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COM(82)684
Vol.1982/0213

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COMMISSION OFTHEEUROPEAN COMMUNITIES
COM(82)684 final
Brussels/15November1982
Proposalfora
COUNCILDIRECTIVE
amendingDirective 81/363/EEConaidtoshipbuilding
(submittedtotheCouncilbytheCommission )
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V->V*
"v..e/■i';--•o^
COM(82)684final

Csn^'vi
EXPLANATORY MEMORANDUM
1.TheFifthDirectiveonaidtoshipbuilding adoptedbytheCouncilon28
April19^1willexpireon31December1982*TheDirectivecontainsaCom­
munitycodeforstateaidstotheshipbuilding industrybasedonArticles
92(3)(d)and113oftheEECTreatyanddesignedtohelptheindustryoutof
itsseverecrisisandtoassistitsrestructuring .Astherehasbeenno
let-upinthecrisisanditisnecessarytosupporttheeffortsofCommunity
shipbuilders tostabilizeandconsolidatetheirpositionandtolimitthe
socialandeconomiooonsequences oftherestructuring ,thesubsidiesoode
needstobekeptinforce.
2*Themarketupturnhasunfortunately notliveduptotheforecastsmadein
1980.Althoughtherewasaslightinoreaseinoutputin198l»thesignsof
livelierorderingdisoernedinthefirstsixmonthsof1981wereshort–lived
andin1982ordershavefallenoffsharply(l).Themedium–termoutlookfor
newordersisnotatallpromising.Estimatesofshipbuilding oapacityand
outputin1982showsubstantialexcessoapacitybothwithintheCommunity
andintheworldatlarge:
Worldtcapacityestimatedat21millionogrt
output "14millioncgrt
EECtcapacityestimatedad3.5millioncgrt
output "2,7millionogrt
3.Between1976and1981,andparticularly TindertheFourthDirective(78/338/
EEC),theemphasiswasonreducingovercapacity.Overthisperiodoapacity
wasoutbyaround30%andemploymentby40%whilstoutputfellby48
(l)Cf.ReportontheStateoftheshipbuildingindustryintheCommunity
(C0M(82)564). 7

Sincethen,moreweighthasgraduallycometobeattachedinrestructuring
planstomodernization measures,shipyardrationalization andproductivity
improvements ,aimedatconsolidating therestructuring carriedoutinthe
precedingyearsandallowingittobearfruit,onthegroundthatitwill
taketimefortheeffeotsofthepreviousroundofcutstoworkthroughto
produceahealthierandmorecompetitive industry.
ThisapproachisreflectedintheseventhrecitaltotheFifthDirective,
whichstatesthat"therestructuring effortisnotconfinedtoreductionof
production ,employment andproductioncapacity,butincludesallothermea­
suresenablingtheshipbuilding industrytobecomecompetitive ;....in
assessingthereductionofproductionoapaoityitisappropriate totake
acoountoftheeffortalreadymade".
Hence,inanumberofoasesinvolvingproductionaids,theCommission has
acceptedconsolidation withoutfurthercapaoityreductions asoomingwithin
restructuring forthepurposesofArtiole6,subjecttothefollowingcondi­
tions,amongothers:
(a)thattheconsolidation waaprecededbyrestructuring involvingsubstan­
tialcapacityreductionsintheformofclosureoftheleastviable
yardsandresultinginproperutilization oftheremainingcapacity;
(b)thatitiaofrelativelyshortdurationj
(o)thatthesubsidiesproposedwouldbasharplydegressive.

Initsscrutinyofaidnotifications ,theCommissionhasalsoborneinmind
thatthefactthattherestructuring processwasproceedingatdifferent
ratesandaccordingtodifferenttimetablesindifferentMemberStates.In
apersistently depressedeconomicenvironment ,ithasconcentrated onensuring
thattheaidschemesweregenuinlydegressiveandlinkedtotheunderlying
economioobjective,whiohisrationalization oftheindustry.
Thecontrolofaidsthusrespondspositivelytotheeconomicandsocialen­
vironmentandbacksupinaconsistentmannerCommunitypolioiesinthewhole
maritimesector:shipping,ports;fisheries,andshipbuilding andship-
repairing.
InviewofwhathasbeenaohievedundertheFifthDireotiveandofthepresent
stateoftheCommunityindustry,theCommissionproposesthattheFifthDi-
reotivebeextendedforthreeyearsuntil31December1985*Toavoiduncer­
taintyamongoperatorsBhouldtheaidagainfallunderthegeneralregimeof
Artiole92whentheFifthDirectiveexpires,itisdesirablethattheCounoil
aooptthisproposalbefore31December1982.
TheCommissionaffirmsitsintentionoftighteningupandimprovingthecon­
trolofshipbuilding subsidies.Tothisenditintendstoincreaseconsults
tionwiththeMemberStatesbyholdingmoreregularmeetingswiththenatio­
nalexpertsduringwhiohallaidnotifications ,andinparticularthosein­
volvingindirectaid,wouldbescrutinized morethoroughly ,byenforcingthe
Directivemorestrictly,withgreaterinsistence onthepriornotification
requirment,andbyimprovingthelayoutandqualityofthehalf-yearlyre­
portsdrawnupunderArtiole10oftheDirective.
Withregardtotheship-repairing industry,whiohiainanextremelyworrying
situation,theCommissionreaffirmsthestatementwhichitaskedtobeinser­
tedintheCounoil'sminuteswhentheFifthDireotivewaaadoptedon28April
1981i

'Thasituation inthe•hip–re pair aeotor ?however ,appears tobeofacor–
tain degree ofurgency inaom® M®mb®rStates andaidforrestructuring th®
sector should therefore b®exarain®d sympathetically ,taking accoujit ofsub­
sidized competition froa shipyards outside theCommunity ".

Proposal for a
CQUNCIL_DIRECII\ /E
amending Directive 81/363/EEConaidtoshipbuilding
THE COUNCIL OFTHEEUROPEAN COMMUNITIES ,
Having regard totheTreaty establishing theEuropean Economic Community ,
andinparticular Articles 92(3 )(d)and113thereof ,
Having regard tothe proposal from theCommission ,
Having regard totheopinion oftheEuropean Parliament ,
Having regard totheopinion oftheEconomic andSocial Committee ,
1
Whereas theCouncil adopted on28April 1982 Directive 81/363/CEE
which embodies acode forState aids with aview topromoting streamlining
andrestructuring oftheshipbuilding industry inacrisis situation ;
Whereas thestate oftheshipbuilding industry ,both worldwide andintheCom­
munity ,hasdeteriorated during theperiod ofapplication ofthesaid Direc­
tive ;
Whereas thesaid Directive expires on31December 1982 ;
Whereas acompetitive shipbuilding industry isofvital interest totheCom­
munity andcontributes toitseconomic andsocial wellbeing byproviding a
substantial market forawhole range ofindustries including those using ad­
vanced technology andalso contributes tothemaintenance ofemployment ina
number ofregions including some which arealready suffering ahigh rate of
unemployment ;
Whereas theapplicationbytheCommission ofDirective 81/363/EECallows for
restructuring andconsolidating schemes soastoenhance thecompetitiveness
oftheEuropean industry bypresenting escalation ofaids *while maintaining a
number ofjobs ;
OJNoL137 -23.5 .1981 ,p.39
•/2

-?-
Whereas inthepreseut continuing economic crisis Member States donot fore­
see inthemedium term ,that isnot within three years ,agenuine recovery
inmaritime industries either atworld oratCommunity levels andwhereas
consequently thestreamlining oftheCommunity 'sshipbuilding industry must
bepursued inorder toobtain alasting improvement ofitscompetitiveness
through adaptation tomarket conditions ;
Whereas inview ofthe severe social andregional repercussions ofthe con­
tinuing crisis and inview oftheefforts andsacrifices demanded bythe
streamlining ofthis sector inthis particular respect ,itdoes not
appear possible immediately toabolish theaids granted byMember States
tothe shipbuilding industry ,whether directly orindirectly ;
Whereas itistherefore necessary toextend for aperi or*ofthree years
thecontrol ofsuch aids asinstituted bytheDirective 81/363 /EEC ,
HAS ADOPTED THIS DIRECTIVE :
Article 1
InArticle 11ofDirective 81/363 /EEC 31December 1982 ishereby replaced
by"31December 1985 ".
Article 2
This Directive isaddressed tothe Member States .