WRITTEN QUESTION E-3280/00

by Daniel Varela Suanzes-Carpegna (PPE-DE) to the Commission

(25 October 2000)

Subject: European shipbuilding industry

In his reply to Written Question E-2568/00(1), the Commissioner responsible for trade, Mr Lamy, stated that the consultations held between the EU and Korea in Seoul last July could be said to have proven relatively fruitful, since they had produced much legal, economic and financial information and documentation and, more precisely, yielded two positive results:

1. Korea will allow the EU to conduct an inquiry into its shipyards, using an antidumping questionnaire as a basis for ascertaining whether the prices of contracts signed by Korean shipyards are in line with the normal value established by the provisions of the General Agreement on Tariffs and Trade (GATT) Antidumping Agreement;

2. The authorities have also agreed to a second round of consultations in September with a view to reviewing the overall functioning of the agreement, and above all to seeking to resolve the differences between the two sides.

In spite of this progress, and bearing in mind that the Commission apparently broke off negotiations with South Korea recently, will the Commission say whether this progress has yielded practical results?

Will it say whether the negotiations have indeed been broken off and, if so, why? Have they been broken off for good, or will they resume?

Will it confirm that the Koreans have been engaging in unfair practices and detail the impact thereof practices on the European shipbuilding industry?

Will it say whether it is determined to bring South Korea before the World Trade Organisation (WTO) as soon as the European shipbuilding industry lodges a complaint under the regulation on obstacles to trade which must precede any action by the EU in this regard?

Does this situation noe bear out the need to maintain European aid to shipbuilding, especially in Objective 1 areas, until such time as the situation of unfair competition on the part of Korea has been fully remedied?

(1) OJ C 136 E, 8.5.2001, p. 50.

Answer given by Mr Lamy on behalf of the Commission

(29 November 2000)

Despite the encouraging results of the meeting in Seoul in July 2000, the Commission's expectations have been disappointed. The second round of consultations held in Brussels on 28/29 September was unsuccessful owing to Korea's lack of political will to reach an agreement on an effective and convincing solution. Korea was unable to implement measures designed to achieve the primary aim of the Agreed Minutes, namely a rise in prices to commercially viable levels based on normal value.

Similarly, the results of visits to Korea by Commission experts were inconclusive. One of the two shipyards refused to cooperate with the Commission under the pretext of confidentiality. The Commission considers that the commitment to transparency made by the Koreans (and the shipyards) was not fully respected and strongly expressed its dissatisfaction to the Korean Government at the second consultation meeting.

A Commission delegation visited Korea on 19 and 20 October 2000 to examine a final Korean proposal for a compromise. Unfortunately the discussions did not yield a tangible result acceptable to the Commission.

Against this background, on 24 October 2000 the European industry (Committee of European Union Shipbuilders Associations) lodged a complaint under the trade barrier regulation(1). The Commission is examining the complaint and if necessary will open an inquiry, which could lead either to new negotiations for a satisfactory solution to the bilateral dispute or to the initiation of proceedings before the World Trade Organisation with a view to sanctioning and halting Korea's practices.

The two reports sent by the Commission to the Council(2) show clearly that Korea is engaging in unfair trade practices. The next monitoring report to be submitted to the Industry Council in preparation for its meeting on 5 December 2000 will take stock of the situation.

The Commission is discussing public aid for shipbuilding, as the current mechanism expires on 31 December 2000. In any event Regulation (EC) No 1540/98(3) provides that other forms of support for the industry (aid for innovation, research and development aid, regional aid for modernisation and restructuring aid) remain available to help the Community industry adapt to international competition.

(1) Council Regulation (EC) No 3286/94 of 22.12.1994 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 Organization (OJ L 349, 31.12.1994).

(2) COM(1999) 474 final, COM(2000) 263 final.

(3) Council Regulation (CE) No 1540/98 of 29.6.1998 establishing new rules on aids to shipbuilding (OJ L 202, 18.7.1998).