The new Mobility Package adopted at the European level represents a significant shift in the transport sector. Its effects have been long anticipated since the Commission’s proposal in 2017, as the new regulations intended to level the playing field for transport operators from different member states. Additionally, they aim to provide equal social protection to all drivers, reduce negative competition, and standardize different administrative procedures. Considering the new procedures, transport operators are faced with a multitude of challenges to adapt their business models to the current requirements.
Main Concerns
There has been significant pushback from Eastern European countries voicing concerns regarding the regulations with the greatest impact including: (1) drivers needing to return to their place of residence or operational center every four weeks; (2) trucks needing to return to the operational center of the company every eight weeks; (3) the interdiction for drivers to spend their regular rest period in the truck cabin; transport operators having to pay drivers the minimum wage applicable in the countries of transit; registration of the cross-border posting in the Internal Market Information (IMI) system.
Impact
The Romanian transport sector ranks eighth in the European Union, with an industry evaluated at EUR 6 billion in 2019. However, the adopted national legislation on the Mobility Package is not clear enough, which makes the task of implementing a new business strategy complying with these obligations even more difficult.
Romanian transport operators will feel the greatest impact of these regulations in their turnovers. There are greater financial costs, as transport from countries on the outskirts of Europe, like Romania, bears a higher cost and a longer time burden. The obligation to arrange the return of the vehicle every eight weeks will see a 10% cut in the annual turnover of a company, according to industry experts. The percentage is significantly higher when aggregating the economic outcomes of all the changes. This adds to the financial burden generated by the interdiction to spend the resting period in the cabin, the minimum wage, and the fiscal treatment of the daily allowance. The new regulations are even more damaging, considering the transport sector has already been severely affected by the COVID-19 pandemic and the recent rise in fuel prices.
What Causes the System to Limp?
The Package falls short on many other considerations. Firstly, it does not deal with the potential refusal of the driver to return at such short intervals, leaving it up to national authorities to analyze how a company has discharged this obligation. The Romanian Transport Authority, in line with the guidelines of the Commission, has offered some insight stating that documents such as CMR or return tickets and proof of written communication to the drivers related to their return are deemed conclusive.
Secondly, the IMI registration system poses significant challenges when it comes to the registration of transnational posting, especially if the transport operation takes place on the territory of more member states. For each of these states, even if the driver spends a limited amount of time on their territory, the company must register the posting in the IMI system.
CJEU Litigation
The Package was challenged before the CJEU by several countries including Romania, Lithuania, Poland, Cyprus, and Bulgaria. However, the ETF, a federation representing 5 million transport workers and their 250 trade unions, is calling upon these countries to withdraw their claim before the CJEU, stating that “it is not the time to question the new rules.”
No Alternative
For countries like Romania, located on the outskirts of the European market and not part of the Schengen agreement, the implementation of the Package appears to have a significant negative impact – translated into the rise of migration of both workforce and capital, the rise of transport prices, and decreasing GDP. What the CJEU will decide concerning the complaints brought forward, which should be analyzed given the alleged breach of the four freedoms that represent core pillars of the EU single market, remains to be seen. Until then, the industry has no choice but to move forward.
By Alina Iozsa, Partner and Real Estate and PPP Leader, and Alexandra Burdulea, Associate, Hategan Attorneys
This Article was originally published in Issue 9.4 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.
