Opinion of the Economic and Social Committee on the 'Proposal for a Council Regulation (EC) establishing new rules on aid to shipbuilding` (98/C 129/05)

On 20 October 1997 the European Council decided to consult the Economic and Social Committee, under Article 198 of the Treaty establishing the European Community, on the above-mentioned proposal.

The Section for Industry, Commerce, Crafts and Services, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 6 February 1998. The rapporteur was Mr Simpson.

At its 352nd plenary session (meeting of 25 February 1998) the Economic and Social Committee adopted the following opinion by 110 votes to three with seven abstentions.

Since the proposals for a new aid regime should be seen within the context of wider shipbuilding policy and, in particular, the Commission's parallel Communication () final outlining new orientations aimed at improving the competitiveness of the sector (point 1.5 of the Regulation Explanatory Memorandum), the Committee refers itself to the opinion it has given on that Communication.

As a reminder, the main conclusions of said opinion are:

- The ESC has, in its earlier opinion (), endorsed the objectives which were agreed in the proposed OECD Agreement on shipbuilding. The failure by the United States to ratify that Agreement is regretted. Whilst the Committee would still wish to see the OECD Agreement ratified, the proposed new regulation has, in principle, the support of the ESC as it seeks to encourage the development of a stronger and competitive EU shipbuilding industry.

- The ESC commends the efforts of the Commission to create a consistent and mutually reinforcing set of maritime policies ranging from the promotion of research and innovation, encouraging industry-wide cooperation and, more recently, encouraging the development of short sea shipping as a contribution to wider problems of freight movement around the Community and in a wider context.

- Recent events in financial markets and exchange rates in the Far East have created an uncertain environment for a number of industries, including shipbuilding. The Committee recognizes that the Commission will need to monitor events and, if necessary, take appropriate action if there is a prospect that the shipbuilding industry will be adversely affected.

- Whilst the removal of operating aid, and its replacement by more selective measures lie at the core of the proposed regulation, the ESC would be reluctant to support the removal of operating aid if the prospects for competitive success were considered too low and if the alternative measures do not offer an equivalent effect.

- The Committee suggests that a further comparison to establish the relative competitive position of the main producers should be undertaken before a final date for the removal of operating aid is decided.

- The Committee welcomes the assurance that at the end of 1999 (one year before the deadline) the Commission will monitor the market situation and, if anti-competitive practices are established, will consider introducing appropriate measures.

- Difficulties might occur if the scope of the new regulation was not broadened to cover critical aspects of ship repair activities and the Committee welcomes this more logical approach to the range of shipbuilding, ship conversion and ship repair activities.

- The proposals relating to export credits, contract aid, closure aid, restructuring aid and investment aid are supported. However, the ESC would be concerned if the consequence of the changes was to increase the level of official expenditure on shipbuilding whereas the effect is supposed to be the opposite; i.e. the reduction and removal of aid.

- The Commission should monitor the impact of the arrangements and, in particular, the impact of the different types of support.

- The Commission should avoid any measures which could result in an international 'subsidy race` and should continue its endeavours to control, and ultimately phase out, subsidies to shipbuilding through an overall agreement within the philosophy of the OECD Agreement. This should be established as a basic principle in order to avoid the building of vessels for which there is no economic justification and where the consequences may be to unfairly distort activity in the shipbuilding sector and seriously damage the economics of the shipping industry.

Brussels, 25 February 1998.

The President of the Economic and Social Committee

Tom JENKINS

() OJ C 30, 30.1.1997.

() COM(97) 470.