ARCHIVESHISTORIQUES
DELACOMMISSION
COLLECTION RELIEEDES
DOCUMENTS "COM"
COM(77)517
Vol.1977/0164

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COMMISSION OFTHEEUROPEAN COMMUNITIES
COM(77)517final.
Brussels,28October1977
Proposalfora
COUNCIL .DIRECTIVE •/
onaid-toshipbuilding
(submittedtotheCouncilbytheCommission)
COLT(77)517final.

Introduction
.1.Stateoftheshipbuilding industry
Overrecentyearsthestateoftheshipbuilding industryworldwidehas
worsenedconsiderably .Excessivesurplusshippingcapacityhasbeen
createdandasaresultnewordersplacedbyshipbuilders havefallen
offrapidly;consequently shipyards'orderbooksarebecomingempty.
Substantial worldwidesurpluscapacityisforecastforthe
yearstocome;itmaybeestimatedat40%oftheindustry'sproduc­
tioncapacity.Inthesecircumstances thecompetition fromcertain
non-member countries (Japan,Korea,etc.)isbeingfeltmoresharply.
ManyCommunityshipyards cannolongermeetthiscompetition andare
havingdifficulty inremaininginbusiness.Employment intheship­
yardscannolongerbemaintained atthelevelof1974and1975.The
MemberStatesarebeingobligedtointroducenationalmeasurestotackl
thecrisiswhichwillmostprobablycontinuebeyond1980.
2.PossibleCommunityaction
TheCommunity cannotremainindifferent tothisdevelopment .When
Parliament adoptedtheResolution ontheShipbuilding industryin
February(1),theCommission undertooktotakeactionwithoutdelay.
Moreover,discussions withtheMemberStateshaverevealedthataction
isrequiredatCommunitylevelandthattheMemberStatesdefinitely
prefertopursuetheactiondefinedinthethreeepreviousDirectives
byadaptingtheirguidelinestothecurrentcrisisconditionsaffecting
theindustry.
)Resolutionof10February1977,181e/77ASS109.

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1.3.Guidelines fortheDirective
1.3.1.PreviousCouncilDirectives onaidtoshipbuilding weremainlydesigned
toharmonizeintervention inthefieldandbringdowntheintensity
ofaidsmostdamagingtocompetition betweenMemberStatessuchas
production aids.Moreover,theseDirectives havebeengradually
extendedtoformsofaidsnotoriginally covered.Thisistrueparti­
cularlyoftheThirdDirectivewhichexpiresattheendof1977and
jcontainsprovisions oninvestment andrescueaids.ThenewDirective
ifollowsthesamelinesalthoughithasbeenadaptedtotheparticu­
larlydifficultconditions mentionedat1.1.
1.3.2.Pursuingtheguidelinecontainedinthepreviousdirectives onwith­
drawalofproduction aids,thedraftFourthDirectiveexcludesthe
grantingofsuchassistance undernormalcircumstances .However,to
meetthecrisis,specificprovisions havebeenmadeauthorizing such
assistance provideditisboundupwithrestructuring theindustry
anddoesnotaffecttradingconditions toanextentcontrarytothe
icommoninterest.Thisboilsdowntostatingthatthisassistance
canonlybetoleratedifitisusedexclusively toalignCommunity
shipyardpriceswiththoseofnon-member countries anddoesnotdis­
courageorderswhichwouldnormallyhavebeenplacedwithother
Communityshipyardsifnoassistance atallhadbeengranted.'
i1.3.3.Asfarascertainaidslimiteddirectlytothepurchaseofships
jbyshipowners areconcerned,checksaretobemadeaftertheassis­
tancehasbeengrantedtopreventMemberStatesusingittoencourage
theplacingoforderswithnationalyardsonly.
Thiswouldnotonlycreatediscrimination amongshipbuilders but
restricttheshipowners' freedomtoordershipswheretheyfindthe
mostfavourable economicterms.
i •^ i
M./.

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1.4.TheDirectiveintheLightofindustrial measures
InpreparingthedraftFourthDirectiveaccountwastakenofall
generallyavailableinformation ontheindustry.TheOECD,Commis­
sionandspecialists inthefieldmoreorlessagreeonthemain
probabletrendsintheindustryupto1980.Thesewerebriefly
describedin1.1.Nationalexpertshavegenerallyconfirmedthis
information whendiscussing theproposalforaDirectiveata
seriesofmultilateral meetings.
Theproposaltakesfullaccountoftheindustry'sstructural problems
andtherefore mustnotbeconsidered asasimplelegalframework
designedtolimitthegrantingofassistance ;itrepresents an
essentialfactorintheapproachtotheindustry.
1.5.TheDirective'sflexibleapproach
InpreparingthisDirective emphasis wasplacedonthecloselink
betweentheproposedcrisis-measures andtheirperiodofimplemen­
tation.Suchmeasuresareonlywarrantedincasesofseriousdiffi­
cultyandthereforetheDirectiveprovidesforpossibleamendments,
moreparticularlyifconditions intheindustryshouldimprove.Such
stepscouldbetakenifdiscussions atinternational levelproduce
practicalresultsorifmarketconditions improve.

-4-
2.TheDirective'scomponents
2.1.Production andsalesaid(Articles 1and2)
TheDirectivedoesnotauthorizeproduction aidsinnormalcircumstances .
Thisdevelopment followsfromthegradualreductionofceilingsinpre­
viousDirectives .
Themeasuresconcerningcreditfacilitiesforsalesrefertotherele­
vantOECDarrangement .
Itmustbestressedthatforshipconversions,thepermittedthreshold
maybereducedto1500grtincasesofalignmenttotermsofferedby
ashipyardinanon-member country.
2.2.Investment aid(Article4)
ThisArticleprovidesforpriornotification ofschemesinvolvinginvest­
mentaidswhichhavetheeffectofincreasingproduction capacity.In
thisway,theCommission canraiseobjections toschemeswhichwould
becontrarytothecommoninterest.
Moreover,theCommission mustbeinformedeverysixmonthsofalldeci­
sionsonthegrantingofinvestment aidsintheindustryexceeding
5millionEUA.Inthisway,theCommission hasanoverallpicture
ofinvestments madeintheindustry.
2.3.Aidtorescueandindustry(Article5)
ThisArticlestatesthataidtorescueshipbuilding ,ship-conversion
orship-repair undertakings maybeconsidered compatible withthecom­
monmarketprovidedthatthemeasureisasteptowardsanacceptable
longer-term solution.Thistypeofintervention islikelytoprevent
suddenshipyardclosureshavingadisastrouseffectonemployment.
./.

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2.4.Anti-crisis aid(Article6)
ThisArticleisdesignedtoenabletheMemberStatestotakecoordina­
tedactiontomeetthecrisis.
UnderthisArticle,aidandnotablyproductionaidmaybeconsidered
compatiblewiththecommonmarketprovidedthattheyarelinkedtothe
restructuring aimsandarenotlikelytoaffecttradingconditionsto
anextentcontrarytothecommoninterest.
Moreover,thisArticleprovidesfortheestablishment ofalistofaid
schemesconsideredcompatiblewiththecommonmarket.
2.5.Non-discrimination clauses(Articles7and9)
TheseArticlesstatethatassistancegrantedtoshipowners andmeasures
forshipbuilding,ship-conversion andship-repair maynotdiscriminate
ι
againstproductsfromotherMemberStates.
Article8alsostatesthattheMemberStatesmustregularlysubmitinfor­
mationondecisionstograntassistancetoshipowners.
2.6.Reviewclauses(Article10)
ThisArticlespecifiesthattheDirectivemaybeamendedifthesituation
improvesorifinternational discussions producepracticalresults.The
DirectivethusfollowsthestrategyofourOECDpartnerswhoreached
agreementonadaptingmeasurestoactualcrisisconditions.
./.

-6-
2.7.DurationoftheDirective
SincethisDirectiveprovides particularly formeasurestomeet
thecrisis,itshouldnotcontinueformorethanthreeyears.Thesi­
tuationshouldbeexaminedattheendofthisperiodtodetermine
whetherthesemeasuresarestillrequiredorpossiblyareinadequate.
*
* *

COUNCILDIRECTIVE
onaidtoshipbuilding
TheCounciloftheEuropeanCommunities,
1.HavingregardtotheTreatyestablishing theEuropeanEconomicCommunity/
andinparticularArticles92(3)(d)and113thereof,
2.HavingregardtotheproposalfromtheCommission,
3.HavingregardtotheOpinionoftheEuropeanParliament,
4.HavingregardtotheOpinionoftheEconomicandSocialCommittee,
5.Whereasthepositionofshipbuilding hasconsiderably worsenedduring
thelastfewyears,andCommunityshipyardsfaceageneralfallindemand
andacutepricecompetition onacontractedworldmarket;whereasthe
resultofthishasbeenaseriousreductioninordersonhand,aggravating
thestructuralproblemsoftheindustryandindeedthreateningitsexis­
tence;
6.Whereasasoundandcompetitiveshipbuilding industryisnecessarytothe
Communityandcontributestoitseconomicandsocialdevelopment,asa
substantial marketforarangeofindustries,includingthoseusingad­
vancedtechnology,andasanemployerinanumberofCommunityregions;
whereasthisisalsothecasewithshipconversionandshiprepairing;

7.Whereasifthesituationintheindustrywerenormalthecontinuation
ofaidstoproduction wouldnotbejustifiedsincetheywouldserveonly
toprotecttheindustryandwouldnotbringaboutanysolidandlasting
improvementoftheCommunityshipbuilding industry'scompetitiveness on
theworldmarket;whereas,however,suchaidsmaybepermittedinthe
presentcrisisprovidedthattheyareintroduced onatemporarybasis,
toallowtheindustrytomeetthenewmarketconditions,andthattheyare
progressively reducedtoencouragetheindustrytoadapttothesecondi­
tions;whereasitshouldbepossibletograntsuchaidwithenoughflexi­
bilitytoallowCommunityshipyardstomeetparticularmarketsituations
andwhichcanbecomplemented intheeventofaworseningcrisis;whereas
suchaidshouldbesubjecttocontroltoensurethatdistortions ofcom­
petitionwithintheCommunitycontrarytothecommoninterestareavoided
andthatthemeasuresarelinkedtotherestructuring oftheindustry;
8.Whereasinordertoresolvethepresentdifficulties facingtheindustry
themembercountriesoftheOECDhaveapprovedgeneralguidelinesprovi­
dingthat,inordertocorrecttheseriousstructuralimbalanceinthe
industry,allshipbuilding countriesaretotakestepstoensurethatthe
inevitablereductionofworldshipbuilding capacityisfairlydistributed
andproceedswithasfewharmfuleffectsaspossible;whereastheCommu­
nity,inapplyingthisagreement,intendstopursueitseffortstoensure
thattheburdenofthecrisisissharedmoreevenly,bydefiningasecto­
ralapproachonaCommunitylevelaswellasontheinternational level
particularly inthecontextoftheOECD.
*
* *
9.WhereasCouncilDirective75/432/EEConaidtoshipbuilding,whichwas
designedtocorrectdistortions incompetition ontheworldmarket,has
helpedtoreduceandtoharmonizedirectaidstoshipbuilding inthe
Community;whereasthatDirectiveexpireson31December1977;

-3-
10.Whereaseveninthisdifficultsituationdistortions incompetition on
theworldmarkethavebeenreducedthroughaseriesofundertakings con­
cludedbythemainshipbuilding countrieswithintheframeworkofthe
OECDwiththeobjectofharmonizing exportcreditconditionsforships;
whereas,withinthissameorganization,theprincipalshipbuilding coun­
trieshaveconcluded ageneralunderstanding whichprovidesforthe
progressive reductionofspecificaidmeasureswhichdistortcompetition
intheshipbuilding industry;
11.Whereasproduction structures shouldbeadjustedtothenewmarket
conditions sothatundertakings intheindustryareeventually enabled
tofollowgeneraleconomicdevelopments andmeetcompetition onthe
worldmarketwithoutthesupportofintervention bythepublicauthori­
tiesandsothattheinvestmenteffortsoftheindustryarecompatible
withtheworldbalancebetweensupplyanddemand;whereas,initsap­
praisaloftheaidswhichareconcerned bytheDirective,theCommis­
sionshouldalsotakeaccountofcommonobjectives torestorethe
sector'shealthintheCommunity asawhole,whensuchobjections have
beendefinedbytheCouncil;
12.Whereas,furthermore,effectiveactionrequiresasolutioncoveringall
aidsandinterventions directlyorindirectlyaffectingcompetition and
tradingconditions onthemarketforthebuilding,conversion orrepair
ofships;
13.Whereasinthesecircumstances aidorintervention aimedatthetempora­
rymaintenance ofashipbuilding ,ship-conversion orship-repair under­
takingshouldbelimitedtothatnecessaryifserioussocialproblems
aretobeavoided;
14.Whereasthemeasuresinfavourofnationalshipowners mayhaveharmful
effectsonthecompetitive positionofothershipyardsoronthestruc­
tureoftheMemberStates,shipping industries;whereassuchmea­
suresshouldinnocasediscriminate againstcertainCommunityshipyards;
15.Whereas,inordertoremedyacertainlackofinterpenetration intheCom­
munitymarket,itisimportantthatEECshipowners addresstheircalls
fortendersasfaraspossiblealsotoshipyardsintheotherMemberStates.
HasadoptedthisDirective :

Article 1
ForthepurposesofthepresentDirectivethefollowingtermsandexpressions
shallhavethemeaningshereunderassignedtothem:
a)"Building"meansthebuilding,intheCommunity/ofthefollowingmetal-
hulled,seagoingvessels:
-merchantvesselsforthecarriageofcargoand/orpassengers,ofnot•
lessthan150grossregisteredtons;
-fishingvesselsofnotlessthan150grossregisteredtons;
-dredgersorshipsforotherworksatseaofnotlessthan150gross
registeredtons;
-tugsofnotlessthan500hp.
»
b)"Conversion"meanstheconversionofmetalhulledseagoingvesselsofnot
lessthan5,000grossregisteredtons,aPartfr°mtheexceptionmentionedin
Article2>onconditionthattheconversionoperationsentailradicalalte­
rationstothecargoplan,thehullorthepropulsionsystem.
ic)"Repair"meanstherepairofthevesselsreferredtounder(a)above.
d)"Sale"meansthesaleofvesselsreferredtounder(a)abovetonational
shipowners,toshipownersinotherMembercountriesandtothoseinthird
countries.
Article2
1Aidsandinterventions inthefromofcreditfacilities maybeconsidered
•compatiblewiththecommonmarketonconditiontheyrespecttheconditions
setoutinthe0ECDCouncilResolutionof18July1974,orinagreementsrepla­
cingthatresolution-,inthefollowingcases:
_forallsalesorconversions ofvessels;
i-fortheconversionofvesselsofnotLessthan1,500grossregistered
tonswherethereis ■alignementwithtermsofferedbyacontractor
ofacountrynotsignatorytothe0ECDresolution 18July1974.

Article3
Notwhithstanding theparticularprovisionsofthisDirective,thegeneral
provisionsofArticles92and93oftheEECTreatyarefullyapplicable
totheshipbuildingandship-conversion andship-repairindustry.
Article4
Aidtoinvestment
1.AMemberStatewhichintendstograntaid,inapplication ofanyaidsys­
temwhatsoever,toanindividualinvestmentprojectinashipyard,
whichwouldhavetheeffectofincreasingtheyard'sexistingproduction
capacityshallnotifythisplantotheCommission,pursuanttotheprovi­
sionsofArticle93(3)oftheTreaty.Suchplanscannotbeputintoef­
fectbeforetheCommissionhasgivenitsagreement.
Inassessingsuchplans,theCommissionshalltakeparticularaccount
ofanyreductionsincapacityinotheryardsinthesameMemberState
whichoffsetthisincreaseandoftheregionalcontextoftheinvestment.
2.TheMemberStatesshallinformtheCommissionoftheirdecisionstogrant
aidtoinvestmentinshipbuilding,conversionorrepairyardswherethe
amountofsuchinvestmentisinexcessoffivemillionunitsofaccount.
Thisinformationshallbeprovidedeveryyearintheformofatable
basedonthespecimenatAnnexI:on1stMarchinrespectofdecisions
takeninthesecondhalfofthepreviouscalendaryearandon1stSeptem­
berinrespectofthosetakeninthefirsthalfofthecurrentcalendar '
!
year. ',
ί
; 1 1
I Article5 j
iAidstorescueanundertaking t
; IAidsandinterventions intendedasatemporarysolutionfortherescue
ofashipbuilding,ship-conversion orship-repairundertakingpendinga
solutiontotheproblemsconfrontingtheundertakingconcerned,where i
thisaidorinterventioniswarrantedby.acutesocialpro

-6-
blemsmaybeconsideredcompatiblewiththecommonmarketunderthisDirec­
tive.Plansforsuchaidshall,pursuanttoArticle93(3)oftheTreaty,
benotifiedtotheCommissionindividually andinadvance.Theycannotbe
putintoeffectbeforetheCommissionhasgivenitsagreement.
Article6
Anti-crisis aids
1.Productionaidsandinterventions maybeconsideredcompatiblewiththe
commonmarketunderthisDirectiveiftheyaregrantedinordertoalleviate
-theseriouscrisis,whichiscausingasubstantial reductioninorderson
handinaMemberStateandsubsequently adecreaseinproduction.Suchaids
shallbeprogressively reduced;theyshallbegrantedonlyiflinkedtothe
realisation ofindustrialrestructuring objectiveswithaviewtomaking
theindustrycompetitive andabletooperatewithoutaid.
2.TheCommissionshallbegivenpriornotification ofanyplanforindivi­
dualintervention measuresundertheschemereferredtoinparagraph 1'
abovewheretheprojectisincompetition withanofferfromayardin
anotherMemberState.Theaidproposalcannotbeimplemented beforethe
Commissionhasgiven'ftsagreement.TheCommissionshallverifythatthese
aidsdonotaffecttradingconditionstoanextentcontrarytothecommon
interest.
3.TheMemberStatesshallsupplytotheCommission atable,fortheexclusive
juseoftheCommission,basedonthespecimenatAnnexII,settingoutthe
decisionsontheaidandintervention referredtoinparagraph 1andan
estimateoftheireffects.Theyshallalsoprovideareportonthereali-
sationoftheindustrialrestructuring objectives.
Thisinformationshallbeprovidedon1stMarchofeachyearinrespectof
decisionstakenduringthesecondhalfofthepreviouscalendaryear,and
on1stSeptemberinrespectofthosetakeninthefirsthalfofthecur­
rentcalendaryear. ' "

TheCommissionshallverifyonthebasisofthesereportswhethertheefforts
^toimplementtheindustrialrestructuring objectivesmentionedinparagraph 1
ofthisarticlearecontributing effectivelytotheadaptationofthe
sectortot'nenewconditionsoftheworldshipbuilding market.
TheCommissionshallregularlydrawupanoverallreporttoserveasthe
basisfordiscussionwithnationalexperts.
4.Interventions intheformofcost-escallationinsurancecanbeconsideredas
beingcompatiblewiththecommonmarketunderthepresentDirectiveprovided
thattheconditionsnotedinparagraph 1above^.arerespected.
5.Theaidandintervention measureslistedinAnnexIIIareconsidered com­
patiblewiththecommonmarketunderparagraphs 1and4ofthepresentArticle.
TheCommissionshallmodifythelistatAnnexIIIonthebasisofthedeci­
sionsittakesregardingnewschemesorexistingaidschemes.
Article7
AidforthepurchaseofshipsshallnotbegrantedtoshipownersinaMemberState
awaywhichdiscriminates againstshipyardsinotherMemberStates.
Abiannualreportonaidgrantedonaselectivebasistodomesticshipowners
shallbemadebytheMemberStates,on1stMarchinrespectofdecisionstaken
inthesecondhalfofthepreviouscalendaryearandon1stSeptemberinres­
pectofthosetakeninthefirsthalfofthecurrentcalendaryear. j
Thisinformationshallbeprovidedintheformofatablebasedonthespeci­
menatAnnexIV.TheCommissionshalldrawupreportsatregular .intervals
summarizing theinformationsupplied. I
?
ThesereportsshallbediscussedwiththeMemberStatesinordertoensure •
»
thatcompetition betweenshipbuilders isnotdistortedbysuchaid.These
provisions arewithoutprejudicetoanyfutureCommunityrules
onaidtoshipowners. !

Article8
InitsappraisalofthenationalaidswhichareconcernedbythisDirective,
theCommissionshalltakeaccountofthecommoninterestasdefinedin
commonobjectivesforrestoringtheindustry'shealthwhensuchcommon
•objectives havebeendefinedbytheCouncilonaproposalfromtheCom­
mission.
Article9
TheMemberStatesshallrefrainfromanyintervention measurestopromote
withintheirnationalterritories thebuilding,conversionorrepairof
shipsasdefinedinarticle1andthemanufacture ofproductsintended
toformpartofsuchshipsotherthanthoseprovidedforinArticles2
to7orthoseconsideredcompatiblewiththecommonmarketunderArticles .
92and93oftheTreaty.
Article10
TheCouncil,actingbyaqualifiedmajorityonaproposalfromtheCommis­
sion,shallamendthisDirectiveasandwhenappropriate.'
Suchamendmentmayfollowanimprovement indemandorfavourabledevelop­
mentsininternational contacts.
Article11
Thisdirectiveshallapplyuntil31December1980. ,
Article12
ThisdirectiveisaddressedtotheMemberStates.

ANNEXI
Tableofinvestment aidunderArticle 5
Description
ofinvestmentPurposeof
iveStmervt(1)Amountof
investmentFormof
assistanceNetgrantequi­
valentasa
percentage of
theinvestment
I
I
(1)Whereapplicable,indicatewhetherpartofanindustry <
development programmeDrrégional

ANNEXII
Information tobefurnished byMemberStatesconcerning theaid
andintervention referredtoinArticle7(1)
Serial
number -Typeof
vesselsGross
registered tonsFinancialeffect,asa
percentage ofthecontract
price(1)
C1)Grantequivalentiscalculated bydiscounting atarateof8%.Where
paymentisbyinstalments,therelevantgrantequivalents areshown
inthetablerelatingtotheperiodinwhichthepaymentsweremade.

ANNEX III
List ofaids considered tobecompatible with
theCommon Market inapplication ofArticle 7paragraph 1
1)Aid measure forship-building notified totheCommission onthe
22.3.77 which wasthe subject oftheCommission 'sletter dated
1/7/77advising the Dutch Government that theCommission hadno
objections regarding themeasure .
2)Aid measure forship-building notified totheCommission onthe
18/2/77which was the subject oftheCommission 'sletter dated
1/7/77advising theBritish Government that theCommission had
noobjections regarding themeasure .

ΛϊΠ'ΤΕΧΗ IV
Information onaidtoshipowners ,tobefurnished "byMember States
pursuant toArticle 8
Sériai
numberïype of
vessel!Gross re-
Igistered
I tons
ι
>
fForm
ofaidFinancial effect
asapercentage
ofthe contract
priceCountry of
building
l
Ij
l
I