unife and the european rail supply industry

IMPRINT Together with 400 European transport stakeholders and its partner association Published by CER,European the Community of European Railways and Infrastructure Managers, UNIFE UNIFE - the Rail Industry will start year with an Annual Reception held in Brussels on 26 Avenue Louise 221,the btepolitical 11 B - 1050 February Brussels 2013. At the presence of Vice-President of the European Commission Siim Kallas, Benedikt Weibel, former CEO of the Swiss Federal Railways (SBB) www.unife.org +32 2 626and 12 Dr 60 Johannes Nicolin, German engineer, will receive the prestigious European Railway Award. Photographs Copyright The Irish des Transport Minister Varadkar is of(CFL) course invited to be the keynote Société nationale Chemins de FerMr. Luxembourgeois LuxTramspeaker of this high level event of the rail community UNIFE Members Paper FSC Certified Recycled Paper

TABLE OF CONTENTS UNIFE and the European rail supply industry

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A few words about UNIFE Challenges from an industrial perspective

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1.

The Technical Pillar of the Fourth Railway Package

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2.

Mobility policy

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a. Stocktaking review of the 2011 Transport White Paper b. Digitalisation c. Urban mobility d. Freight policy

3.

Investment policy a. Connecting Europe Facility and EU Structural Funds b. Mobilising private investment for rail (EFSI and other initiatives)

4.

ERTMS Speeding up the deployment of ERTMS

5.

Sustainability a. Towards COP21: Transport decarbonisation and EU climate policies b. Non-Road Mobile Machinery Regulation (NRMM)

6.

Industrial policy a. For an EU Strategy in favour of the European rail supply industry b. Focus on Research & Innovation and Shift2Rail c. Focus on Skills policy d. Focus on SME policy

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Trade and International Affairs a. Free-Trade Agreement negotiations with Japan b. Transatlantic Trade Investment Partnership (TTIP) and bilateral cooperation with the US c. Investment Agreement negotiations with China d. International Public Procurement Instrument e. Responsible sourcing of minerals from conflict zones

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UNIFE AND THE EUROPEAN RAIL SUPPLY INDUSTRY

A few words about UNIFE Based in Brussels since 1992, UNIFE is the association representing the European rail manufacturing and supply industry at the EU and international level since 1992. The association gathers over 80 direct company Members – from numerous SMEs to major industrial champions from all over Europe – involved in the engineering, design, manufacture, maintenance and refurbishment of rail transport systems, subsystems and related equipment. UNIFE also brings together national rail industry associations from no less than 15 European States. As a trusted partner of the European Institutions, UNIFE looks forward to a fruitful cooperation with the Council of the European Union and its Luxembourg Presidency during the second semester of 2015, as well as continued collaboration with the various European Commissioners and European Parliament Committees dealing with policies impacting our industry.

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Challenges from an industrial perspective The European rail supply industry is a diverse and geographically widespread industry – from thousands of SMEs to major industrial champions; from rail supplies in rolling stock to signalling systems and infrastructure, including all components and subcomponents. In total the European rail supply industry employs no less than 400.000 people all over Europe. With absolute sales of €47 billion, the European rail supply industry still accounts today for 46% of the market for rail products in the whole world. The world leadership of this export-oriented industry is also attributed to its R&D capacities. Indeed innovation has been in the D.N.A. of a European industry that currently invests 2,7% of its annual turnover in R&D and that has come up with innovations such as the high speed train, ERTMS (European Rail Traffic Management Systems) and automated metro systems. We are now at a pivotal moment where the industrial competition from Asia and especially China is getting fiercer and fiercer. This was already aptly pointed out by DG ENTR in its 2013 Sector Overview and Competitiveness Survey of the Railway Supply Industry. But two years later, the rapidly-evolving situation has definitely become a cause for serious concerns for all European rail suppliers. While the access to some key markets is getting more and more restricted or is effectively non-existent for European rail suppliers, some companies from these same countries have become tough competitors in all products segments and on all continents. This is particularly the case for Chinese State-owned companies, which have growing export ambitions, including within the EU. In December 2014, it was announced that CNR Corporation Ltd (CNR) and CSR Corporation Ltd (CSR) – the two biggest Chinese manufacturers with combined sales amounting to USD 31.7 billion in 2013 – would merge. The merger was finalised on 1 June 2015, with the two entities ceasing to exist to form CRRC Corporation Limited, the world’s largest train builder. This merger has led to the creation of a huge company with twice the size of its immediate European competitor and benefiting from higher combined revenues, increased capital for acquisition, profit accretion and bigger economies of scale due to a large protected domestic market, and a strong pricing power.

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Challenges from a transport perspective Rail is the greenest and safest mode of transport. However, despite its obvious benefits, rail today has a smaller share of transport volumes than it deserves. It still has great potential that needs to be unleashed in order to meet the ultimate decarbonisation target of a 60% reduction in CO2 emissions in the transportation sector by 2050 as well as the two key objectives set in the Commission’s Transport White Paper published in March 2011:

• 30% of road freight over 300 km should shift to other modes such as rail or waterborne transport by 2030, and more than 50% by 2050, facilitated by efficient and green freight corridors. To meet this goal will also require appropriate infrastructure to be developed. • By 2050, complete a European high-speed rail network. Triple the length of the existing high-speed rail network by 2030 and maintain a dense railway network in all Member States. By 2050 the majority of medium-distance passenger transport should go by rail.

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his document will provide an overview of UNIFE priorities and legislative goals for the Luxembourg Presidency and beyond.

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1. THE TECHNICAL PILLAR OF THE FOURTH RAILWAY PACKAGE

The Technical Pillar of the Fourth Railway Package is extremely important for the European rail industry as it addresses one of the heaviest burdens on the rail sector: the complex and expensive authorisation procedures in Europe that currently immobilise assets worth €1.2 billion. By addressing this problem the Technical Pillar will help create the strong home market that the European rail manufacturers – including the thousands of SMEs and other sub-suppliers –need to continue thrive globally. Therefore, UNIFE enthusiastically welcomes the final agreement reached during the ninth informal Trilogue on 17 June thanks to the much-appreciated efforts of the Latvian Presidency. UNIFE would like to thank the Council and the European Parliament – with its TRAN Committee Chair Michael Cramer – once more for their intensive and efficient work on a legislative framework that will create a streamlined and efficient process for vehicle authorisation in Europe and enhance the role of ERA, making it a one-stop-shop for vehicle authorisation and safety certification. Given the utmost importance of the Technical Pillar for the entire rail sector, UNIFE hopes that the Luxembourg Presidency will now be in a position to forward the agreed texts to the European Parliament as soon as possible so that the Technical Pillar can be finally and officially adopted during its term. With the support of the Luxembourg Presidency it will also be essential for European Railway Agency (ERA) to now anticipate and start preparing the implementation of the Technical Pillar.

UNIFE hopes that the European institutions will adopt the Technical Pillar as a matter of priority during the Luxembourg Presidency in 2015

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2. MOBILITY POLICY

a.

Stocktaking review of the 2011 Transport White Paper The Transport White Paper, published by the European Commission in 2011, outlined the vision for EU transport policy for the next ten years including perspectives up to 2050. The roadmap elaborated by the European Commission highlighted a number of challenges that are still more than relevant four years later, such as oil scarcity, increasing competition and congestion. In light of these challenges, the document rightly emphasised the role of rail in meeting EU targets for the decarbonisation of the transport sector and the establishment of a single European transport area. UNIFE welcomes the ongoing review process launched by the European Commission as a useful opportunity to take stock of the progress made to achieve the ambitious objectives set in 2011 and identify corrective actions for issues that have not been properly addressed thus far.

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In the context of the stocktaking review of the Transport White Paper, UNIFE would like to stress the need to keep a high level of ambition by confirming the target of 60% reduction in transport greenhouse gas (GHG) emissions by 2050 as well as the modal shift objectives. This key message was also conveyed by UNIFE to the European Parliament in the framework of the currently discussed own-initiative Report on the mid-term review of the 2011 Transport White Paper – under the coordination of Rapporteur Wim van de Camp.

In view of the Transport Council on 8 October 2015 – which the Luxembourg Presidency will partly dedicate to the White Paper review – and the upcoming inter-institutional discussions with the European Commission and the European Parliament; UNIFE would like to raise the attention of the Luxembourg Presidency on the following key points: • The objective of the mid-term review should be to increase and streamline the efforts to meet the ambitious targets of the 2011 Transport White Paper. So far, the Transport White Paper has made a difference in thinking, but not yet in delivering and UNIFE is therefore concerned that concrete results of Transport White Paper initiatives will become evident only in the distant future if the current pace of implementation is kept. • Initiatives aimed at creating jobs and boosting EU competitiveness such as the Juncker Investment Plan (and the related EFSI Regulation), should take into account the White Paper objectives and, in particular, rail’s environmental credentials. Therefore, it will be important to ensure that the implementation of the European Fund for Strategic Investment contributes in practice to the White Paper objectives by boosting projects supporting sustainable transport.

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• R&D initiatives should aim at increasing the attractiveness of rail transport and at the same time support the leading role of the European rail supply industry in light of increasing global industrial competition. A good example has been set in the area of Research and Innovation by the creation of the Shift2Rail Joint Undertaking; however a timely start of R&D projects will be critical to successful implementation. • The lack of level playing field in the global rail market is an outstanding issue and should play a key role in ongoing and future EU Trade negotiations (cf. current negotiations with Japan, the US and China). The issue of competition from third countries (especially Asia) is becoming increasingly important. In this respect, a comprehensive and coherent EU strategy should be defined in order to level the playing field in public procurement at the international level – which is currently unfavourable to EU interests.

b. Digitalisation Considering the European rail industry’s key role as suppliers of new IT technologies, automation, sensors and monitoring tools, traffic/asset/energy/ big data management solutions (including ERTMS/ETCS) or security systems; UNIFE warmly welcomed the Communication on a ”Digital Single Market Strategy for Europe” presented by the European Commission in May 2015. As rightly stated in the ”e-Transport” chapter of this Communication, ”digitalisation and better integration of existing tools can significantly improve transport and traffic management and open up a wide range of opportunities”. Therefore, UNIFE has been happy to engage with Transport Commissioner Bulc on this key topic and we are now actively contributing to the work of DG MOVE for the definition of a new EU Strategy for a ”Digital Single European Railway Area”. UNIFE also looks forward to working with the European Commission as a Member of the newly-established ”Digital Transport and Logistic Forum”. In this regard, UNIFE considers that Shift2Rail, the major EU rail R&D initiative, is the best place to handle most of the future of rail digitalisation with a holistic approach. ERTMS, with its technical component, the European Train Control System (ETCS) should also be a major element of the Digital Single European Railway Area.

In the framework of the preparation by the European Commission of its Strategy for a ”Digital Single European Railway Area”, UNIFE calls on the support of the Luxembourg Presidency to ensure that the upcoming EU Strategy will be developed in full coherence with the related priorities of already existing EU technologies and initiatives such as ERTMS and Shift2Rail.

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c.

Urban mobility Urbanisation has been a major trend of the past decades and is expected to continue. As a result, urban transport now accounts for 40% of CO2 emissions and 70% of emissions of other pollutants arising from road transport; in addition it is the main source of congestion, which costs nearly €100 billion, or 1% of the EU’s GDP, annually. Hence, urban transport must meet the challenge of an increased demand for mobility and safety while reducing pollutant emissions. UNIFE considers that modal shift from private vehicles to public transport is the most effective way to reach the goal of more sustainable urban mobility in European cities, and thus contribute to meeting the 2011 Transport White Paper CO2 emission reduction targets of 60% by 2050 compared to 1990. The European rail supply industry provides solutions for urban transport with low, or even zero emissions of CO2 and other pollutant gases. Light rail, metros and commuter trains are the least polluting public transport means in urban areas. Moreover, the rail supply industry is committed to further improving the energyefficiency of its products through different technologies and methods, such as hybrid technologies, weight reduction, regenerative braking, energy storage, new traction technologies, optimised operational parameters or alternative green power supply solutions. Therefore, rail should play a central role in future EU policies on sustainable urban mobility as it is a key part of the solution to current issues, such as pollution, greenhouse gas (GHG) emissions and congestion. In order to boost this process towards sustainable mobility, adequate financing, at both EU and national level, should be ensured for rail-bound projects in light of their high economic, environmental and social impacts. This key message was also conveyed by UNIFE to the European Parliament in the framework of the currently discussed own-initiative Report on sustainable urban mobility – under the coordination of Rapporteur Karima Delli.

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In the context of the ongoing Parliamentary discussions on sustainable urban mobility and in view of the informal Council on 7 October 2015, which the Luxembourg Presidency will dedicate to urban mobility; UNIFE calls on the Luxembourg Presidency to take into account the following points: • Rail is by far the largest provider of electric mobility for both urban and interurban transport. As a consequence, rail-bound solutions should be the starting point of any future EU policies aimed at promoting electric mobility. • Investments in urban transport are essential. In this respect, UNIFE calls on the European Commission to increase or at least maintain the current level of public investments in sustainable urban transport and on local and national authorities to potentially explore alternative sources of financing for railbound urban projects together with the EIB and national public financial institutions. • In order to keep the momentum and further boost the development of urban rail systems, UNIFE would like to highlight the need to secure sufficient EU funds for future R&D activities in urban rail.

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d.

Freight policy Despite the ambitious modal shift targets set in the 2011 Transport White Paper and its clear benefits in terms of sustainability, rail freight is currently still very far from unleashing its full potential. This is due to a number of technical and regulatory barriers within Europe, such as lengthy authorisation procedures for rolling stock or insufficient cross-border cooperation in traffic management. In order to reverse the current declining trend, the European Commission is planning to develop a new agenda for rail freight, based on the experience of the Rail Freight Corridors. UNIFE is convinced that the revitalisation of rail freight is therefore closely linked to interoperability, innovation, and streamlined authorisation processes. In this respect, besides advocating for both Shift2Rail and the Technical Pillar of the Fourth Railway Package, UNIFE also supports the implementation of Rail Freight Corridors and the Commission’s ongoing plans aimed at making rail freight a more attractive transport solution for customers.

Since the next European Rail Freight Days will be organised by the European Commission under the auspices of the Luxembourg Presidency, UNIFE would welcome the support of the Council’s Presidency towards continuous development in terms of standards, interoperability for ERTMS and capacity, paving the way for improved quality of rail freight services across Europe.

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3. INVESTMENT POLICY

a. Connecting Europe Facility and EU Structural Funds UNIFE believes that the available EU financial resources should be used in the best possible way. Be it for infrastructure, rolling stock or signalling, there are enormous needs for investments at all levels: European, national, regional and urban. For transport infrastructure alone, the 2011 Transport White Paper evaluated that more than €1.5 trillion will need to be invested in the 2010-2030 period. In this context, the Connecting Europe Facility (CEF) will continue to be the cornerstone of the EU Investment Policy in the transport sector for the 2014-2020 period. The rail system is a key beneficiary of the funds available under the CEF, which were increased threefold when compared to the 2007-2013 period. The high demand for EU co-funding was exemplified by the 2014 CEF Transport Calls for Proposals for which the demand was three times higher than the available funding (€11.9 billion).

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The high number and quality of the rail projects for these first calls under the CEF demonstrated the dynamism of the sector which is willing to carry out major construction, upgrading and modernisation plans. Following our active participation in the last TEN-T days in Riga (June, 2015), UNIFE will continue to monitor the implementation of the major projects in order to foster the completion of the strategically important TEN-T rail corridors. Moreover, the achievement of an integrated European transport system will also depend on the successful implementation of the EU Structural and Investment Funds, in particular the Cohesion Fund. UNIFE would like to emphasise two fundamental aspects: the prioritisation of rail projects and the absorption capacity. On the first point, UNIFE closely monitors and welcomes the commitments for rail investment made so far by Cohesion Countries in their (Transport) Operational Programmes. UNIFE considers it, indeed, as essential for these Member States to make best use of the Cohesion Fund to support rail projects. The recent organisation of the annual UNIFE General Assembly in Bucharest (June 2015) is a clear sign of our industry’s willingness to support Cohesion Fund investment in rail projects in Central and Eastern Europe. UNIFE also supports the Commissioner for Regional Policy, Corina Creţu, in her efforts to achieve a more results-oriented approach for EU cohesion funding. With clear results and output indicators reflecting the planned outcomes of the Operational Programmes, all stakeholders will be able to evaluate the impact of the investments. Nevertheless, the absorption capacity which varies significantly from one Member State to the next remains a concern for UNIFE. In some Member States, rail infrastructure and rail transport still face dramatic underinvestment. Capacity-building measures should be prioritised in order to achieve long-standing results. Therefore UNIFE will continue to foster dialogue between EU Institutions, national administrations, railway operators and the rail supply industry in order to exchange best practices.

In this context, UNIFE would like to recall once more that public grants will remain of vital importance for the rail transport projects and therefore we call on the Luxembourg Presidency to ensure – together with the European Commission, the European Parliament and the Innovation and Networks Executive Agency (INEA) – that the best use is made of both the Connecting Europe Facility and the EU Structural Funds in order to boost rail investment all over Europe.

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b.

Mobilising private investment for rail (EFSI and other initiatives) While public grants will remain of vital importance to finance rail projects, UNIFE is also ready to work together with the European Institutions and the European Investment Bank (EIB) to ensure that EU initiatives aimed at mobilising private investment for strategic projects will also benefit the rail sector in Europe. The newly created European Fund for Strategic Investments (EFSI) will play a key role in fostering private investment in important long-term transport infrastructure projects. UNIFE welcomes the agreement between the EU colegislators – and the much-appreciated support of the European Parliament in this respect – regarding the funding sources for the Juncker Investment Plan, which significantly mitigated the planned reductions of the CEF grants funding. With a total amount of planned investment of €315 billion – including €240 billion to be invested over the next three years in infrastructure and innovation – it is essential to ensure that rail projects will benefit from these investments. In this respect, UNIFE underlines the important role of the new ”European Investment Advisory Hub” that will be managed by the EIB in partnership with the European Commission. UNIFE welcomes the fact that it will be accessible not only to Member States and public authorities, but also project promoters and the private sector. The EIB will have a crucial role in helping to structure the projects in a way that they could benefit from private investments under the EFSI.

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Many existing successful public-private partnership projects also testify the potential of private investments in rail projects. In particular, UNIFE supports the European Commission’s efforts to explore innovative financing schemes and business models for the deployment of ERTMS. Furthermore, UNIFE welcomes the recent adoption of the regulation on the longterm investment funds that will help tackle barriers to private investment in long-term infrastructure projects. UNIFE also strongly supports the European Commission’s aim to build a Capital Markets Union that will help unlock more investment for companies and for infrastructure projects. Last but not least UNIFE warmly welcomed the recently launched European Parliament’s Long-Term Investment Intergroup – chaired by TRAN Vice-Chair Dominique Riquet – and we are committed to actively support its efforts to ”promote and finance long-term sustainable investment in the real economy”.

UNIFE calls on the Luxembourg Presidency to: • closely monitor the start of the implementation of the EFSI instrument • work together with the European Commission and the EIB to ensure that support in the transport sector will indeed go to ”projects and priorities eligible under CEF Regulation and TEN-T Guidelines” as well as ”smart and sustainable urban mobility projects” • ensure a continuous dialogue between the European Institutions, the EIB and rail stakeholders on EFSI and the other initiatives aiming at boosting private investment

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4. ERTMS

ERTMS remains one of the key pillars for achieving an interoperable and attractive railway system. The standard targets the integration of the different European national signalling systems - and represents, at its foundation, the aspiration to build a Single European Railway Area. As a unique global signalling system, ERTMS considerably facilitates cross-border traffic movements. Trains equipped with ERTMS systems and components manufactured by any qualified supplier are able to run on tracks equipped with ERTMS of any other supplier. This enables the easy and seamless coordination of domestic and international train services and helps make rail transport more competitive.

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When ERTMS is installed along a given corridor in Europe, rail operators only need to purchase ETCS as the on-board equipment, as opposed to the many legacy systems running in different countries. This significantly reduces the costs of the global signalling equipment whilst allowing for the reduction of maintenance costs and increasing the flexibility of drivers’ work routines.

Speeding up the deployment of ERTMS

The UNIFE statistics (June 2015) show that almost 76,100 km of railway tracks and nearly 9,500 vehicles are already running or contracted to be equipped with ERTMS worldwide. Europe’s share in trackside investment is 55%; nonetheless significant investments have been on-going in Asia (31% of the total ERTMS trackside investments) and in Africa and the Middle East (11%). The latest statistics also demonstrate that there is a constant, stable rate of increase in ERTMS investments in Europe. Some Member States are continuously introducing, extending and implementing ERTMS in their network. Complete, nationwide network deployments are ongoing in countries such as Belgium, Denmark and Luxembourg. A significant investment plan is also foreseen in the United Kingdom.

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Some Central and Eastern European Member States have also made progress in deploying ERTMS on their networks. Nonetheless, a rather slow uptake is visible in CEE Member States despite the availability of European funds for this purpose. The European Commission is currently preparing, with the decisive involvement of the European Coordinator for ERTMS, Karel Vinck, and with the active support of the sector, the ERTMS Breakthrough Programme. This Programme includes a certain number of actions that aim to speed up the deployment of ERTMS. These actions should be undertaken by all actors of the sector, at both European and Member State levels. The European rail manufacturing industry is committed to continuing to deliver, in cooperation with the European Railway Agency (ERA) and the Users, an ever-stable and interoperable system. ERA – whose role as ERTMS System Authority shall be reinforced by the Fourth Railway Package – will also organise under the Luxembourg Presidency (on 22 and 23 September 2015 in Lille) the 2015 ERTMS Command and Radio Communication Conference (ERTMS CCRCC).

UNIFE calls on the Luxembourg Presidency to work together with the European Commission on the preparation of the revised ERTMS European Deployment Plan. On its side, UNIFE is fully in favour of speeding up ERTMS deployment to gain the greatest benefit of ERTMS system by: • Supporting the European Commission in the setting-up of the ERTMS ”Breakthrough Programme” • Ensuring the stability of the specifications and a successful next release of the Baseline 3 Specifications, by end of 2015; • Reducing migration time; • Using the availability of European funds to deploy ERTMS in the EU and build an attractive business case for ERTMS by implementing the system in the whole of Europe.

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5. SUSTAINABILITY

a.

Towards COP21: Transport decarbonisation and EU climate policies The transport sector still accounts for around a third of EU greenhouse gas emissions, which makes it the second biggest greenhouse gas emitting sector after energy. Given the increasing dependency of the EU on imports of fossil fuels and the EU commitment to meet ambitious CO2 emissions reduction targets, the transport sector definitely needs to be decarbonised. Besides a low use of imported fossil fuels, rail’s performance clearly stands out in terms of high energy efficiency, low specific emissions of CO2, and a growing use of renewables. Therefore, decarbonisation of the transport sector should mean above all more rail-bound public transportation solutions, and further electrification of the sector. UNIFE has repeatedly advocated for a modal shift from road and air to rail as the most environmentally friendly mode of transport. Modal shift will also generate a number of additional benefits such as reduced dependency on foreign energy suppliers, and reduced congestion and pollution.

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Considering the encouraging October 2014 European Council Conclusions on the 2030 Framework for Climate and Energy Policies and the strong dedication of Energy Union EC Vice-President Maroš Šefčovič, UNIFE would like to reaffirm that the newly agreed EU targets represent a unique opportunity to address the major challenge related to transport sector CO2 emissions and to achieve a level playing field between transport modes. Finally, the last months leading to the 21st Conference of Parties (COP21) in Paris will be decisive to come up with a satisfactory post-Kyoto international agreement and the Luxembourg Presidency, the European Commission and the French Government will play a key role in this respect. This future agreement needs to take into account the specific needs of the transport sector, and the ambitious initiatives that have been launched by the rail sector during the UN Climate Summit in September 2014. The European rail industry is at the disposal of the Luxembourg Presidency to further discuss the role of transport in these negotiations.

UNIFE believes that targets within the 2030 Framework for Energy and Climate Policies should be conducive to growth in the rail sector while avoiding the creation of new costs or barriers to such growth. In particular UNIFE would very much welcome the support of the Luxembourg Presidency to: • entrust the European Commission to confirm, in legislation, the 60% reduction of transport emissions by 2050 compared to 1990 levels – as per the Transport White Paper – with an additional binding target for 2030. • encourage the European Commission to create a ‘Transport Pillar’ within the Framework, to guarantee ambitious reductions in both greenhouse gas emissions and fossil fuel imports for the transport sector. In particular, a binding commitment on a minimum percentage of the use of revenues from the auctioning of EU ETS allowances in order to fund rail and public transport should be implemented. • encourage the European Commission to act on transport infrastructure charging in order to ensure that all modes pay a fair share of their infrastructure and external costs.

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b. Non-Road Mobile Machinery Regulation (NRMM) In September 2014, the European Commission proposed measures to cut emissions of major air pollutants from engines in non-road mobile machinery and cut the complexity of the legal framework for the sector. The proposal provides for more stringent emission limit values for internal combustion engines installed in non-road mobile machinery (NRMM) and aims at repealing an extremely complex directive comprising 15 Annexes and amended 8 times since it was adopted in 1997. Considering the difficulties faced by the rail industry due to the introduction of stage IIIB emission limits for railcars and especially for locomotives, UNIFE welcomes the European Commission’s proposal that takes into consideration the very specific market characteristics of the rail sector.

UNIFE would like to call the attention of the Luxembourg Presidency and the co-legislators on the following key points: • Interchangeability of engines: UNIFE proposes to allow railcar engines (RLR) to be installed in locomotives (in place of engines of category RLL) since there is a possibility that in some specific cases/projects there might be an economic advantage, while at the same time providing an environmental benefit. • Exemption for contracts already in place at the time the new regulation enters into force: The proposal also introduces a date limit for the production and placing on the market of diesel railway vehicles, while contracts in the rail sector sometimes require production times of over 5 years after the first unit is authorised, to deliver all units of the series. Therefore, UNIFE would like to introduce in the current proposal an exemption for contracts placed before the introduction date of the new regulation on the date limits for production and placing on the market of machinery. • Engines for auxiliary rail vehicles and auxiliary engines for railcars: For a broader utilisation of the especially designed railcar engines, UNIFE proposes to also allow a railcar engine RLR to be installed in auxiliary rail vehicles and to be used as auxiliary engine in railcars.

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6. INDUSTRIAL POLICY

a.

For an EU Strategy in favour of the European rail supply industry At a time where world leadership and jobs are at stake, UNIFE has actively advocated for a coordinated and comprehensive approach at the EU level to put in place the most favourable business conditions to ensure the maintenance of a strong, innovative and competitive rail manufacturing base in the EU.

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This EU industrial Strategy for our sector could be based on 5 key pillars:

Internal Market

Internationalisation and Market access

Skills

Research and Innovation

SMEs

In this regard, UNIFE particularly welcomes the recent decision of the European Parliament’s ITRE Committee to prepare an official Resolution on the global competitiveness of European rail supply manufacturers. The European Parliament is expected to adopt this Resolution in Plenary in Strasbourg during the Luxembourg Presidency. At a crucial time where China recently finalised the merger of its two biggest State-owned manufacturers and hereby the creation of the world’s largest train builder, European rail supply manufacturers – including the thousands of SMEs and other sub-suppliers – consider this as a strong and positive signal towards a job-creating and export-oriented European industry. UNIFE very much looks forward to contributing to the work of the ITRE Committee on this Parliament’s Resolution. This shall be a unique opportunity to discuss and define the best cross-sectoral policy framework at the EU level for the benefit of our industry.

UNIFE is at the disposal of the Luxembourg Presidency to work together with the European Commission and the European Parliament’s ITRE Committee on defining a coordinated and comprehensive EU industrial strategy to maintain the world leadership of European rail supply manufacturers.

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b.

Focus on Research & Innovation and Shift2Rail Being at the forefront of Research and Innovation will be a key factor if Europe wants to win the industrial battle against foreign (and especially Asian) competitors. Therefore UNIFE already had the occasion to warmly thank the Council for its intensive and efficient work on the proposal for a Regulation to establish the Shift2Rail Joint Undertaking (JU), published by the Commission on 16 December 2013 and officially adopted by the Council on 16 June 2014. Since then, and as foreseen by the Regulation, the European Commission has been responsible for the establishment and initial operation of the Shift2Rail JU. An Interim Executive Director has been nominated and the Commission launched the much-awaited Call for Associated Members on 6 October 2014. The whole evaluation process for the candidate Associated Members is still ongoing and should be finalised before the end of the Luxembourg Presidency. The new Executive Director of the JU is expected to be appointed by March 2016, after a selection by the Shift2Rail Governing Board. In the meantime we are grateful that the Council swiftly endorsed the Shift2Rail Master Plan on 10 February 2015 and we welcomed the start in May 2015 of the first pre-Shift2Rail projects (referred to as ”lighthouse” projects) awarded under the first ”Mobility for Growth” call of the Horizon 2020 Programme. These projects will launch key research activities that will feed into the Innovation Programmes of the Shift2Rail Joint Undertaking. UNIFE will coordinate the two ”lighthouse” projects ”Roll2Rail” and ”IT2Rail” and participate in ”In2Rail” (with Network Rail as coordinator).

UNIFE calls on the Luxembourg Presidency to: • ensure the launch of all the R&D activities of the newlyestablished Joint Undertaking as soon as possible • closely monitor – including through the now operational States Representatives Group – the establishment and initial operation of the Shift2Rail JU for which the European Commission has been responsible; • investigate, together with the European Commission, the Innovation and Networks Executive Agency (INEA) and the European Investment Bank (EIB), about additional financing opportunities for Shift2Rail, in particular for deployment activities (for example with the Connecting Europe Facility).

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c.

Focus on Skills policy Interestingly, a study published by DG ENTR in 2013 entitled Sector Overview and Competitiveness Survey of the Railway Supply Industry identified the ”Safeguarding access to skilled labour” as one of the 4 major action fields for the future of our industry. According to this study, ”as in most technical engineering sectors the supply of technical engineers may become a bottleneck in maintaining the competitive position of the European rail supply industry on the long term. Especially in view of the ageing population it can be expected that a significant cohort will retire”. The Commission’s study therefore makes various recommendations that are still very relevant today and for which UNIFE invites the European Institutions to further investigate. Beside these recommendations, UNIFE also finds the Commission’s initiative to support the creation of several European Sector Skills Councils very interesting. These are designed to anticipate the needs for skills in specific sectors and to achieve a better match between skills and labour market needs. Fourteen Sectors have already benefited from feasibility studies and some have already been set up such as the Automotive and the Shipbuilding industries. UNIFE is ready to work with the European Commission to assess the feasibility of such an initiative in the rail industry.

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UNIFE, with the help of our National Associations, also encourages Member States to support national initiatives such as the successful National Skills Academy for Railway Engineering (NSARE) in the UK – which allows the railway industry to work with the UK Government and training providers to shape the qualifications of their employees in order to better compete in global markets. Last but not least, UNIFE encourages the use of the European Social Fund (ESF) for launching image campaigns at European/national/regional level(s) to help attract young people to our industry.

At a time where both Transport Commissioner Violeta Bulc and Employment Commissioner Marianne Thyssen have announced their common ambition to develop a ”Social Agenda for Transport”, UNIFE is more than ever eager to cooperate with the Luxembourg Presidency and the European Institutions to: • Further investigate on the Recommendations of the Commission’s Sector Overview and Competitiveness Survey of the Railway Supply Industry regarding ”safeguarding access to skilled labour” • Assess the possibility to launch a ”European Sector Skills Councils” for our industry • Assess the feasibility of using the European Social Fund (ESF) to launch image campaigns at European/national/regional level(s) to help attract young people to the rail industry • Help promote best practices implemented at the Member State level in this field.

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d.

Focus on SME policy On the model of the automotive industry where world reknown assemblers work together with thousands of sub-suppliers, the European rail supply industry is also composed of some major ”system integrators” (such as Alstom, Bombardier Transportation, Siemens and CAF) and of thousands of more specialised rail suppliers, including thousands of SMEs. Therefore, it is worth stressing that a large part of the number of people employed in the rail supply industry (400.000 in total) is due to the vitality of the SMEs in our sector. A few months ago, UNIFE welcomed the intention of the European Commission to revise the Small Business Act with the goal ”to continue a strong European policy to support Small and Medium-sized enterprises”. With the help of its SME Committee, UNIFE responded earlier this year to the public consultation launched by the European Commission in this regard. This public consultation has been the occasion for UNIFE to call on a revised ”Small Business Act” that would benefit to rail-supply SMEs by: • supporting their internationalisation • supporting their efforts to innovate • facilitating their access to finance • making national administrations more responsive to SME needs • reinforcing skills development to overcome the shortage of skilled labour

At a time where Commissioner for Industry and SMEs Elżbieta Bieńkowska has not made any announcement yet concerning a new ”Small Business Act”, we call on the Luxembourg Presidency to work together with the European Commission to ensure that the new European policy framework will be proposed before the end of 2015 that also takes into account the interests of rail-supply SMEs.

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7. TRADE AND INTERNATIONAL AFFAIRS

Trade and international affairs are a key aspect of UNIFE’s activities, with the objective to address barriers that significantly hamper EU suppliers’ access to world rail markets and to build solid partnerships with rail stakeholders in prominent countries. To achieve these objectives, UNIFE works closely with European institutions, in particular with the European Commission (Commissioners Malmström and Bienkowska) and with the Presidencies of the Council. UNIFE is, therefore, very much looking forward to working with the Luxembourg Presidency on the following key dossiers.

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a.

Free-Trade Agreement negotiations with Japan Following Japan’s unilateral commitment to guarantee transparency and non-discrimination of procurement process in the railway sector in 2011, a package of measures was agreed upon between the Japanese government and the European Commission, with different components and implementation procedures. These measures became effective in October 2014, following the EU decision to lift its objection to the delisting of the 3 Honshu Japanese Railways (JR East, Central and West) of the WTO GPA. UNIFE welcomes the package of measures as a step in the right direction to improve EU suppliers’ access to the Japanese rail market. Indeed, the ”one-year package” has enabled some progress to be made on transparency of procurement processes in Japan. However: • • •

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The level of information provided still greatly differs from what can be found in the EU, notably with its centralised information system called Tenders Electronic Daily (TED); The enforcement of the measures agreed in the package differs from one rail operator to another and/or depends on the agreed measures; The package is considered insufficient by UNIFE to solve crucial issues such as the Operational Safety Clause (OSC) or discriminatory procurement procedures.

Therefore, the evaluation of the ”one-year package” by the European Commission and the Japanese government, to be performed during the Luxembourg Presidency, should confirm the necessity to further address procurement and technical issues so as to reach a reciprocal market access by the end of the negotiations. To this day, the market access situation in Japan still strongly contrasts with that in Europe where Japanese rail suppliers have indeed been awarded major contracts. Finally, the next EU-Japan Railways Industrial Dialogue will be held during the Luxembourg Presidency (November).

UNIFE would like to call the attention of the Luxembourg Presidency and Council to the following key points: • The enforcement of the measures of the ”one-year package” by the Japanese government on behalf of the GPA covered entities and by the 3 JRs remains a critical issue. In particular, UNIFE believes that the delisting of the 3 Honshu JRs (which account for 60% of the Japanese rail market) must be followed by concrete actions to prove their willingness to open procurement to further EU suppliers. • The negotiations on rail should be actively pursued in the second phase of the negotiations. The support of the Luxembourg Presidency and of other key Member States on this issue will be crucial. In particular, the Operational Safety Clause (OSC), which is de facto a non-tariff barrier for EU suppliers, should be removed in the second phase of negotiations on the basis of a clear, transparent understanding of safety requirements in Japan. In this respect, the industry expects DG MOVE, the European Railway Agency and the Japanese government to intensify their discussions during the Luxembourg Presidency. • The market access discussions on rail and in the public procurement chapter of the agreement should ensure that EU suppliers benefit from a wider and by all means reciprocal access to the Japanese rail market. In particular, an extended coverage of entities compared to Annexes II and III of the WTO GPA should be guaranteed, as well as eliminating discriminatory practices and requirements such as the request to have previous experience in Japan.

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b.

Transatlantic Trade Investment Partnership (TTIP) and bilateral cooperation with the US UNIFE is a strong proponent of the trade negotiations launched in June 2013, arguing that both the EU and the US would benefit from an improved business environment in the rail sector. Although many railway manufacturers have established themselves on the US market, they face barriers in the form of domestic content requirements. Indeed, US federal authorities (in particular the Federal Railroad Administration, the Federal Transit Administration and Amtrak) demand a certain percentage of domestically-produced equipment. UNIFE members have reported that these percentages have increased in recent years due to political pressure from the US government, and that some administrations plan to increase their requirements to 100%. This is, in particular, the case for current initiatives such as the Grow America Act, which could significantly increase existing local content requirements for mass transit projects. On top of that, US States or municipalities and their related mass transit authorities can impose even more stringent domestic requirements, and impose local content requirements when no federal money is involved. This situation acts as a deterrent against foreign companies and has major collateral impacts (increase in production prices, difficulties in finding appropriate domestic suppliers etc.). It is therefore of utmost importance to remedy this situation in order to facilitate trade between the two blocks. After a year and a half of negotiations, UNIFE is concerned by the lack of progress on the public procurement chapter. This is due to several factors, among which the sensitivity of the ”Buy America” policies and the difficulty to associate US States in the negotiating process. However, UNIFE would like to stress the importance of achieving a balanced and satisfactory result on this chapter given the importance of public procurement for the European rail supply industry.

UNIFE would like to call the attention of the Luxembourg Presidency and Council on the following key points: • ”Buy America(n)” requirements significantly hamper EU suppliers’ access to US markets due to their high stringency level (e.g. 100% requirements as proposed in the draft ”Grow America Act”). These should be lowered to a reasonable level to offer EU suppliers a net benefit, and additional state requirements supplementing the federal ones should not be allowed.

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• Procurement commitments under the Agreement on Government Procurement (GPA) should be expanded to ensure that all rail-transport related federal and sub-federal entities (especially mass transit entities) are covered, while guaranteeing transparent and open procedural requirements. In this respect, the involvement of US States needs to be secured so as to ensure the success of the negotiations and the finalisation of an agreement. • Existing cooperation initiatives in the rail sector should be intensified by a more frequent regulatory dialogue between the EU (DG MOVE/European Railway Agency) and the US (Federal Railroad Administration), with each party sharing its experience and achievements. A convergence of EU and US regulatory and standardisation systems should be encouraged in order to facilitate access to US markets for EU suppliers.

c.

Investment Agreement negotiations with China In the past few years, UNIFE members have encountered increasing difficulties on the Chinese rail market. Not only are some market segments now de facto closed to foreign suppliers (even in the case of Joint Ventures), but additional constraints are imposed by adjudicating authorities (nontransparent public procurement procedures, increasing localisation rates, etc.) on the market segments that are accessible to foreign suppliers. At the same time, however, Chinese state owned companies are becoming increasingly challenging competitors in all product segments and on all continents through unfair competition. The most recent development in this respect is the merger between the two main Chinese train manufacturers CNR and CSR. The merger process was finalised on 1 June 2015, with the two companies establishing CRRC, the largest rolling stock supplier in the world. UNIFE would like to draw the attention of the Presidency to the possible consequences in terms of jobs and economic growth if European players lose their competitive position as a leading industry worldwide. Therefore, UNIFE believes the negotiations on a bilateral investment agreement between the EU and China should facilitate European business in China and aim at improving access to the Chinese market and providing EU investors in China with a high level of investment protection in a single, coherent text. Nevertheless, the market access component must be the cornerstone of the negotiations, addressing important issues like mandatory Joint Ventures, licensing regimes and localisation rates. In this respect, UNIFE is concerned by the lack of progress of the negotiations and calls for the negotiations to accelerate.

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UNIFE would like to call the attention of the Luxembourg Presidency and Council on the following key points: • Member States should ensure that market access barriers are adequately addressed in the EU-China Investment Agreement negotiations, and that they result as soon as possible in concrete improvements for EU rail suppliers. UNIFE will keep working closely with European institutions on this topic. • Member States should support the European Commission in the negotiations for China’s access to the WTO Agreement on Government Procurement (GPA), so as to ensure that China can join with a revised offer on a reciprocal basis with the EU – i.e. with extensive coverage of central, sub-central entities and stateowned-enterprises, and no specific carve-out for the rail sector. • The High-level Dialogue on Transport and the Rail Working Group established between DG MOVE and the Chinese National Railway Administration (NRA) should be pursued in order to discuss market access issues, regulations and standards and reinforce their overall transparency. Indeed, foreign players are not often given the opportunity to comment on drafts of standards and specifications, which may lead to entry barriers and unfair competition.

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d.

International Public Procurement Instrument In March 2012, the European Commission published its proposal to create an international public procurement instrument. After a long process, the European Parliament supported this proposal by a vote in plenary session in January 2014. In spite of this very positive signal for the future of the instrument, and a revised proposal of the Italian Presidency, discussions within the Council are still blocked by several Member States. UNIFE has been a proponent of such an instrument since its inception. As global companies whose products are usually purchased through public procurement procedures, European rail suppliers have experienced different levels of openness when trying to establish themselves in non-European markets. In some countries, they face significant barriers, be it in the form of ”buy local” provisions, forced technology transfers, or de facto exclusion. These barriers result in missed business opportunities for the European industry, and ultimately impacts both economic growth and jobs. This stands in sharp contrast with the situation in Europe, where public procurement rules are fully transparent and open as per the EU public procurement legislation. As Commissioner Malmström committed to make a revised proposal this year – most probably during the Luxembourg Presidency – UNIFE would like to reiterate its support of the international procurement instrument as a tool to increase the EU’s leverage in trade negotiations and achieve a level-playing field between the EU and major world markets.

Therefore, UNIFE calls on the Luxembourg Presidency of the EU to: • Discuss in a constructive way the forthcoming proposal from the European Commission on the international procurement instrument. • Find a suitable compromise which could accommodate Member States whilst featuring a high-level of ambition and creating new business opportunities for the European rail industry.

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e.

Responsible sourcing of minerals from conflict zones In March 2014, the European Commission proposed a draft Regulation setting up an EU system of self-certification for importers of tin, tantalum, tungsten and gold who choose to import responsibly into the Union. Self-certification would require EU importers of these metals and their ores to exercise ‘due diligence’ by monitoring and administering their purchases and sales in line with the five steps of the Organisation for Economic Cooperation and Development (OECD) Due Diligence Guidance. In May 2015, the plenary session of the European Parliament voted in favour of a mandatory EU-wide scheme on responsible minerals originating from conflictaffected and high-risk areas. The plenary session amended the Report proposed by the INTA Committee, making it mandatory and expanding it to all players in the mineral supply chains, both upstream and downstream. While the European rail industry welcomed the initiative proposed by the European Commission and is committed to operate with transparency, a pragmatic and efficient proposal should be proposed so that the competitiveness of the European industry is not put at risk.

UNIFE would like to call the attention of the Luxembourg Presidency and Council on the following key points: • The voluntary nature of the scheme should be maintained to incentivise companies to further develop responsible management systems. • The EU should maintain the scope of the 4 proposed minerals – tin, tungsten, tantalum and gold – for which international expertise in due diligence schemes already exists. • The scheme should remain focused on the most effective level of the EU supply chain. Expanding the scope of the EU scheme to downstream users will make the system costly for a lot of companies (including SMEs), while results will be limited as it is technically extremely difficult to trace the origin of minerals beyond the level of smelters/refiners. • Candidates to public procurement (be it at EU or national level) should not be asked to implement the fully fledged due diligence process. The competitiveness of the EU industry is at stake and this would also have serious implication on the price of final products.

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For further questions, please contact: Jean-Philippe Peuziat Head of Unit – Public Affairs +32 2 642 23 25 [email protected]

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UNIFE. Promoting Rail Market