1.  For many decades, European rail transport was dominated by nationally based vertically integrated state monopolies, which dealt with international traffic through cooperation rather than competition. It is the aim of the European Commission to liberalise the market, so that incumbents are encouraged to compete with each other, and new entrants attracted in. This is widely thought to be particularly important in seeking to raise the rail share of the market in European freight traffic.

2.  To this end, the European Commission has introduced three packages of Directives. The First Railway Package, which became law in 2001, ought by now to have been implemented in all the European Union-15 Member States. The Second Railway Package was adopted by the European Union in 2002 but has not yet been implemented in Member States. The Commission has now produced a Third Railway Package of Directives which has not yet been adopted.

3.  Against the legislative background, which is explained more fully in paragraphs 13-18, Sub-Committee B decided to undertake an inquiry into the implementation of the European Union policy of open access for European rail freight services. We were particularly keen to know to what extent there remained barriers to the development of competition in international rail freight, and if there were such barriers, what could be done to remove them.

4.  A further element of European transport policy, put forward in the European Commission's 1998 White Paper on Fair Payment for Infrastructure Use and reiterated in its 2001 Transport Policy White Paper (Transport Policy for 2010 - Time to Decide) is the policy of charging each mode of transport according to the costs it imposes by use of the infrastructure, including the external costs of congestion, accidents and environmental damage. Appropriate charging for the use of infrastructure on all modes could be a very important complementary measure to liberalisation, in order to ensure that traffic allocates itself between modes of transport on the most efficient basis possible. However, we did not seek evidence on this issue and do not therefore seek in this report to reach conclusions on this aspect of European policy.

Acknowledgement

5.  We are grateful to all witnesses for their evidence, in particular for evidence from continental companies and organisations many of whom travelled long distances to give oral evidence. We should like to thank our Specialist Adviser, Professor Chris Nash, for his help and advice throughout the inquiry and the drafting of this report.

Recommendation to the House

6.  The Committee considers that the European Union's policy of open access for international rail freight services raises important issues to which the attention of the House should be drawn, and recommends this Report to the House for information.