysis comprised a modelling and analysis exercise. For the modelling exercise, a reference scenario was defined, against which to assess the effects of the various market opening scenarios in 2020, assuming the implementation of the measures in the proposal for a Directive will be carried out in 2010.

The main conclusions from the modelling exercise and the stakeholder analysis can be summarized as follows:

The proposed market opening scenario, free access for railway undertakings to the Member States’ network in order to provide international services, including cabotage, will be beneficial.

The contemplation of market opening measures - particularly for an industry as complex, diverse, and politically-influenced as the European railways - must rely on qualitative judgements rather than firm predictions of quantitative impacts (indeed, one of the major benefits of competition is the percolation of new behaviour and products into an industry, which policy-makers cannot anticipate in detail).

The key change introduced by a new (amended) Directive would be to allow all appropriately licensed railway undertakings (and not simply international groupings, as under Directive 91/440) to operate international passenger train services anywhere in the Community; for the majority of international passenger services in Europe, cabotage access to domestic passenger flows is essential to sustain a commercially viable rail service; the indicative results of the impact analysis confirm that market opening may lead to significant changes in service and fare levels, with impacts on state aids and investment.

It remains impossible to predict with accuracy the effects of domestic open access while the interpretation of the EU acquis on the procurement of public services remains the subject of legal and policy debate. Clarity in this area must be reached before further market opening is implemented: to open the domestic rail market within an uncertain environment could be more damaging than continuing with the status quo. Implementation of additional legislative provision in order to ensure open access for rolling stock would be unnecessary: the market should be allowed to adapt, and existing competition regulation should act to prevent abuses of conduct Implementation of additional legislative provision in order to ensure open access for rolling stock would be unnecessary: the market should be allowed to adapt, and existing competition regulation should act to prevent conduct abuses within this changing market environment within this changing market environment.

2- FOLLOW-UP

The legislative proposal contains a provision requesting the Commission to submit a report to the European Parliament and the Council on the implementation of this Directive on 31 December 2012 at the latest, 2 years after the final date for implanting its provisions. Within the framework of the Railway Market Monitoring Scheme, it is intended to continue to monitor all the relevant aspects of this railway market, which includes, obviously, the passenger market.