WRITTEN QUESTION P-2278/99

by Carlos Westendorp y Cabeza (PSE) to the Commission

(24 November 1999)

Subject: Aid to the shipbuilding industry

The European shipbuilding sector is in serious difficulty. One of the EU's priorities should be to secure the future of a competitive shipbuilding industry which will contribute to social and economic development by maintaining a certain level of employment in a number of regions, many of which have a high level of unemployment.

In its report to the Council on the situation of shipbuilding in the world, the Commission acknowledges that South Korea's public aid scheme for shipbuilding is destabilising the world market in that sector. With a view to planning measures which will remedy this state of affairs, has the Commission quantified the amount of such aid?

Council Regulation (EC) No 1540/98(1) of 29 June 1998 lays down new rules on state aid to the shipbuilding sector up to December 2000. Is the Commission planning to extend the provision of such aid to European production beyond that date as a precautionary measure whilst it pursues its investigation into shipbuilding aid in South Korea?

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

Answer given by Mr Monti on behalf of the Commission

(20 December 1999)

The Commission fully shares the Honourable Member's concerns about the difficult market situation, which is characterised by very low prices and serious over-capacity caused by Korea.

So far as alleged subsidisation of Korean shipbuilding is concerned, at this stage it is not possible to quantify the possible forms of public support being used to assist Korean yards. More information is required. The Commission will continue its investigations and present its findings to the Council.

As regards the Community's aid regime, Council Regulation (EC) No 1540/98 of 29 June 1998 establishing new rules on aid to shipbuilding, provides for a range of various aids to shipbuilding up until 2003. The only aids that are due to be abolished at the end of 2000 are contract-related operating aids. There are no plans at this stage to prolong such aids.

In accordance with Article 12 of the Regulation, the Commission is obliged to keep the market situation under regular review and will, if appropriate, propose measures to address the situation if it is found that Community yards are suffering injury from unfair competition practices. The Commission's recent report to the Council(1) was the first such report.

At its meeting on 9 November 1999, the Industry Council noted with concern the report's findings and called for a series of actions to address the situation. It wanted the Commission to pursue its efforts to establish a level playing field for the sector by immediately engaging Korea in constructive consultations with a view to halting the unfair competition. Further it called upon industry, Member States and the Commission to seek as much detailed evidence as possible of the alleged anti-competitive behaviour, in order to take appropriate action under the World trade organization (WTO). It wanted Member States to urge the International monetary fund (IMF) and World Bank to continue to investigate whether the conditions and assumptions for IMF rescue packages are fully respected. Finally Member States and the Commission were to pursue their efforts to establish a level playing field for the sector in the appropriate international fora, including the Organisation for economic cooperation and development (OECD), in order to enforce fair competition rules. The Council also welcomed the Commission's determination to continue to meet its obligations under Article 12 of Council Regulation (EC) No 1540/98 and to report on developments as soon as necessary.

(1) COM(1999) 474 final.