ARCHIVES HISTORIQUES
DELACOMMISSION
COLLECTION RELIEEDES
DOCUMENTS "COM"
COM(76)224
Vol.1976/0075

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COMMISSION OFTHEEUROPEAN COMMUNITIES
*
COm(76)224 final.
Brussels ,26th May1976#
?
COMMUNICATION
FROMTHECOMMISSION TOTHECOUNCIL
ON
SHIPBUILDING
001-1(76 )224final

TABLEOPCONTENTS
1.THECRISIS IKTHESHIPBUILDING SECTOR 1
1.1Production trends 1
1.2Situation asregardsthec<3!>cbrir.ifleet 3
1.3Features ofthecrisisintheshipbuilding sector 4
1.4Community aspects 6
1.5Conclusions 8
2.POSSIBILITY OPSOLVING THEPROBLEM OPEXCESS PRODUCTION ■
CAPACITY INTHESHIPBUILDING INDUSTRY THROUGH INTERNATIONAL
COOPERATION 9
2.1International cooperation 9
2.2Framework ofcooperation 10
2.3Progress madewithintheOECD 11
2.4Implementation oftheOECD,s"Generalguidelines " 12
2.4.1.Reduction ofproduction ©opacity 13
2.4.2.Allocation ouneworders 14
2.5Tì^rtT'ioi.-xriiv' cop-icity 16
2.6Measures concerning employment 16
2.7Conclusions ~ 16
3.POSSIBLE ACTIONIPCOORDINATED SOLUTIONS ATINTERNATIONAL
LEVELPROVEIMPOSSIBLE 17
3.1Needtosafeguard Community shipbuilding 17
3.2Needforcoordinated actionatCommunity level 17
3.3Possible measures 18
3.4Needforathoroughinvestigation 18
4.CONCLUSIONS ANDPROPOSALS 19
ANNEXES

COMMUNICATION
PROMTHE'COMMISSION TOTHECOUNCIL
On
."SHIPBCJILIXJNS
INTROIUCTION
Takingasitsbasisthenatureofthesituation facingtheCommunity ship­
buildingsectorandprospective developments ,theCommission in1972
pointedtothecomingdangerofsurpluscapacity,andin1973submitted
proposals totheCounciltoaccelerate theimprovement oftheindustry's
competitivity before.thesituation deteriorates withoutaggravating
theimpending imbalance .
Sincetheeventsoflate1973intheoilsector,andtheirrepercussions
oneconomicactivity,thelatentimbalance betweensupplyanddemandhas
rapidlydeveloped andassumedconsiderable proportions .Thethreatened
problems have,therefore ,beenacutelyrealised.
Toadapttotheeffectsofthecrisisintheshortterm,theproblemof
overcapacity mustberesolved,and,perhaps,problems connected withthe
allocation oforders.Inthelongterm,apartfromthesheerreduction in
capacity,theCommunity'scapacitywillhavetobeconsiderably re­
structured .
Theanalysis oftheorisisfacingthesectordemonstrates interalia
theCommunity'sinterestinsupporting resolutely and,ifneedbe,pro­
motinganymethodofobtaining asolution bymeansofinternational
collaboration .

1-
1.THECRISISINTHESIIIPBUTLDDTG SECTCR
Althoughtheshipbuilding sectorisstillmaintaining asatisfactory
levelofactivity asaresultofworkonordersreceivedbefore1975»
itisfacedwithaseriousworldwide crisescharacterized byastructural
surplusofproduction capacity compared withcurrentandforeseeable
orders.Thisimbalance isatpresentreflected inadeclineinneworders
accompanied byawaveofcancellations ofearliercommitments andafall
ofprices.
1,1Production trend
Duringthelastfifteenyears,i/orldshipproduction hasincreased
rapidly,atanaveragerateofaround10%peryear,risingfrom
7.9milliongrtini960to34*8milliongrtin1975*Thistrendhas
lednotonlytotheappearance ofnewshipbuilding countries ,in
particular thedeveloping countries andSouthern Europe,butalso
toaconsiderable difference betweentheJapaneserateofexpansion
andthatofmostoftheothershipbuilding countries .Shipbuilding
capacity hasbeendeveloped mostintensively inJapan,where
production rosefrom1.7milliongrtini960to17milliongrtin
1975,whereasduringthesameperiodintheCommunity countriesit
increased onlyfrom4millionto7.8milliongrt.
Thedifference betweentheseexpansion rateshasbroughtabout
agreatchangeintherelativeshareoftheindustries ofthose
oountries inworldproduotion :duringthisperiodtheCommunity's
sharefellfrom51%to22$whilstJapan1srosefrom22%to50%

SHIPBUILDING -Breakdown of..worldproductionD
milliongrt %ofworldtotal
i960 1970 |1974
I(1975 .
Li960 1970 1974 1975
OCDE 7,23420,705 31,86731,419 92,1 9l»4 :91,090,2
ofwhich
Community3,996 6,305 3,0327,75450,927,8 22,9;22,3
[
Japan 1,63710,539 17,72017,17321,6
1'46,5 50,649,4
jSweden 0,727 ,1,678 2,1022,178--9,3-7,4\6,06,3
!Spain 0,170 0,826 1,7611,508 <2,2 -3,6 5,04,3
Kozvav 0,238 ,0,654 0.9171,021 -3,0-2,92,62,9
IUnitedStates0,338 0,442 0,9280,950|
I4,3 2,02,62,7
IYugoslavia 0,182 0,669 '0,6720,623 2,3 3,0 1,91,8
1South .Korea 0,005 0,3200,420 00,91,2
JBrazil0.012 i■■0,056 0,2970,346 0,2 0,2 0.81,0
World 7,85822,643 35,76634,766
*.·.··· Ν··'I
100,0 100,0!
100,0100,0
Source:Lloyd'sRegister ofShipping ...
!)production-sMpaCQmPmccd +shipsdélirerai
milliongrt=milliongrossregistered tons(seeAnnexIforthe
definition oftheunitsused).

Thistrendwasaccompanied bya-tendencyfor,production tobecomemore;,
specialized .Thiswascausedmainlybytheneedtorationalize inorderto
deal ,withademandwhichwasgrowingbothinrespectofquantity andquality..
Thusanumberofundertakings inJapanandthewesternEuropeancountries
adaptedtheirproductionfacilities toconoentrate' onthebuildingofcertain
typesofvessels,;inparticular ,largetankers.Inaddition,shipyards specially
designedforconstructing suchvesselswerecreated,particularly inJapan.
Theproduction oftankerscurrently playsanimportant partintheshipbuilding
sectorthroughout theworld. ■ .i
: .·.■· ,·,.. :--''»■.'..ί
Brealedown ofworldtotalofshipsdelivered ,bytypeof
> vesselinthousandgrtand#!1,•
) ; » i,_ ? ,
Year,
s|Tankers •
[:grtj*?<>Bulkcarriers j
grti%!Others i
i I
; .'!'-Total'
grt i%
1970 :
1974\
1975
r,-J■i
Ilh IIII.1
10033.|47.8|
2085462.2,|
2Ï72566.4
1v
!•'ii î
5373j25,ô j
7458j22.2
j6248-j18.3
I.■* ;I;'
j *i 1
557526.5
523915.6
523015.3
r20981
33541
;34203
!
1•100
100'
100
(l)ïlirthe*'détailsinAnne::II'
1.2Situation ofthemerchant fleet .<■
Thetrenddescribed abovecanbeexplained bythespectacular increase
inoiltransport requirements whichbeganinthe1960'sandledtoa
m^remarkeddemandfortankersandlargecombinationcarriers^oompared
withthatforothertypesofvessels.Despitethefactthatsignsofex­
cesstransport capacity toappearasearlyas1972-73 »manyship-
ownerspursuedafeverishbuyingpolicy,encouraged bytheconsiderable
expansion inpublicandprivatecredit,thusleadingtheshipyards in
theirturntoincreasecapacityconsiderably .
Following theeventsof1973intheenergysector,thegrowthofthe.
tradeinoilwashalted,indeed,abruptly andthedemandforits
transport declined.Inthemediumterm,anyrevivalofsuchrequirements
(l)Bulkcarrierscapableofcarryingbothdrybulkcargoesandoil

-4-
willbeinfluenced "bynewdevelopments inthetradeinenergyofthein­
dustrialized countries ,suchas,arelativedeclineinconsumption dueto
morerationalutilization ,thetendencytoshortentransport routese.g.
"bytheopeningandprobable widening oftheSuezCanal,theworkingofnew
sources,especially intheNorthSea,andthedevelopment ofpipelines ,etc.
Althoughtheenergypolicies oftheoil-producing and-consuming countries
cannotyetbefullyappreciated ,themedium-term forecasts areforaless
sustained development ofoiltransport byseathanherebefore.
Thereiscurrentlyestimatedtobeanexcessofl/3intankercapacity,
which,takingintoaccountvesselsunderconstruction andinspiteofforced
modification ofproduction plans(cancellations andconversions )isexpected
tolastatleastuntilI98O(AnnexIII).
Inparallel withthesestructural changesinoiltransport ,therecenteconomio
recession hasledtoageneraldeclineintrade,and,therefore ,onoverall
reduction inthagrowthofshipping .
1.3Features ofthecrisisintheshipbuilding sector
Thecrisisontheoiltransport markethashadseriousrepercussions onthe
shipbuilding industry.
Forthoseshipyards specialising intheconstruction oflargetankers,the
immediate consequences havebeen:
–large-socle cancellations ofordersandtheamendment ofsometoother
typesofvessel|
–analmosttotalabsenceofneworderssincetheendof1974?asituation
expectedtoendureforseveralyears.

Nevertheless ,theremaining -orders fortankers will ensure satisfactory
levels ofemployment until 1977 ?"this type ofshipyard isthen indanger
ofbeing completely without work initsspeciality until atleast 1980 .
Forother types ofshipyard ,theconsequences ofthecrisis intheoil
transport market will mainly arise from theattempts ofbigshipyards ..
spezializing inlarge tankers toputtheir equipment touseinthese other
market sectors , - '■•, ■ •.-i
However ,theconstruction ofdrybulk carriers ,assub-sector oftheindustry
which istechnically closest totheconstruction oflarge tankers ,could
inturn beaffected bysurplus tonnage .Several factors could cause' a
decline in .activity * , • -.
–theconversion oforders fortankers into bulk carriers j
-theuseofcombination vessels ,previously vised foroil,for
thetransport ofdrybulk s
» ;
-theexcess capacity :resulting from advance orders placed in1975 on
account ofvery lowprices ruling inJapan . ' " •'
Itmust therefore beexpected that thecurrent level ofordeisfor this , .,
• ... ... ..... 'I ■
type ofvessel cannot bemaintained during theworst ofthecrisis in
..■ - ■ • / ' ; '
tanker construction .Shipyards specializing intankers will therefore not
beable toswitoh tobuilding bull :carriers ,without damage tothelevel
oftheactivities ofshipyards operating inthis latter sector .
Theactivity ofshipyards operating inthemarket forother types of
ships (freighters ,specialized andmiscellaneous vessels )will probably ,
only suffer atemporary setback caused bygeneral slowing down ofthe
economy .Nevertheless ,acrisis could arise ifshipyards specializing in
thefields affected bythestructural changes intransport requirements
enter their market .Even iftheeconomy should pick upimmediately ,the
resulting demand would notprovide sufficient volume tobesfhared with
shipyards nottraditionally operating inthese markets .

Itisdifficult tomakeaquantitative estimate oftheworldwide surplus
production capacityinshipyards .According toavailable estimates ,for
theperiod1976toI98Omeasuredingrt,itamountstoanaverageof40fo
forthewholeindustry,andtoabout60%fortankers,especially the
largeandverylarge.Expressed intermsofemployment levels,andbearing
inmindthatthelabourrequirement variesconsiderably according tothe
technical featuresofthevarioustypesofshipsbuilt,thissurpluscapar-
cityisabout20'fofortheindustry asawholeandabout60%fortanker
construction (AnnexesIVandV).
Withregardtomarketprospects fortheshipbuilding industry asawhole
afterI98O,thegenerally-accepted estimates tendtoshowthatdemandwill
pickupagainslowly.However,thisrecoverywillnotbesufficient toen­
ablecurrentavailable capacityto beutilized 5thecrisisistherefore of
astructural nature.
1.4Community aspects
Theabilityofindividual yardstotacklesuchanextensive andexceptionally
long^-lasting crisisvariesgreatly.Thestruggleforsurvivalwillundoubtedly
beextremelj' -hard.
Japanese shipyards ,whichenjoycomparatively substantial advantages ,above
allbecause,oftenformingpartofindustrial andtradeconglomerate com­
panies,thaiarefinancially strongerthantheiropposite numbersinthe
Community ,willbebetterequippedtodealwiththecrisis.'Thisisalready
evidentj Japanese shipyards arenowobtaining themajority ofneworders

-7-
byofferingprioaawhichwouldnotallowCommunity shipyards tomaintain
theiractivities .AnumberofCommunity shipyards aretherefore indanger
ofbeingforcedtocloseandthiswouldfurtherstrengthen theJapanese
industry'sdominanoe ofamarketwhichwillstabilize atalowerlevel.
Theshipbuilding industryisextremely importanttotheCommunity (see
AnnexVI).Itdirectlyemploysmorethan400.000peopleandalsoprovides
worktorafurther1.000.000 oddinvarioussupplyindustries ,whosede­
liveriesofgoodsorservicesrepresent about60%ofshipyardturnover.
Theindustryisalsoextremely important forregionalpolicy,asitis
oftenlocatedinregionswherethestructure ofindustryisscarcely
diversified (seeAnnexVII).
Inaddition,5inthelightoftheCommunity'sexporttradeandthefactthat
morethan80%isoarriadbysea,theCommunity hasarighttoretainsome
degreeofindependance ,inthebuilding oftheshippingessential for
itstradeandthustocontribute tothem'aintainance ofinternational
competition .Inthisconneotion ,itshouldbenotedthatshipping under
Memberstates'flagsaccountsfor22$oftheworldmerchantfleet.Inthe
past,Community shipownerspurchased abouttwo-thirds ofnewtonnagefrom
Community shipyards (AnnexesVIIIA+B).Theseshipyards soldaboutone-
thirdoftheirproduction ontheworldmarket.
FortheCommunity tobeinapositiontomaintainashareoftheshipbuil­
dingmarketcommensurate withitsinterests ,itmustdevotemoreeffort
thaninthepasttore-establishing thecompetitivity ofthissector
duringtheperiodinwhichcapacitywillhavetobereduced.Thisrequires
thatthemeansofreconversion andrestructuring inthissectormustbe
implemented andooordinated ataCommunity level.

Batthisrestructuring canonly "beachievedinthelongterm.Itisnecessary
tomountintheshorttermmeasures sufficient todealwiththeserious em­
ployment andregional problemslikelytoariseastheunfavorable market
situation develops.
Conclusions
Thisanalysishighlights theseverityoftheorisisfacingshipbuilding
throughout theworld.
Themanyassessments ofothersconfirmthissituation,andtheobservations
madebytheOECDaretellings theysaidthatrecentanalyses clearly
showtheseriousness oftheproblemstoberesolved:ontheonehanda
substantial surplusoftankertonnageintheshortandmediumterm,andon
theother,averylargesurplusinshipyardcapacityintheshortandlong
run."
Inviewofallthefactorsmentioned ,wemustacceptthattheCommunity v
cannotescapetheconsequences ofthecrisisinthisindustry.Bearing
inmindthepolitical,economic andsocialinterests involved andthe
featurespeculiartothisindustry wheretraditional protective measures
areineffectual (see2.1),Communityactionmustbeplannedtohelpkeepthe
harmfulconsequences ofthiscrisistoaminimum,andeliminate theCommunity
industry'shandicaps in*.relationtoitscompetitors .

2.POSSMIRYY OPSOLVING THEPROBLEMS-OF-EXCESSFRODOCTIQN CAPACIT
IFTHF;PRPTTTILDINC ?SECTCRTLLP.CNU FLRFFI^ATIOTAL COOPERATION
2.1International cooperationTtroi '-Mjiic^i ,awyaij>wiafc*o ^–ammmt–KM ictmma *lai
Conventional marketdefencemeasures suohasinportcontrols or
theintroduction ofcastonedutiesaredifficult toapplyinthe
shipbuilding sector,particularly asshipowners canresortto
)
theviseofflagsofconvenience .
Furthermore ,boththeorisisintheshipbuilding Beetorandthe
marketitservesareworldwide .Itistherefore tobefearedthat
uncoordinated measures byindividual countries wouldbeineffective
and,becauseoftheirprotectionist effect,leadonlytodisruption
ofcompetition andapartitioning ofthemarket.
Itistoopposeadevelopment ofthiskindthatthemostimportant
shipbuilding nationshavesubscribed totheOECDarrangements on
*)aidstoshipbuilding andexportcreditsforvessels.Furthermore
theCommunities ThirdCouncilDirective of10July1975onaidsto
shipbuilding (N°75/432/EEC)stemsfromthesaneooncern.
*
.'Generalarrangement onthegradualelimination ofobstacles to
normalconditions ofcompetition intheshipbuilding industry"
whichhasbeenineffectsince1972andwhichconcemes particularly
thegradualdismantling ofdirectaidsandthe"Arrangement onexport
creditsforvessels"whichhasbeenineffeotsince1969,

-10-
Thesefactorsshowthatthemostsuitablevehicleforre-establishing
asatisfactory equilibrium betweenproduction capacity anddemand
isthatofinternational cooperation .Theaimofsuchcooperation
shouldbetoachieveanadequateandorderlyreductioninproduction^
andtherebyafairdistribution oftheeconomic andsocialburden
involved.Thiswillpreventthebiddingupofcostlyfinancial aids
andsafeguard thefreedomoftrade.
Thisapproachisconsonant withtheCommunity'scommercial policy
principles andinterests .Allpossibleeffortsmusttherefore bemade
topreventtheemergence ofnewbarriers.Itshouldbenotedthatthe
Community,assuch,has26fobyvalueoftheworld'sforeigntrade,
andthatthistogether withintraCommunity exchanges amountsto
40foofworldtrade.
«
2.2Framework forcooperation
numerousinitiatives havesli^eaeiybeentakonbypublicauthorities and
interested cirolestosolvethroughinternational cooperation the
world-wide problems ofgradually adjusting theshipbuilding industry
toactualneeds.Itshouldbenotedherethat,atthelevelofthe
industry,theAssociation ofWestEuropeanShipbuilders (AWES)and
theShipbuilders Association ofJapan(SAj)arestudyingthepossibilities
ofestablishing jointlythebasesforvoluntary restraint intheindustry.
Thesenegotiations have,however,notproduced anyobviousresultsup
tonow.
(l)Theexpression "reduction ofcapacities "usedinthisdocumentcovers
variousmeasures suchareduction ofproduction ,abolition ofcapacities
byconverting themtootheractivities orotherformsofwithdrawal
ofinvestment .

-11-
Themostnoteworthy efforts madebypublicauthorities havebeenundertaken with­
intheQB3D«As$0foofworldshipproduction comesfromcountries represented
inthisOrganization anditsworkhasalreadyproduced avalidbasisfrom
whichtodevelopacceptable solutions,TheOBCD,sseemsthemostappropriate
foruminwhichtoworkoutasystemofinternational cooperation .
Thefactthatsomeoountries donotbelongtothisOrganization (notably
Yugoslavia ,SouthKoreaandBrazil),ordonotparticipate intheseactivities
asisthecasewithsomemembers(notablytheUnitedStatesandGreece),does
Λnotinvalidate thi3conclusion .Indeed,thoughtheirproduction capacityis
notnegligible ,itisnotsuchastoconstitute amajorthreattotheeffective
application ofasystemofinternational cooperation .
;
*
2.3Progress madewithintheOECD
Atitsmeetingon30and31March1976theOECDCouncil'sWorkingGroupn°6
onshipbuilding reachedagreement onthe"GeneralGuidelines forgovernment
policiesintheshipbuilding industry"(AnnexIX)|theyhavebeenadopted
bytheOECDCouncilon4May1976.
According tothese"GeneralGuidelines "whicharebasedontheprinciple
ofsolidarity ,fairness andinternational responsibility ,eachmember
government oftheWorkingGroupn°6(*)(althoughnotboundtodoso)should?
(a)setitselfasfirstprioritytheobjective ofasuitablereduction
initsshipbuilding capacity,takingintoaccounttheregional and
socialproblems whichthepursuitofthisobjective Willcreate;
(b)refrainfromtakinganymeasuresorgrantinganyaidlikelytoup­
settheprocessofadaptation withintheindustryinquestion ;
'The"GeneralGuidelines "havebeenadoptedbyallproducercountries
intheCommunity andbythefollowing countries :Spain,Finland,Japan,
NorwayandSweden.

-12-
(c)ensure that practices ,particularly forpricing ,remain within
thelimits offair competition ;
(d)abstain from taking anymeasures which might lead totheorealion
ofnewconstruction capacity .
Under these "General Guidelines "itwasalso agreed toItrmstigp /fcathe
exchange ofinformation ,particularly about developments innational
policies ,trends inproduction capacity andtheorder book ofeach
producer country .
Itshould also benoted that ,although these "General Guidelines "have
been accepted bythose Member States which areshipbuilders ,several
have expressed reserves ,based ontheir ownparticular circumstances ,
about thevery principle ofreducing production capacity .
TheCommunity stated inadeclaration that the "General Guidelines "were
aninitial step which should befollowed before theendofthecurrent
year bypositive measures tore-establi^a balance between supply and
demand (Annex X).
•4Implementation ofthe OECD 's"General Guidelines "
Since these "General Guidelines "impose noobligation ,they areinfact
recommandations tothesignatory countries .Furthermore ,theprinciples
which they laydown areofavery general nature andifimplemented .without
coordination risk failing toachieve theobjective ofre-establishing a
structural balance between production capacity anddemand .

^ -13-
\
2,4*1 Reduction ofproduction capacity
lathelight ofthis ,theCommunity must beready togofurther ,
should theOECD Guidlines fail toachieve their objectives (reduc­
tion ofcapacity ,allocation ofneworders )andtryandnegotiate
aconvention orgentlemen ,sagreement with itsmain partners within
this organization .
Butstraight away theCommunity should affirm unquivocally its
willingness topursue therealization ofthese objectives onthe
basis ofthe"General Guidelines' *.Inparticular ,itshould deolare
itsreadiness toplay itspart inthereduction ofglobal production
oapaoity forthepurposes ofre-establishing abalance between
supply anddemand .
Inthis conneetion ,the"General Guidelines "allow each participating
country todecide foritself ,theextent ,rate andmeans ofachieving
thereduction ofitscapacity .
Itisforconsideration whether Community criteria andmechanisms
should beestablished forthecoherent application ofthese ■
"Guidelines "within theCommunity andtoenable theCommunity to
play itspart assuch ,thus avoiding disjointed action byitsMember
States * .'. •••.
TheCommunity hasaninterest inmaintaining ashipbuilding industry
which iscompetitive ontheworld market andbest able tosupply
Community 'sownneeds .3his objective maybest besecured bythe
selective reduction oftheCommunity ^production oapacity . .

-14-
Toactonitscommitment andmindfuloftheabovementioned Community
priorities ,theCommission willconsulttheMamberStatesendotherparties
concerned andthenpresentproposals forCommunity actionparticularly on
theextentofthecriteria,meansandtimesaale forthereduction envisaged
fortheCommunity .Onthespecificpointofhowthereduction willbeborne
bythedifferent MemberStates,theCommission proposestoadoptthefollowing
criteria :
-capacity shouldinthemainbereducedinthoseMemberStatesinwhich
shipyards usuallybuilding thetypesofshipaffected bythecrisisare
located,andshouldbeindirectproportion totherelative volumeof
suchcapacityineachMemberStatej
-eachMemberStatewilldecideforitselfwherethecutswillbemade
:withinitsownshipbuilding industry .Itwouldindeedbeeconomically
wrongtoclosethemostup-to-dateandefficient yardswhichareoften
thosefittedouttobuildbigtankers.Thisfreedemofmanouvrewill
makeitpossibleforthecutstobearmainlyonthelessefficiant yards,
totheextentthatthisdoesnotcreatesocialproblems,andprovided
thatthereisEnactualreduction intankerproduction capacity ?
-reductions incapacitywillbedefinedincompensated grossregistered
tons(AnnexI).Shipbuilding isgenerally alabourintensive operation ,
butthelabourrequirement canvarywidelydepending onthetypeof
vesselbuilt5theuseofcgrtwillallowforthesedifferences when
considering howthereductions shouldbeshared.
Thefeasibility ofthisapproach-itmustmeettherequirements ofboth
employment andcompetitivity –willlargelyhingeontheextenttowhich
agreement canbereachedbetweenthetwosidesoftheindustry.TheCom­
missionwillconsider whetherthemeanscouldnotbeprovidedtoallowthis
concensus tobereachedtogetherattheCommunity level.

15,
2.4*2Allocation ofnoworders
Fortheallocation ofneworders,theOBCD's"Goners!Guidelines "
envisage,atthepresent,asystematic exchange ofinformation
aboutthestateoforderbooks.
Butitmustbeborneinmindthatthereduction ofoapacity,even'
ifagreedandorderly,wouldbobroughtitoendught tho^ooncontratton of
ordersincertaincountries vvchlpy&rde *Marketforaejaalonenaywellnot
bringaboutanequitable distribution oftheconsequences ofthe
crisis.Onecantherefore considerthat,intheframework ofa
cooperative international policy,anecessary complement tothe
reduotion ofcapacitywillbeatemporary agreement ebout'new orders.In
thiscdnrrocttou ,Japanesepublicauthorities andindustryhave
bothassertedthattheirshipyard'spricingpoliciesareeconomically
justified .Nonetheless itremainsthefactthatthesepolicies pose
renlproblemsfortheCommunity'sshipbuilding industry.Aconsequence
.•'oftheirconsiderably lowerlevelofpricesislikelytobethat
themajority ofnewordorswillcontinuetogotoJapanese yards.
TheCommunity shouldtherefore ,withoutwaiting,prepareproposals
whichcouldbeputingoodtimetoits03CDpartners,shouldthe
exchangeofinformation envisaged bythe"GeneralGuidelines "prove
inadequate toensureafairdistribution ofneworders.
Thisproblemissocomplexthatonlydetailed studywillallowthe
mainlinesofsuchproposals tobedefined.Weshall,however,have
todepartfromtheassasption thattheparticipants willaccept
sharesbasedupontheproportion ofworldordersthattheyobtained
in1974~1975 »subdivided bycategory ofvesselyettobedefined..

-16-
2.5Restructuring existing capacity
TheCommunity shipbuilding industry canbebetter -oquipedtomeetfuture
marketrequirements ifitusesthistimeofcrisistoovercome onceand
forallthecompetitivity handicap whichmakesitsovulnerable today.
Thisrequires adecisiveefforttoreorganize andmodernize shipyards
throughout theCommunity before,ifatallpossible,theendofthe
presentcrisis.Tothisenditisnecessary toconcertexisting
λ
andprospective national measuretogetherwithanypossible Community
action.
2.6Measures concerning employment
Decisions takentoreducecapacity andtorestructure existingcapacity
willdirectlyaffectemployment andcouldcauseproblems incertain
regionswhereindustryislittlediversified .Thiscallsforthepre­
paration ofprogrammes thatwillensurethatanyadjustments inemploy­
mentwillbemadewithdueconsideration fortheinterests ofemployees
withparticular emphasis ontheirredeployment shouldtheyhavetobe
maderedundant .TheCommission willproposesupportfornational action
inthisfieldviatheEuropean Regional FundandtheRiropean Social
fund,andparticularly underArticle4of"theCouncilDecision of
*1.2.1971*TheCommission hasalreadylaidanappropriate proposalbefore
theCouncil(COM(73)l788 finalAdd.dated14.1.74).
2.7Conclusion
Evensuccessful international cooperation willnotsolvefortheCommunity
thebasicproblemfacingitsshipbuilding sector,i.e.seekingand
establishing adegreeofcompetitivity comparable tothatachieved by
itsworldpartners ,particularly Japan.Thereisnoreasonwhythis
objective shouldnotbeattained,especially ifCommunity shipbuilders
resolvetotakeadvantage ofallthe,'potential' ,offerodbytheCommunity
dimension Itfollowsthatthisrestructuring isthemainproblemtobe
tackled,astheCommission hasonmorethanoneoccassion soughttobring
theIfemberStatestorealise.Itcannotberelieduponalone,however,
sinceitwouldbringnoresultsintheshortterm,evenifsetinhand
immediately .

POSSIBLE ACTIONIPCOOnriiTATION OPSOLUTIONS ATINTERNATIONAL
LEVELFitO""SIMPOSSIBLE
3.1IToedto.sofegnacd .Comia-vtw shipbuilding
Should "theOECDbounabletoofferasatisfactory solution ,the
Community shouldseek,withJapan,anagreement ,opentosubscription
byanyotherOECDmember.Inviewofitseconomicsocialandstrategic
importance ,theCommunity cannotseeitsshipbuilding industryeliminated ,
iftheeffortsbeingmadetoachieveaninternationally coordinated
reduction ofcapacity andallocation ofnewordersshouldfail.This
wouldrecfuireittotakeanynecessary steptopreserve asuffioient
shipbuilding capacitytoprotectitsvitalinterest .
ButtheCommunity willbeobligedtohastenevenmoretheunavoidable
processofreducing capacity andimproving thatconsidered indispensable
intheeventofacompletefailureofallattempts atinternational
cooperation .Indoingthis,solutions willhavetobefounded onthose
sameprinciples ofintrar-Community coordination aswerespecified for
apossibleinternational agreement insub-paragraphs 2.4.1,2.5,2.6and
2.7abovejandshouldbesought,tothegreatest extentpossible ,with
theagreement ofbothsidesofindustry .Butanyway,ifthishappens
itwillnotbepossibletoundertake anyorderlyreorganization ofproduction
facilities unlesstheyareaccompanied byimmediate stopstoensure
thesurvival ofthatcapacitythatneedstoberetained .
3*2Needforcoordinated actionatCommunity level
Itistobefearedthatthefailureofeffortsatinternational cooperation
willgiverisetoaproliferation ofunilateral uitional measures ,in
supportoftheindustrybothbytheMemberStatesoftheCommunity and
othershipbuilding nations.Thiswouldthreatenageneralprolongation
andaggravation ofthecrisis.

-18
r*romtheCommunity'sshipbuilding industries' pointofview,the
proliferation ofnational measures would ,imperilnotonlyCommunity
solidarity butalso,asaconsequence ofenfeebling internalcompetition
weakenitsexternal competitivaty .Thecoordination ofthestepsthat
wouldthenhavetobetakenwithintheCommunity musttherefore be
,arranged .Thisneedisdemonstrated bythefactthatthedirectand
■-indirectnational supportfortheindustry heretobe hasnotenabled
ittobecompetitive withthirdcountries shipyards ,particularly those
inJapan.
3.3Possibls actions
Inviewoftheabove,maintaining atleasttheessential coreofaCommunity
shipbuilding industry requires ?
–continuous Community coordinations tobeeffective thismustcover
allfieldsofactionconsidered .^.
-jointrecoursetoallthosemeasuresnecessary tomaintaintheactivities
ofatleasttheessential coreoftheindustry,andprotectitagainst
themeasures ofthirdcountries 5anongthesemeasures onecanruleout
neitherfinancial supportfprshipowners oryards,noranyappropriate
actioninthefieldofmaritime orcommercial policy.
Whatismere,toobtainmaximumresults,theuseofsuchmeasuresin
combination cannotbeexcluded .
3.4Feedforathorough examination
Theextentofsuchmeasures,theircostsandmodalities ,shouldbe
examinedfurther,inthelightoffuturedevelopments affecting theresolution
•ofthesector'sproblems.
Inanycasesuchmeasures wouldinvolveamoreseriouspolitical committment
-thantheseinconsequence ofaninternational agreement ,sincetheCommunity
wouldthenhavetoactinaclimateofhostility .

4.CONCLUSIONS AIIDPROPOSALS
TheCommission isoftheopinionthat,toobtain "bestresults,theserious
world-wide crisisinshipbuilding callsforimmediate Community action,
inadvanceofanypossiblefruition oftheunavoidable stepsforre­
structuring theindustryinthelongertern.Itbelievesthatamongsuch
possible community initiatives ,thebestwayofachieving asatisfactory
andorderlybalancebetweensupplyandderaend-andhenceafairdistri­
butionoftheensuingeconomic andsocialconsequences -istoseek
solutions throughinternational cooperation .Thiscooperation would
alsoavoidrecoursetoautonomous safeguard measures withitsensuing
disadvantages.
Accordingly theCommission considered itappropriate thattheCommunity
shouldatthisstagetakeconstructive actionfollowing theinitiative
shownbytheOECD,andwhichhasfoundpractical expression intheacceptance
ofthe"GeneralGuidelines forgovernment policies intheshipbuilding
industry".
TothisendtheConmission recommends thattheCouncilshoulddecideon
theneedfortheCommunity to:-
(i)negotiate onthebasisofacommonposition anymeasuresnecessary ,
ttfithintheframework oftheC3CD,fortheimplementation ofthe
"General Guidelines ".
(ii)commititself,withinthatcontext,toplayitspartinbringing
aboutthereduction inproduction capacity whichisnecessary ona
worldwidescaleinordertorestorethebalancebetweensupply
anddemand.
(iii)defineattheappropriate momenttheextentoftheCommunity'sshare
inthisrundownaswellitstiming.
TheConmission willinformtheCECDthattheaboveactionistheCommunity's
contribution tothegradualapplication oftheprinciple ofsolidarity ,of
international responsibility andfairness whichisthebasisofthis
Organization 's'initiative .
ForitsparttheCommission willnotfailtoforwardtotheCouncil,suit
ableproposals withaviewtoimplementing theaboveaction,basedon
theguidelines contained initsCommunication .

ΑΝΝΈΛ Ι
Explanatory note ontheunits used inthedocument
i
Gross registered tonnage (grt,).Thegross tonnage ofaship isameasure
ofvolume andisexpressed intons :thevalue ofatonis100cubic feet
or2.83m\
Deadweight tonnage (d*t),calculated inmetric tonnes ,isameasurement
ofthetotal weight ofcargo ,fuel ,andsupplies etc .carried onboard
ship .
Remark tTheoretically these twounits arenotcomparable since they refer
todifferent concepts .Afixed ratio exists only foraspecific ship .
However ,forsimilar types ofvessel ,itissometimes permissible tomake an
approximate conversion !this factor mayvary from O.85to2.0 ;inthe
case ofoiltankers itvaries from 1.5 to2.0*
Itisimpossible always tousethesame unit ofmeasurement .Both areused in
thetext according tothenature ofthedata available .
Compensated gross register tonnage (cgrt )isameasure for .theexpression
oftheamount oflabour required tobuild aship ;ittakes account ofthe
fact that theactivity measured innumber ofhours pergrtvaries con­
siderably according toonthedimensions andtype ofship .5000 cgrt
isdefined astheequivalent oftheamount oflabour required tobuild
ageneral cargo vessel of5000dwt .
Tonne.mil cisameasure oftransport capacity theunit forwhich represents
thecarriage ofaweight ofonemetric tonne over onenautical mile
(1.852 m).

SHI1Bcœ3ï,I2K2 >(inthcuocad /prt)
(SourcetLloyd'sAnnualSummaries ofMerchantShipscomplrtrd-tall-3)
Typeofvessel
im
1.Tankers
2.Bulkcarriers
3.GeneralcargoGermany Belgium
1154.8
423;9
90.5
4.SnacialiBod cargo22;9
5.Miscellaneous
Total
1.2221
1.Tankers : 1749^5
2.Bulkcarries J311.3
3.Generalcargo I195^8
4.Specialized cargo145;9
5.Miscellaneous j96.0145.8
2142.9
Total 2498.6119.3
129.4
M
256-1
18;9
112,6
50;9
18.2
200.6Den-nark
785.6
213.1
41.4
36.5
1076.6
648.5
202;3
85.O
33,5
969.2Prance
691.2
76;4
55-2
181;7
41.7
1040.2
638.6
60,2
396;3
54-6
1149.7Ireland
0,4
0,4
assteaas
28:1
2.4
30.5Italy
586.3
291.3
27-0
25;9
22r2
9532
497.4
226:8
36.3
4;0
27.0
791>5Nether­
lands
819.1
39-7
20.5
62.6
.941-9
8713
15-3
415
172
83,2
l028.5United
Kingdom
4573
446;3
200;6
252
67,0
\196,4
aessaaa
5844
380:8
166-3
6;0
322
11695Community
4914.1
1535.9
454.4
276.2
~383.1
7613.7
5008.6
1277;2
587.4
620.3
344.7
7838.2Japan -
11710.8
3505.9
780.1
484.6
412.6
16894,0
12646.7
2.913.2
981.8
161.6
283.2
16991.2Restof
World
4229.1
2366.6
1531.0
224.6
682.2
9033-5
6070.1
5052.6
1207.3
290.5
752.4
9.373.1|Worlr 1
208e-•
7/«..
4
2V
c'•
1/r
33.541 .
2272^.,
6243.(
2.776*.
1072./
1.3o0.:
34.202.-

ΑΙΙϊΓΤ:III
Demand,forOilcarrying ^capacity
,*•(estinate)' .
i. ...WORLD •iI
1974
I1980 I1985
t
' s1.Oiltransport byseain10tonnes 1624il450 |
i i*)
1661
2.Carryingcapacity requirements in''• I
!ι
I
10tonne-ailes 10.90 II11.16 13.02
3.Theoretical demand :foroil-
gtankersin10dut~I
1
234from240
to255280
# ι4.Theoretical carryingcapacity I
available (Fleet+deliv&rlec )
in10°-»dvk 280 I'340
iI
I
*)Basedonanassessment ofthedevelopment offutureoilrequirements
bytheOBSEfenthoecBunption ofapriceof$6.parbarrel.
Theoiltankerfleetwasestimated at310milliontdwasat1January1976j
ofwhiohmorethanonethirdwassurplus.
Merchant Fleetsoftheworld ,
(shipsof100grtandupwards)
in1000grtatthe1stJulyofeachyear
• ~j.-.-T-I96O ■j1970
'Tankers."t- *' ■41465 86140 150057"
. .1
Bulkcarriers ) jI ;•
i '•46652 :85548
Generalcaigo--.;•r< 88365 72396 ,70399.
Specialized cargo) 6699 19139
Miscellaneous15603 j
i16969
Total 129770 227490Γ"'–
342162
ofvhich.Cormnity ■i43621 I
1 l!57370
1.74282
ι,. -
Source:Statistical TablesofLloyd'sRegister ofShipping

AMF-S:IV
(l)Basedonthe
(*)Standard iieninitialestimates drawnupbytheAliES
Hours!
!
I!
L1976-1930
Annual
capacity
1975Produc­
tion
1975.
Orders7or*c>xtemtiHljTheoretic -,I
^vr<v1uot"lo*i Iannual(,,j
irequireme -'
.10grtexisting j(uptoiexpected 1
31.12.75)j1976-771973-80 i
Oiltankers 26.82!
22.54 i46.34'3.0 |23.17 1.0 !9.30
i
Bulkcarriers 6.55 6.06I19.54 8.6 I
ι !5.63 6.62
Others 5.84 4.96 16.47 16.50 6.59 6.04
Total .39.21 33-56.j82.35 j28.10
i\22
!J.10
l
I21.96j
106SMH(*)
1!
i
1I
I
\ I h
IOiltankers
!280 221 455 j29 i1 !
1227 .
I10I
I91
I
Bullecarriers 109 82 265 i117
i!76 90
Others 300 287 846 |848j339310
l
Total 689 590'1566j994
1 ■•»j512L„i491 |

ORDERBOOKS(in10prt)
HypeofvesselF.R.
Germany|Belgium Denmark Prance1rIreland j_lItaly Nether­
lands.–7–
Umtçd
KingdomCommunity Japan Restof
theworldWorl 1
total.
asat31.12.CTr ,
Oiltankers 5113 442408 I3607 19611418 3923
Iι1847442820
I25409
i857c;
Bulkcarriers
(alltypos)
Othervessels951
.1615!480
I213564
261294795
5968
28180
j'394ι
1411*
3004549
65166962
27375891
7345174^2
16
ITotal 7679 734 32336554 100 321018926134 !2953952519
,■■!■■■ I<38645 I12070
asat31.12.1975 .
Oiltankers \
Bulkcarriers *\
(alltypes)
,Othervessels1601'
713
1'88844
416
165. 1
1340
449
2131
ί
2162
269667
21219
816
!262552
66
326.3237
I036
65610155
3563
620818716
9881
276617466
6099
7492Φ-ϋΥ
19
16A££
Total 4202 625 20024858 69|2297
y______|9444:929 '19.'926.3136331057823-"
CANCELLATIONS :Between31December1974and31Dccom"ber1975thocancellation ofon-dorsforoilttukex^taxprntodio40Qillioaitdw.,
whichcdrrePTJonds tomorethan18millioncrtj ,
1TB. 'Thigannex.showe •theconsiderable reductioninordersduemainlytothreefactors:
–thohighrateofproduction
-cancellations-thelackofhewordersforlargeoiltankers.
/

:*Tf
ANNEXVI-
Datashowingthesiscofthesectorin1972
CountryTotal
tsodbors
ecployodIlcnbcre
ocployedr
inthe
ms-^orshipyards*)Totalpsribors em­
ployodesaper­
centageofthe
iaotivepopulationShareofthe
sectorinthe
GDP
•Çerraany 6570045000 0.25$ 0,32Jo
Prance 4450015800 0.20% 0,20%
Italy I11200015800 0.22% 0-17%
Netherlands 493001?400 I1.10$ I1.40%
Belgium j12500 ; 0.32% »
United
Kingdom
Ireland j173
1000
780 :40000I
0.65$
0.17$.0,69%
0.23%
Itenoark
122300 5100 0.90% O.64%
Ί
Community |411080(139100) 0.40% 0.35%
■11 » ■ 1■
Japan 1265.800 (70000) 0.51%OVUfOgV AW*foountries)
Sweden
ιι ιΛ31500 0-79%
#)capableofconstructing vesselswithacapacityofatlrast150000tdw
B»B»Thodatarjivonaboveincluderelatedactivities,oopeoially intheen­
gineering ooctorfinsofaraathey «yooarriedoatbyundertakings inuhioh
t£enaiaactivityistheoonetroctf aadrepairofvessels*
Thesedataarebasedmainlyonnationalindustrial statistics ,thefigures
forthedifferent/countries arenetnecessarily cooparablebeoauseofgapsordifferences ofdefinition *

rÆV'-AnnexVII
SHXPWXUHNQ
SitingOfthe .-rialrshipyard /;,
(according tor^j/;tothe
OECDquestionnaire -nf
15February 1973)
•"fro«~2000to2500
groBstons
ofrom25000toIOC000
grosstons
0over100000grosstons
National Production
for19<5i"millionsofgrosstons
(according toLloyd's
Register ofshipping ).. ,
I'«y/w-~ ■""*."7. Sitingoft
.– STy(«ccordiugfOECDquesti
\15February
S"~*"troà~Z' Jrv-J gross
j>Jr$f °froiB2
( «rooB
1 0ovsr1'
'f*.. \m0'5S?"" 1MN'atiic ford'ik*\ °*«
7§/f^ ^ (accord :
• R°8i8t'
c a1c–Hì
T*ffyJ=^cr^'
\pj."sr
tT>/ 71' 1 •r?c \w (J >rIf) So, *KT/ •vJVlSL~r' *

an ;
I *
DELIVERire TOCOTiMTOTITY SHIPOWNERS HI1974,BYCOUNTRY OPBUILD
I!Purchaeingcountry Countryofbuild
I(forregistration in)CountryofregistrationIOtherTCCcountrios TotalECcountries..-
Non-membcr countner
git fr i°jgrt Λ._l.grt
UnitedKingdom 954-428 25.0 1.104326 29.0 2058754 54.0 1754608 46.0
IBclgium 132 0.1 132 0;1 186044 99-9
IDenmark 428734 67.5 49-623 7.8 478357 75:3 I156921 24.7
IPrance I•514024 31.2 43-699 2.7 '557723 33-9 I.089349 66.1
IF.R.Germany 1.291786 96,2 5486 0:4 1.297272 9b,6 44-992-3./i
IIreland 220 13.7 ■220 13.7 1385 86.Z
Italjr.* 887-424 99.97 245 0,03 887669 100.0
INetherlands '!.39-641 15,7_J149141 59-3 •188782 75-0 62902 25.c
TotalEC 4.116.037 .47Ό1.352872 .15.4 5.468.909 62-4 13296201 37.»
Japan Othercountries
IJapan 2-849 .282 100,0 304
Source;Lloyd'sAnnualSummary1974(Table4-Registration ofallshipscompleted during1974)

MtTEX..VIIIB
iQjy^Rffs ,?0,ocMgargnr SKTOJEERS aritm.srCCGOTKT OPBDTLD
Purchasing country
(forregistration in)Countryofconstruction
Countryofregistration i
.1 ■i i.iOtherjjvjcountries TotalECcountries IKon-mcmbGr countries
grt'*jgrt lo ertMrs^t55
UnitedKingdom - 820.907 27,7 1.025365 .34.6 I.846-272 62,3 I.II5.609 37-7
IBelgium
*p1330 o;9 ■1330 0,9 142318 99-1
1Denmàrk . .253110 44-3 17867631:3 431-786 75-6 139-306 24.4'
IFrance .510.808 •49-6•■■84-376 8:2 595-184 57f8 434.897 42.2
IF.R.Germany ._ 81592389,4 .20,832 2;3 836.761 91*7 75.791 .8.3.
IIreland 235 8.6•235.8.6 2503 91«4
.782106 92:3I
1782106 92.3 65356 7,7
INetherlands • .365561 75.6 12110 -2,5 377671 78.1 105991 21.9
TotalEC '3548415 51.0 1322930 19.0 4871345 70.0 2081771 30.0
JaparuTapan Othercountries
3066083 100.0 0
Source:Lloyd'sAnnualSummary1975(Table4-Eegistration ofallshipscompletedduring1975J

ORGANISATION FORECONOMIC -1- ANNEXIX
COOPERATION ANDDEVELOPMENT
Paris,12thMay,1976
C(76)53(Final)
Scale3
COUNCIL
RESOLUTION OFTHECOUNCIL
CONCERNING GENERAL GUIDELINES FORGOVERNMENT POLICIES
INTHESHIPBUILDING INDUSTRY
(AdoptedbytheCouncilatits417th .meetingon4thMay,1976*)
TheCouncil,
HavingregardtotheaimsoftheOrganisation forEconomic Cooperation and
Development ;
HavingregardtotheResolution oftheCouncilof24thMay,1966concerning
theTermsofReference ofanadhocWorkingPartyonShipbuilding ,asamended
[C(66)57,C(67)104(Final),C(70)165(Final )];
HavingregardtotheRecommendation oftheCouncilof30thMay,1969»concer­
ningGovernment Assistance totheShipbuilding Industry[C(69)73];
HavingregardtotheUnderstanding ofExportCreditsforShips,asamendmended
[C(69)60(Final),C(70)204(Final),C(74)88(Final),C(75)162(Final)];
HavingregardtotheResolution oftheCouncilof20thand24thOctober,
1972,concerning aGeneralArrangement fortheProgressive RemovalofObstacles
toNormalCompetitive ConditionsintheShipbuilding Industry[C(72)166(Final)];
HavingregardtothereportbyWorkingPartyNo6oftheCouncilonShipbuilding
[C(75)215]andtotherequestoftheCounciltotheWorkingPartytointensify
itseffortsinordertoimporvethesituation affecting thisindustry assoon
aspossible[C/M(76)1,Item10].
NOTESthatthefollowing countries ,MembersofWorkingPartyNo6ofthe
CouncilonShipbuilding (Germany,Belgium,Denmark,Spain,Finland,France,
Ireland,Italy,Japan,Norway,theNetherlands ,UnitedKingdomandSweden)
havedecidedtoadoptthegeneralguidelines forgovernment policiesinthe
shipbuilding industry setoutintheAnnextothisResolution .
*)TheDelegates forGreeceandTurkeyabstained;

c(76)53(Pinal)
i-miec:
•" ■'' 1^,:
CBNER,*,L GUIDELINES FORGO^IT'OT miCISS
INTHESHIPBUILDING INDUSTRY
1.WorkingPartyNo,6oftheCouncilonShipbuilding wasinstructed by
theCouncil",,,,tokeepthesupplyanddemandsituation underclose
reviewandtosuggestanyactionrequiredtoavoiddevelopments that
couldleadtostrongpressures forareversion tocompetition-distor -
tingassistance toshipbuilding ...»"^('/2)l&>(?insl )rSection
Inaccordance withthesetermsofreference theWorkingPartyconsi­
dered,atits28th,29thand30thsessions ,possible waysofremedying
thepresentandexpected imbalance intheshipbuilding industry.
2.TheCouncilatits409thmeetingon20thJanuary ,1976»takingnote
oftheReportC(75)215 byWorkingPartyNo,6,e:q>resseditsgreat ,,
concernattheseriousproblems facingtheshipbuilding industry ,and
urgedtheWorkingPartytointensify itseffortsinordertoimprove
thesituationaffectingthisindustryassoonaspossible/~T)/l?(76)l»
ïtcc'1U,
3,Afterexamining andassessing thepresentandfutureprospects for,,
supplyanddemandinshipbuilding ,WorkingPartyNo,6ofthe
.Councilconsiders thattheresultsofitsanalysisclearlyshowthe
seriousness oftheproblemstoberesolved :ontheonehandasubstan­
tialsurplusoftankertonnageintheshortandmediumterm,andon
theother,averylargesurplusinshipyardcapacityintheshortand
thelongrun.
4.TheMembercountries oftheWorkingPartyagreethatinorderto
remedytheseriousstructural disequilibrium existinginthisindustry,
effortsareneededinallshipbuilding countries inorderthatthe
"inevitable reduction inworldshipbuilding capacity maybeachieved
'intheleastdamaging andmostequitable waypossible .

-3
%TheMembercountries oftheWorkingPartyconsiderthattheseriousness
oftheexisting andejectedsituation makesitessential thatthe
international maritime community ,governments andtheindustryin
particular ,shouldseekeverymeansofrestoring normaland"balanced
conditions ofcompetition andmarketwithintheshortest possible
time.
6.TheMembercountries oftheWorkingPartyreaffirmtheiradherence ,in
thespiritoftheMinisterial Declaration of30thMay,1974tothe
arrangements concluded intheframework ofWorkingPartyNo.6ofthe
Council,inparticular theGeneralArrangement fortheprogressive'
removalofobstacles tonormalcompetitive conditions intheshipbuil­
dingindustry ,andtheUnderstanding onExportCreditsforShips.
7.TheMembercountries ofWorkingPartyNo.6onShipbuilding acceptthe
principle ofsolidarity ,fairness andinternational responsibility
implyingthateachshipbuilding countryplnysanappropriate partin
resolving thedifficulties .
8.TheMembercountries oftheWorkingParts' -agreethatappropriate natio­
nalpolicies shouldbedevisedtodealwiththeproblems ofadaptation
thatariseineachshipbuilding country ,andstressthatinvirtueof
theprinciple ofsolidarity ,fairness andresponsibility ,internatio­
naloo-opcration isneededtofacilitate thepursuitofthesepolicies
andavoidunilateral action.
9.Inthespiritoftheprinciples agreeduponintheaboveparagraphs ,
theMembercountries oftheWorkingPartyareagreedonthefollowing
generalguidelines ,whichmightguidegovernment actionintheadapta­
tionprocessoftheshipbuilding industry andfacilitate subsequent
national andinternational discussion .
10.Eachgovernment ,MemberoftheWorkingPartyNo.6should:

-4
(1)endeavour toensurethatapriority aimintheadaptation ofits
shipbuilding industry ,is,talcingintoaccounttheimbalance xjfthe
market,reduction ,asappropriate ,oftheproduction capacity ,reco­
gnisingtheregional andemployment problemsthatariseinpursuing
thataim;
(2)nottotakeanymeasureorgiveanyaidtoitsshipbuilding industry
whichwoulddisturbintheshortorinthelongertern,theneces­
saryadaptation processoftheindustry ?
(3)watchinthatconnection thatpracticesinitsindustryremain,in
particular inthefieldofprices,inaframework offaircompetition ;
(4)refrainfromtakingmeasureswhichwouldhelptocreatenewshipbuil­
dingcapacity anda&gravata theworldwide ErtruoturrJ .Inbalaoce inthe
shipbuilding industry,
11.Thosegeneralguidelines areaddressed togovernments .Compliance with
themisnotobligatory anddoesnotlimittherightof-Membercountries
totakemeasures connected withtheshipbuilding 'industry inaccordance
withinternational agreements alreadyconcluded ,inparticular inthe
franeworlc ofCECD.
12.TheMembergovernments ofWorkingPartyNo.6oftheCouncilofShip­
building ^havingagreedontheseguidelines ,decide:
(l)tokeepeachotherinformedoversixmonths,withinWorking .Party
No.6,ontheprogressoftheirnationalpolicies ;
,(2)thataspecialsessionoftheWorkingPartymaybeconvenedatthe
'requestofoneormoreparticipating countries wheneverthisis
necessary ; •<

(3)thatthesub-Group onsupplys.nddemandshallinformitregu­
larlyofprogress towardsarestoration ofmarketequilibrium ,
andsinparticular ,ofthetrendofshipbuilding capacities ;
(4)thatthesub-Groupwill,asquicklyaspossible ,setupa
systemofreciprocal information whichwould,eachquarter,
allowknowledge ofthevolumeofneworderstakenbyeachpror»
ducingcountry. r.
Sfembergovernments ofWorkingPartyNo.6areawarethatthese
generalguidelines mentioned in',thepreceding paragraphs providea
generalframework forgovernmental policies.Theyagreethatpracti­
calsolutions whichwouldallowareturntoanormalandbalanced
workingofthemarket,mustcontinuetobesoughtbygovernments
atanaccelerated pacewithintheframework oftheguidelines .

ν
AUNEX X
Declaration "bytheEuropean Economic Community
ontheOECD 's"General Guidelines "proposal
presented atthemeeting oftheOECD fsWorking
Party No6(Shipbuilding )inParis on30March
1976
TheCommunity hasnoted theinitiative taken intheOECD forthepurpose of
defining theframework fortheconsideration oftheserious problems fecaing
theshipbuilding industry ?theCommunity feels that thepresent end'foresee­
able developments inthis industry must bethetreated asworrying andthat
themajor imbalance between supply capacity anddemand isstructural in
nature andlikely topersist foralong time#
TheCommunity considers that this document canconstitute avaluable star­
ting-point making itpossible ,inparticular ,toverify each partner *sdis­
position tocontribute towards thefinding ofsolutions answering tothe
present ciris .
However ,this canonly beaninitial step andmust befollowed quickly by
more practical mesures aimed ataneffeotive restoration ofthebalance be­
tween supply anddemand .
Indeed ,theCommunity considers that ,inview ofthegravity ofthesituation
andtheconsequences thereof ajoint effort must bemade toarrive atre­
sults which canbetranslated into practice before theendofthis year .
TheCommunity emphasises that ,intheformulation oftheCommunity solution
forthesituation initsownshipbuilding industry ,account will betaken
ofthose practical achievements deriving from theOECD initiative that tend
tostabilize themarket .