WORLD TRADE
ORGANIZATIONG/SCM/Q2/EEC/39
23 December 2002
(02-7065)
Committee on Subsidies
and Countervailing MeasuresOriginal:  English
SUBSIDIES
Request from the REPUBLIC OF KOREA to the
EUROPEAN COMMUNITY and its Member States pursuant to Article 25.8
of the Agreement on Subsidies and Countervailing Measures
The following communication, dated 6 December 2002, has been received from the
Permanent Mission of Korea.
_______________
My authorities instruct me, pursuant to paragraph 8 of Article 25 of the Agreement on
Subsidies and Countervailing Measures (“the SCM Agreement”), to request that the European
Community (“EC”) and its Member States provide the information requested in the questionnaire
enclosed herewith on the nature and extent of the su bsidies afforded to the shipbuilding industry in the
EC.
It would be appreciated if the European Communities provide a response “as quickly as
possible and in a comprehensive manner” as provided in paragraph 9 of Article 25 of SCM
Agreement.  We consider that 40 days from the dispatch of the present letter and questionnaires
constitutes reasonable time to respond our request.  Thus, we look forward to receiving your response
to this request by 15 January 2003.G/SCM/Q2/EEC/39
Page 2
I. GENERAL QUESTIONS ON THE EUROPEAN COMMUNITY(“EC”)’S LEGAL
FRAMEWORK FOR AID TO THE SHIPBUILDING SECTOR’
1. Can the EC confirm that its basic legal framework for aid to shipbuilders is set forth in
Council Regulation (EC) No 1540/98 of 29 June 1998 establishing new rules on aid to shipbuilding1
(“Regulation 1540/98”) and Council Regulation (EC) No 1177/2002 of 27 June 2002 concerning atemporary defensive mechanism to shipbuilding
2 (“Regulation 1177/2002” hereafter)?
2. Can the EC confirm that Regulation 1540/98 controls aid granted by the Member States of the
EC to the shipbuilding sector in relation to the building, conversion or repair of self-propelled
seagoing commercial vessels of 100gt and above, tugs of 365 kW and above, and fishing vessels over100gt for export? Can the EC also confirm that Regulation 1540/98 applies both to aid granted
directly to shipbuilding undertakings and to other entities related to them whether directly or
indirectly financed by EC Member States or their regional or local authorities or financed through
State resources in any form whatsoever?
3. Can the EC confirm that the different types of aid covered by Regulation 1540/98 are as
follows?:
(i) Operating aid in the form of contract-related aid supporting shipbuilding and ship-
conversion projects up to a maximum of 9 per cent of the contract value before aid.
3
Can the EC confirm that the provision on this operating aid lapsed on
31 December 2000 but the permitted subsidies can continue to apply to contracts
entered into force before that date, for vessels to be delivered up to the end of 2003 or
even longer in exceptional cases?
Can the EC confirm that operating aid is also contemplated in the form of state-
supported credit facilities, which are considered compatible with EC provisions if
they comply with the terms of the OECD Sector Understanding on Export Credits for
Ships.  Is it correct that OECD-compatible credit facilities are not counted towards the
maximum ceiling for permissible operating aid?
(ii) Closure aid to defray the normal costs resulting from the partial closure of
shipbuilding, ship repair or ship conversion yards and leading to an irreversible
reduction in production capacity.
(iii) Restructuring aid for firms in difficulty in the form of capital injections, debt write-
offs, subsidized loans, loss compensation and guarantees, which is granted on one-off basis and leads to an irreversible reduction in production capacity.
(iv) Other aid measures in the form of investment aid for innovation, regional investment
aid, aids to defray research and development expenditure and aid defraying costs for
environmental protection.
4. Can the EC confirm that Regulation 1177/2002 reinstates operating aid up to a maximum
intensity of 6 per cent of contract value before aid in support of contracts for the building of container
                                                     
1 O.J. No L 202, 18 July 1998, p. 1.
2 O.J. No L 172, 2 July 2002, p. 1.
3 For shipbuilding contracts with a contract value before aid exceeding £ 10 million, the ceiling is 9 per
cent, for conversions, repairs for shipbuilding contracts of a lesser value, the ceiling is 4.5 per cent.G/SCM/Q2/EEC/39
Page 3
ships, product and chemical tankers as well as LNG carriers to be delivered within three years from
the date of signing of the contract (extension of the three-year delivery deadline remains possible in
special circumstances)?
5. In the terms of the Regulation, such operating aid will be considered compatible with the
Common Market when there has been competition for the contract from a Korean shipyard offering alower price.  Can the EC elaborate on how this requirement is assessed in practice?
6. Can the EC confirm that contracts eligible for aid under Regulation 1177/2002 are those
signed from 24 October 2002 (i.e. the date that  the European Commission’s Notice announcing the
initiation of WTO dispute settlement proceedings against Korea as a result of the investigation
conducted under the Trade Barrier Regulation concerning certain alleged subsidies received by the
Korean shipbuilding industry was published), until one month after the European Commission givesnotice in the Official Journal of the European Communities that these dispute settlement proceedings
are resolved or suspended? Is it correct that Regulation 1177/2002 will in any event expire on
31 March 2004?
7. Can the EC confirm that aid in support of contracts for the building of LNG carriers will,
however, only be authorised for contracts signed after the European Commission gives notice in the
Official Journal of the European Communities that it confirms, on the basis of investigations covering
the period of 2002, that the Community industry has suffered material injury and serious prejudice in
this market segment caused by the alleged Korean subsidies ?
8. Can the EC confirm that the aid permitted under the above framework provisions is financed
directly by the EC Member States or their regional or local authorities or financed through State
resources in any form whatsoever?
II. QUESTIONS ON THE EC’S SUBSIDY CASES
The Republic of Korea requests the European Commission (hereafter, “the Commission”) and
the EC Member States to respond to the following questions for the years 1998, 1999, 2000, 2001 and
up to this date.  The information should also include aid that has been and/or will be provided based
on a shipbuilding contract signed before 2001 in respect of the ships to be delivered subsequently
under the conditions set forth in Regulation 1540/98 and aid that may already have been approved or
notified for approval under Regulation 1177/2002.
(Identification of Subsidies)
1. Identify which subsidies were or have been granted, or maintained, directly or indirectly, to
the EC shipyards in terms of the following categories.
- Operating aid
- Restructuring aid
- Closure aid
- Investment aid for innovation
- Regional investment aid
- OthersG/SCM/Q2/EEC/39
Page 4
The information in this questionnaire is requested irrespective of whether the subsidies are
funded by the federal, regional, local authorities, other public bodies in the EC Member
States or private institutions directed or entrusted by the authorities to grant these subsidies
from their own funds or through funds made available by the EC.
(Legal Provisions)
2. Identify the legal provisions (EC and/or EC Member State provisions) with full references on
the basis of which each subsidy is identified in question 1 and provide the following
information on:
(i) The eligibility criteria, including terms and conditions, of each subsidy identified in
question 1 and any anticipated changes to the criteria with the documentation
substantiating the changes, and in the case of the subsidies being terminated, the last
date that a company could apply for or claim and receive benefits under the
programme.
(ii) The procedure for authorising and granting each subsidy, identified in question 1,
both in the EC Member States and within the EC, and whether a formal application
and/or specific approval is required each time benefits are received or the receipt of
benefits is automatic after their initial authorisation.
(Operating Aid)
3. For each subsidy, identified in question 1, provided as an operating aid, please provide the
following information on:
(i) The forms in which the subsidy was or has been granted (e.g., grants, loans, loan
guarantees, bond infusions, tax benefits), the amounts provided in each form, and
terms and conditions of each form of the subsidy.
(ii) The name and address of the agency or authority responsible for administering and
authorising the subsidy within the EC or within an EC Member State.
(iii) The name of the shipyard(s) to which the subsidy was or has been provided, the type
(including CGT) and buyer of the vessel, and the time of sales contract and delivery
of the vessel.  The examples of types of vessels are following:
- Crude oil tankers (single hull only)
- Crude oil tankers (double hull only)
- Product and chemical carriers
- Bulk carriers
- Combined carriers
- General cargo ships
- Reefers
- Full container ships
- Ro-Ro vessels
- Car carriers
- LPG carriers
- LNG carriers
- Ferries
- Passenger ships including cruise ships
- Fishing vesselsG/SCM/Q2/EEC/39
Page 5
- Other non-cargo vessels.
(iv) The ratio of the total amount of the subsidy to the total sales value at delivery and
order book level for each type of vessel concerned for each of the above calendar
years within the period mentioned above.
(v) The total amount of the subsidies afforded by each EC Member State per each of the
above calendar years.
(iv) The number of vessels delivered and corresponding CGT separately for
- holding owners within the EC
- holding owners outside the EC
(Restructuring, Closure Aid, etc)4. For each subsidy, identified in question 1, provided as a restructuring, closure aid, and other
aids, please provide the following information on:
(i) The forms in which the subsidy is granted (e.g., grants, loans, loan guarantees, bond
infusions, interest relief, debt rescheduling , equity for debt swaps, other debt write-
offs, tax benefits), the amounts provided in each form, and terms and conditions ofeach form of the subsidy.
(ii) The name and address of the agency or authority responsible for administering and
authorising the subsidy within the EC or within an EC Member State.
(iii) The name of the shipyard(s) to which the subsidy was or has been provided, and the
types of vessels (including CGT) the shipyard has produced since 1998.
(iv) For each restructuring aid, the methodology a pplied to determine the viability of the
shipyard and to develop detailed plans, and the name of the institution that conducted
the field study and evaluated the value of the shipyard in difficulty.
(v) The total amount of the subsidies afforded by each EC Member State per each of the
above calendar years in terms of each category of aids (restructuring aid, closure aid,
etc).
(Equity Infusion)5. If any of the subsidies identified in question 1 takes the form of equity infusion or a debt-for-
equity swap, please include the following specific information in the answers to questions 3
and 4 in this section of the questionnaire.
(i) The name of the recipient of each investment/conversion.
(ii) The name of the federal, regional or local authorities, another public body or private
institutions directed or entrusted by public body, which approved the equity
investment/conversion and the date at which it did so.
(iii) The exact amount of the equity infusion.G/SCM/Q2/EEC/39
Page 6
(iv) The methodology to determine equity worthiness of the shipyard and, if any reports
or other documents were prepared in support thereof, the conclusions of the studies or
reports.
(v) If the government of the EC Member State concerned attempted to, or did, secure
equity investment for a shipyard in difficulty from private sources, please describe the
circumstances surrounding the investment, any agreement entered into between the
government and the private parties, and provide all relevant documentation (e.g., a
copy of the agreement, discussion memoranda, etc.).
(Loans, Loan Guarantees, Export credits)
6. If any of the subsidies identified in question 1 takes the form of a loan or a loan guarantee,
please include the following specific information in the answers to questions 3 and 4 in this
section of the questionnaire.
(i) Short-term loans
If short-term loans (less than one year) were provided by a public body or a private
institution directed or entrusted by a public body in EC Member States, and principal
or interest was repaid, accrued and/or waived during the years referred to above,
please provide the following:
(a) The types of institutions (e.g., banks, leasing firms, brokers, insurance
companies) that provide short-term commercial loans in the EC Member States
concerned. In addition, please explain the role of the government in
controlling/directing those institutions and their lending policies.  For each typeof institution, specify whether loans are provided in domestic currency, foreign
exchange, or both.
(b) The predominant national average short-term interest rate in the EC Member
States concerned (including copies of the source materials) for the period
concerned. If a predominant national average interest rate does not exist, please
provide the interest rate in the EC Member State concerned for each type ofshort-term financing and the weight each type represents as a percentage of the
total of outstanding short-term loans.
(c) Specify other charges or practices used in normal commercial transactions.
(d) The date and amount of any forgiveness or assumption of any principal or
interest payments during the years referred to above.
(ii) Long-term loans
If long-term loans (longer than one year) were provided by a public body or a private
institution directed or entrusted by a public body, which had principal or interest
outstanding during the years referred to above, please provide the following
information:
(a) The types of institutions (e.g., banks, leasing firms, brokers, insurance
companies) that provide long-term credit in the EC Member States concerned.
In addition, please explain the role of the government in controlling/directing
those institutions and their lending policies.  For each type of institution,G/SCM/Q2/EEC/39
Page 7
specify whether loans are provided in domestic currency, foreign exchange or
both.
(b) The following information for each year in which a long-term loan was
approved which had principal or interest outstanding:
- If the loan has a fixed interest rate, please provide the long-term fixed
interest rate(s) available from private commercial lenders to most companies
in the country in question at the time the loan was approved.  If such a
figure(s) is (are) not available, please provide the long-term variable interest
rate(s) available from private commercial lenders to most companies in the
EC Member State in question during the same period.  If this figure is notavailable, please provide all types of short-term financing available in the
EC Member State at the time the loan was approved, the percentage each
type represented of the total amount of short-term financing, and the
corresponding monthly average interest rates for each type in the period
concerned.
- If the loan has a variable interest rate, please provide the long-term variable
interest rate(s) available from private commercial lenders to most companies
in the EC Member State in question at the time the loan was approved.  If a
long-term variable interest rate from commercial lenders is not available,please provide the long-term fixed interest rate(s) available from
commercial lenders to most companies in the EC Member State concerned
at the time the loan was approved.  If this figure is not available, please
provide all types of short-term financing available in the EC Member State
concerned at the time the loan was approved, the percentage each typerepresented of the total amount of short-term financing, and the
corresponding monthly average interest rates for each type in the period
concerned.
- In all cases, state whether the applicable rate is for loans provided by
publicly owned or controlled institutions or by privately held institutions,
and whether such rate is subject to any government-mandated ceiling or cap.
(c) Specify other charges or practices used in normal commercial transactions.(d) Provide the date and amount of any forgiveness or assumption of any principal
or interest payment.
(iii) Loan guarantees
For any loans with principal or interest outstanding that were guaranteed or insured by
a public body or a private institution directed or entrusted by a public body in ECMember States, please provide, as relevant, the information requested in sections (i)
and (ii) above.
(iv) Export credit facilities
To the extent that export credit guarantees or export loans are granted which the EC
and its Member States consider to be compatible with the requirements of the OECD
Arrangement on Guidelines for Officially Suppo rted Export Credits and, in particular,G/SCM/Q2/EEC/39
Page 8
of Annex I thereto, i.e. the Sector Unders tanding on Export Credits for Ships, explain
the grounds for such compatibility and supply relevant supporting factual evidence.
(Tax Benefits)
7. If any of the subsidies identified in question 1 takes the form of a tax benefit, please include
the following specific information in the answer s to question 3 and 4 in this section of the
questionnaire.
  (i) The type of the tax benefits: i.e. deduction from taxable income, credit toward taxes
payable, exemption from taxes owed, deferral of taxes owed, or other type of tax
benefit.
(ii) The specific methods of the companies using these tax subsidies to calculate the tax
benefits they claim and a sample calculation using a blank tax form.
(iii) If a company is in a tax loss situation, the effects of the tax benefit programme on
the company.
(iv) If tax losses are generated through the use of this tax benefit programme, whether the
company carry forward these losses?  What are the normal tax provisions for loss
carried forward?  Please provide the relevant provisions of the tax laws andregulations.
(v) If the programme involves deferral of taxes owed, please provide the predominant
national average short-term interest rate in the EC Member State concerned.
(Other Relevant Matters)
8. Please provide the following information  for the period from 1998 until to date (per calendar
year except for the current year) based on the vessels delivered.
- The total turnover of the EC shipyards per EC Member State and the breakdown of
these total turnover figures into the turnover figures for each type of vessel.
- Actual production, in CGT, of the EC shipyards per EC Member State both on a total
basis and for each shipyard and  type of vessel.
- The Commission’s plans for the following three years in terms of limitations of
production capacity or the release of the limitations currently imposed for each EC
Member State and shipyard.   
(Statistical Data for Specified Subsidies)
9.   Please provide information of the statistical data permitting an assessment of the trade effects
of the subsidies provided or to be provided in  accordance with the following subsidy schemes.
The information to be supplied include:
- the eligibility criteria;
- the name of the shipyard(s) and type of the vessel(s) (including the relevant CGT)
benefiting directly or indirectly of the aid;
 - in the case of operating aid, the intensity of the aid;
- the amount of the aid;G/SCM/Q2/EEC/39
Page 9
- the form in which the aid has been or will be granted;
- which authority has granted or will grant the aid.
(i) The Commission’s approval of the sale of Eastern German shipyard MTW-
Schiffswerft to the Norwegian Group Aker Yards ASA and the approval of a second
and most likely final tranche of DM 175.1 million of restructuring aid to the
shipyard.4
(ii) The Commission’s approval of a DM 129.6 million restructuring aid for Volkswerft
shipyard in Stralsund.5
(iii) According to the information available, on Lürssen's takeover of Bremer Vulkan
Marine (BVM) Schiffbau in bankruptcy, the Land of Bremen offered DEM 900,000
investment aid (i.e. 15 per cent of the intended total investment envisaged).
Moreover, the Land agreed to contribute DEM 4.6 million to the cost of employing
110 new workers on Lürssen's wharf and waived DEM 5 million debt plus
unspecified interest that BVM owed the Land's 100 per cent owned Hanseatische
Industrie Beteiligungen GmbH (HIBEG). The two latter measures constituted un-
notified aid and were, therefore, illegal State aid to Lürssen, which was enabled to
expand its capacity and improve its prospects to compete for navy and other orders.
(iv) The Commission’s approval of aid to be granted by Germany for the restructuring of
the shipyard Volkswerft in Stralsund for a total investment aid of DEM 34.2 million.6
(v) Until 1999, the German KG system continued to be in operation whereby investors
received tax allowances permitting the offset of the losses from vessel depreciation
against income tax. While the scheme was not limited to shipbuilding, it wasextensively used in that field to finance containership newbuildings.
7
(vi) In 1999, the Commission approved indirect shipbuilding aid in Italy in the form of a
tax credit (9 per cent) and a subsidised interest rate (8.9 per cent grant equivalent) to
promote shipyard investment.8
(vii) Section 5 of Italian Law No 261 of 31 Ju ly 1997 establishing aid to shipbuilding and
shipyards as implemented in the Ministerial Decree No 539 dated 17 December 1999
provides for the establishment of the so-called “Fondo centrale di garanzia per il
credito navale”. The main activity of the Fund is to hedge the refund of capital or
interests in relation to State aid to the shipbuilding industry.
(viii) The UK Shipbuilding Industry Competitiveness Minister, Alan Johnson, informed the
House of Commons on 24 May 1999 that the UK government had approved the
following for the benefit of Appledore Shipbuilders Ltd.: more than  £ 1 million from
the Shipbuilding Intervention Fund (SIF) to build a fisheries protection vessel for the
Irish Navy and about £500,000 Regional Selective Assistance towards a three year£ 6.5 million dry dock expansion project.
                                                     
4 European Commission News Release No IP/98/720.
5 European Commission News Release No IP/98/186.
6 European Commission News Release No IP/99/962.
7 The scheme was authorised by the European Commission on 1 March 1995 (Official Journal No C 266, 13
October 1995, p. 16).
8 European Commission News Release No IP/00/1513.G/SCM/Q2/EEC/39
Page 10
(ix) The Netherlands are operating a “Commanditaire Vennootschappen” investment
scheme pursuant to which private investors investing in a partnership limited by
shares can claim back tax on funds invested in the partnership set up specifically to
build a ship.  While this scheme should be withdrawn, the information is that tax
relief might continue to be granted in different forms.
(xi) In 1999, the Commission approved the Spanish aid scheme for shipbuilding 1999-
2003.  This included operating aid in the form of contract-related aid up to 9 per cent
of the contract value but also included closure aids, restructuring aids, investment aid
for innovation, regional investment aid, ai d for R&D and aids for environmental
protection, aid to shipowners in the form of subsidised loans and interest rate
support.9
(xii) In 2000, the Commission authorised some French aid measures under the Loi de
Finance for contract-related aid but also for investment aid of 22.5 per cent and
12.5 per cent intensity, respectively, and for R&D aid granted within the Community
framework for R&D aid.
(xiii) In 2001, the Dutch Government increased its budget for aid to the shipbuilding
industry by an extra US$28 million after the budget of DF 130 million had been
exhausted.10
(xiv) AP Moller in Denmark was reported as potentially receiving over 500 million Kroner
in subsidies for its Lindoevaerft shipyard.11
(xv) Germany is reported to have been preparing to subsidise the interest rates of
shipbuilding loans allegedly under the OE CD CIRR regime for an amount of EUR 50
million set aside in its 2002 budget.12
(xvi) Aid granted by the Dutch authorities in support of the restructuring of Koninklijke
Schelde Groep through capital injections of EUR 47.7 million and an interest free
loan of EUR 20.4 million.13
(xvii)  The Shipyard Improvement Programme and the SS Marketing Services launched in
the UK to assist UK shipyards sales of newly built small vessels.  The SS Marketing
Service is reported to be initially financed (until 2003) by the British government up
to £2.8million.14
(xviii)  The granting of soft loans up to about US$ 1.45 Billion for the accession of 40
German-built ships by Indonesia without the German shipbuilder having beenadmitted through the open bidding process and with the official prices having been
fibbed.
15
(xix) The additional subsidies granted by the state government of Schleswig-Holstein in
September 2001 further to the decision of the German federal government to  provide
                                                     
9 European Commission News Release No IP/99/182.
10 Dutch top up shipbuilding subsidy, Fairplay, 5 July 2001.
11 Moller Shipyard may receive new subsidy, Dow Jones International News, 4 September 2001.
12 Germany prepares subsidy package for shipyards under new CIRR regime, Lloyd’s List, 25 July 2001.
13 Commission investigates restructuring and privatisation of mixed shipyard KSG in The Netherlands , European
Commission press conference of 25 July 2001.
14 UK drives to attract small vessel newbuild market , Lloyd’s List, 19 June 2001; UK yards targeting smaller but
profitable vessel market , The Shipping Times, 28 June 2001.
15 40-ship German deal queried , Fairplay, 13 December 2001.G/SCM/Q2/EEC/39
Page 11
an additional DM 80 million for the country’s yards as a result of the order rush that
took place in the second half of 2000 in view of the imminent expiry of the EC
operating aid scheme.16
(xx) The government funds provided for the modernisation of the Vulkan group’s Eastern
German shipyards and reportedly misused by Vulkan’s management.17
(xxi) The reportedly generous export credit guarantees granted by the French export credit
agency Coface to Chantiers de l’Atlantique in connection with certain cruise ships
being built for troubled Renaissance.18
(xxii)  The participation of the French government in the establishment of Cruiseinvest LLC,
a Marshal Islands-incorporated company to acquire six of the 684-passenger
Renaissance ships from judicial sales held in Gibraltar and in the UK. Cruiseinvest is
understood to have paid the outstanding value of the existing mortgages on the ships,an amount in excess of $ 700 million.  However, the operation has been described as a
simple change of pocket of the money as all the investors behind the Marshal Islands
company held first guarantees on the mortgages.  They are reported to get back
almost 98 per cent of the amount actually paid, while the remaining 2 per cent is to
cover the unpaid salaries to the crews and judicial costs.  In addition to CreditAgricole-Indosuez, which had issued all the mortgages for the ships, among those
represented by Cruiseinvest there would be Alsthom, the owner of Chantier de
l'Atlantique that built the ships and the French Government through its export credit
agency Coface.
19
(xxiii)  The financing of a new ferry to be built at Chantiers de l’Atlantique by the French
regions of Bretagne and Pays de Loire reportedly using tax break schemes.20
(xxiv)  The financing of two cruise ships for owner Royal Olympic cruises by a German
banking consortium " led by the government's Kreditanstalt für Wiederaufbau"  up to
80 per cent of the total sales price of EUR 312 million.  A guarantee was reportedly
secured for EUR 70 million of that amount from the city government of Hamburg.21
(xxv)  The aid granted by Spain for the restructuring of publicly owned shipyards and
leading to the creation of IZAR, currently being investigated by the European
Commission.22  An earlier aid package granted in 1998 and consisting of special tax
credits was declared incompatible with the Common Market byCommission Decision
2000/131/EC of 26 October 1999.23
(xxvi)  The German government's reconstruction and development bank, Kreditanstalt für
Wiederaufbau in Frankfurt is reported to have provided another soft loan of EUR 81.8million as part of a programme for building an inter-island passenger vessel for
Indonesia at a German yard.
24
                                                     
16 Schleswig-Holstein State grants subsidy to its shipyards , Lloyd’s List, 20 September 2001.
17 Firmer Vulkan bosses facing fraud retrial , Lloyd’s List, 18 September 2001.
18 Alstom shipyard plan scuppered , Financial Times, 12 November 2001.
19 French investors pay $700m to buy back six Renaissance cruiseships , Lloyd’s List, 29 November 2001.
20 Regions to finance new French ferry , Fairplay, 8 January 2002; Brittany ferries poised to order another
newbuild , Lloyd’s List, 9 January 2002.
21 Olympic Explorer going nowhere fast , Lloyd’s List, 18 January 2002.
22 European Commission Notice 2002/C 21/03 – State Aid – Spain – C/40/00 (ex NN 61/00) – Further
restructuring of Spanish shipbuilding – Invitation to submit comments pursuant to Article 88(2) of the EC Treaty, O.J. C 21,
24 January 2002, p. 17.
23 O.J. No. L 37, 12 February2000, p. 22, r ecently upheld by the European Court of Justice in judgment of 21
March 2002, case C-36/00.
24 German bank clears loan for Indonesian ferry project , Lloyd’s List, 8 February 2002.G/SCM/Q2/EEC/39
Page 12
(xxvii)  The French Government’s participation in the rescue of the Compagnie Marseillaise
de Réparation shipyard through provision of funds amounting to EUR 1.6million.25
(xxviii)  The aid granted by the Greek Government to Hellenic Shipyards in connection with
the privatisation of the company.  The Commission approved part of this aid on
5 June 2002, while at the same time initiating a detailed investigation on theremaining part.
26
(xxix)  The financing of a new car ferry to be built at German Jos L Meyer shipyard for
French Channel operator Brittany Ferries.  According to the press, 75 per cent of the
cost of the ship is to be financed under French tax-break provisions by a banking pool
which includes Credit Agricole Indosuez, BNP Paribas, Crédit Coopératif, Crédit
Industriel de l'Ouest and Germany’s KVF.27
(xxx)  The granting of aid by the Dutch Government for the building of four new 540-TEU
container ships at shipyard Bodewes Scheepswerf Vlharding for Indonesia’s Arpeni
Pratama Ocean Line.28
(xxxi)  The package of subsidies worth EUR 24 million approved by the German parliament
(plus EUR 48 million to be provided by German coastal states) ahead of the approval
of the EC temporary defensive mechanism to shipbuilding and reportedly designed tosupport the construction of container vessels and tankers at German yards.
29
(xxxii)  The financing of the building of a new ferry at insolvent German shipyard Flender
Werft secured by a consortium of banks composed, inter alia , by German
government's reconstruction and development bank  Kreditanstalt für Wiederaufbau
(KfW) and the Schleswig-Holstein government-owned Landesbank Kiel.30
(xxxiii)  The financial aid provided to German shipowners to compensate for non-wage labour
costs and approved by theCommission on 5 June 2002.31
(xxxiv)  The aid granted by the French Government to support the creation of Soreni Ship
Repair Company after the bankruptcy of the shipyard Ateliers et Chantiers du Havre
Constructions Navales in 1999.  This aid is currently being investigated by theCommission.
32
(xxxv)  The Spanish Government is reported to be finalizing a proposal to provide EUR 500
million in state credits to help the country’s shipbuilding and maritime sector face up
competition from, particularly, Asian yards.33  Please indicate whether this proposal
has already been adopted and provide details of the support measures envisaged
therein.
(xxxvi)  Before resigning, in October 2002, the former Dutch economic affairs minister
announced that the Dutch Government would grant the domestic shipbuilding
industry a new EUR 60 million subsidy package.34 Please indicate whether the
                                                     
25 Paris backs Marseilles yard plan , Fairplay, 7 May 2002.
26 European Commission News Release No IP/02/816.
27 Unions fail to persuade Brittany Fe rries to switch to  local shipyard , Lloyd’s List, 10 June 2002.
28 Arpeni plans orders in the face of delays , TradeWinds, 21 June 2002.
29 Berlin defies Brussels’ aid delay , Fairplay, 27 June 2002; IG Metall urges coastal states to pay up yard aid ,
Lloyds List, 30 July 2002; German yards get subsidy go-ahead , Fairplay, 31 July 2002.
30 Flender gains newbuilding support , Fairplay, 4 July 2002; German shipbuilding battle , Fairplay International
Shipping Weekly, 11 July 2002.
31 European Commission News Release No IP/02/812.
32 European Commission Notice 2002/C 222/04 – State Aid – France – Aid C 55/2002 (ex NN 53/2002) ) Aid to
Soreni Ship Repair Company (shipbuilding) – Invitation to submit comments pursuant to Article 88(2) of the EC Treaty, O.J.
No C 222, 18 September 2002, p. 21.
33 Spanish aid to bolster technology capacity , Lloyd’s List, 3 October 2002.
34 Subsidy uncertain as cabinet falls , Fairplay, 16 October 2002.G/SCM/Q2/EEC/39
Page 13
measure has been adopted and whether any subsidies under the scheme have already
been granted.
(xxxvii)  The German shipyard Meyer Werft is reported to have won an order from Indonesia’s
government-owned shipowning company Pt Pelni for a 15,000 GT passenger ferry.
Germany’s government-owned reconstruction and development bank Kreditanstaltfür Wiederaufbau is reported to have provided an EUR 81.8 million soft loan to
finance the construction of the vessel.
35
(xxxviii)  In October 2002, the Danish Government announced to have secured a broad political
agreement to reintroduce shipbuilding subsidies.  According to the plan, the new
subsidies would be provided half by the government directly and half through the
specialist shipfinancier DSF.36 Please provide the details of this new subsidy package
and whether any subsidies under the scheme have already been granted.
(xxxix)  The Dutch shipyard Volharding is reported to have applied for operating aid under the
temporary defensive mechanism in relation to a contract for the building of a 5,700
DWT ordered by an Italian owner. In addition to the information listed in the chapeau
of question 9, please indicate (i) whether the aid has been already notified to the
Commission for approval and, if so, please provide a copy of the notification; (ii) ifthe aid has already been approved by the Commission, please provide a copy of the
relevant decision; (ii) explain in detail how the requirement that there has been
competition for the contract from a Korean  shipyard offering a lower price has been
assessed by the competent Dutch authorities and the Commission.
37
(xl) The authorities of the German State of Hamburg are reported to have approved a
4 million EUR subsidy package for the benefit of Hamburg shipyards on
12 November 2002 for the purpose of implementing the temporary defensive
mechanism.  The Federal German Government is reportedly expected to provide
further 2 million EUR for the benefit of Hamburg shipyards.38
(xli) German yard Kvaerner Warnow Werft is reported to have applied for operating aid of
6 per cent intensity under the temporary defensive mechanism in relation to a contract
for the building of four 2,532 TEU container ships ordered by Norway and Cayman
Islands-based Andreas Ove Ugland.  The vessels will reportedly be then chartered to
the German shipping company Hamburg Sued. It is also reported that the project will
be financed by Germany’s government-owned reconstruction and development bank
Kreditanstalt für Wiederaufbau.  In addition to the information listed in the chapeau
of question 9, please indicate (i) whether the aid has been already notified to theCommission for approval and, if so, please provide a copy of the notification; (ii) if
the aid has already been approved by the Commission, please provide a copy of the
relevant decision; (ii) explain in detail how the requirement that there has been
competition for the contract from a Korean  shipyard offering a lower price has been
assessed by the German authorities and the Commission.
39
(xlii) Two German yards belonging to the Aker Kvaerner Group, Aker MTV in Wismar
and Kvaerner Warnow Werft in Rostock, are reported to have applied for operating
aid of 6 per cent intensity under the temporary defensive mechanism in relation to a
                                                     
35 Jakarta and Meyer Werft in ferry deal  and Meyer Werft bullish on better times ahead , Lloyd’s List,
23 October 2002.
36 DSF hole in Denmark plan for yard aid , Lloyd’s List, 24 October 2002.
37 Subsidy saves shipyard subsidiary  and All is well at Volharding , Fairplay, 8 November 2002.
38 German Hamburg Approves 4.0 Mln Euro Subsidy for Shipyards , German News Digest, 13 November 2002.
39 Germans plead for state yard aid , Fairplay, 13 November 2002; German Kvaerner Warnow Werft Receives
128.6 Mln Euro Order, German News Digest, 13 November 2002; Ugland takes plunge – Norway and Cayman Islands-
based Andreas Ove Ugland is back into newbuilding in a big way , Tradewinds, 15 November 2002.G/SCM/Q2/EEC/39
Page 14
contract for the building of six 2,500 TEU container ships ordered by the Islamic
Republic of Iran Shipping Lines.  The two yards are reported to have applied for
financing to Germany’s government-owned reconstruction and development bank
Kreditanstalt für Wiederaufbau.  In addition to the information listed in the chapeau
of question 9, please indicate (i) whether the aid has been already notified to theCommission for approval and, if so, please provide a copy of the notification; (ii) if
the aid has already been approved by the Commission, please provide a copy of the
relevant decision; (ii) explain in detail how the requirement that there has been
competition for the contract from a Korean  shipyard offering a lower price has been
assessed by the German authorities and the Commission.
40
__________
                                                     
40 AkerKvaerner in six boxship deal for Iran , Lloyd’s List, 19 November 2002.