WRITTEN QUESTION P-0977/00

by Juan Ojeda Sanz (PPE-DE) to the Commission

(22 March 2000)

Subject: Situation of the European shipbuilding industry

During February and March a delegation from the European Commission met with the South Korean authorities to express once more the grave concern in the European shipbuilding sector regarding the well-documented unfair practices employed by this country, which have brought the industry to the brink of destruction.

Will the Commission explain which issues were discussed and why no agreement was reached?

Knowing the desperate situation of the sector, what action does the Commission intend to take next?

Given that this question does not just affect Europe, do the United States and Japan share the European Union's concerns?

If South Korea maintains its inflexible position, does the Commission, with the support of the European shipbuilding industry, intend to take up the issue with the World Trade Organisation?

Answer given by Mr Lamy on behalf of the Commission

(18 April 2000)

The Commission shares the concern expressed by the Honourable Member in regard to the European shipbuilding industry.

In line with the Industry Council's conclusions of 9 November 1999, the Commission has initiated a dialogue with Korea aiming to halt the unfair practices of Korean shipyards. The Commission has had three bilateral meetings, one in Paris in December 1999, the second in Seoul in February 2000 and the third in Brussels from 14 to 16 March 2000. The aim of the discussions was to obtain definite commitments from Korea with a view to stabilising the world shipbuilding market, which would help to bring prices up. To achieve this, Korea should undertake not to aid shipyards in difficulty and not to subsidise the sector either directly or indirectly. It should also make commitments to financial transparency and compliance with international accountancy standards.

On 29 March 2000 Korea sent agreed minutes accepting the Commission's proposals, with some exceptions. If an agreement is reached in the near future, the Commission together with the European industry and the Member States will check very carefully that Korea fulfils its commitments.

However, should Korea not deliver or if there are no tangible results on the market, the European industry has said that it will file a complaint with the Commission (under the Trade Barriers Regulation, i.e. Council Regulation No 3286/94 of 22 December 1994 laying down Community procedures in the field of the common commercial policy in order to ensure the exercise of the Community's rights under international trade rules, in particular those established under the auspices of the World Trade Organisation)(1) against Korean subsidy practices. If the complaint provided sufficient evidence the Commission would be prepared

to initiate an investigation. This could end up before the WTO Disputes Settlement Body, thus offering the Community the prospect of Korea's practices being penalised.

The Commission is prepared to propose using all the trade policy instruments available to find a solution to the sector's problems, consistent with its international obligations.

The shipbuilding industry in Japan, also affected by aggressive Korean competition, has noted the possibility of WTO action against Korea. The Japanese authorities have said that they will participate in any WTO proceedings initiated by the Community. The American industry has written to its authorities to demand trade action of this kind against Korea.

The Commission is paying particular attention to this issue and to the effects of unfair competition by Korean shipyards on the Community shipbuilding industry.

(1) OJ L 349, 31.12.1994.