WRITTEN QUESTION E-2390/99

by Mogens Camre (UEN) to the Commission

(16 December 1999)

Subject: Shipbuilding State-aided dumping by South Korea Council Regulation No 1540/98

I refer to the Commission Report to the Council of 5 October on the situation in the world ship-building industry, and to Council Regulation No 1540/98(1).

The report shows that the European ship building industry is facing serious problems of unfair competition from South Korea. South Korean yards are selling vessels at below cost and nobody has yet managed to stop them.

On 9 November 1999 the Council (Industry) called on the Commission to meet its obligations under Article 12 of Council Regulation No 1540/98.

In its conclusion, the Council notes that European ship-building has been caused injury as a result of Korean policy. In such circumstances, Article 12 requires the Commission to propose to the Council measures to address the problem.

It is unacceptable that European shipyards cannot compete on fair terms, and are being forced into large-scale closures. European ship building workers are being made unemployed while owners are suffering huge losses. The cause is not inefficiency in the European ship building industry but the fact that state subsidies are enabling South Korean yards to charge prices below the cost of production.

What does the Commission intend to do to halt this unfair South Korean competition for European yards?

What other industries and sectors have complained of unfair competition from South Korea?

(1) OJ L 202, 18.7.1998, p. 1.

Answer given by Mr Lamy on behalf of the Commission

(22 December 1999)

The Commission shares the Honourable Member's concern about world shipbuilding and the difficulties many Community shipyards are facing because of aggressive competition from Korean shipbuilders.

The Council (Industry) which met on 9 November 1999 asked the Commission to take some specific steps to stop the unfair practices shown to exist in the sector.

The Commission will therefore open joint bilateral discussions with the Korean industry and Government with a view to finding solutions to the problems. The first meeting for this purpose will be held in Paris on 14 December 1999, in the margins of the meeting of Working Party No 6 of the Organisation for Cooperation and Development (OECD).

As the vessels in question are not actually imported the usual trade protection, anti-subsidy and anti-dumping instruments do not apply in this sector. Nevertheless, the Commission is seriously investigating the possibility of bringing an anti-subsidy action against Korea under multilateral World Trade Organisation (WTO) rules. At the same time, the European industry is assembling the evidence it will need to be able to lodge a complaint with the Commission very quickly under the rules on trade barriers.

The monitoring report to be presented to the next meeting of the (Industry) Council will allow the Community to decide whether any further measures are needed to resolve the problem.

A number of Community industrial sectors have experienced increased competition from Korea and other Asian countries, following the financial crisis and the resulting currency devaluations. The Commission has received complaints also alleging dumping or subsidisation in some of these cases. In line with the relevant Community legislation, where such complaints have contained sufficient prima facie evidence they have been investigated, and if appropriate measures have been imposed.