WRITTEN QUESTION E-2795/99

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

(18 January 2000)

Subject: Aid to the European ship-building industry

In the European Parliament's recent plenary debate on 19 November 1999 concerning the Commission's statement on the ship-building industry, Members took the opportunity to denounce the dumping practised by countries such as Korea, who hamper fair competition in the shipbuilding sector worldwide, and to point out that aid must be maintained in Europe until world markets are stabilised.

According to certain reports, the Commission authorised State aids for ship-building in Italy on 16 November, more precisely for the creation of two new shipyards, one in Oristano (Sardinia) and the other in Belvedere Maríttimo (Calabria).

1. Can the Commission say whether this authorisation of European State aids is part of its global strategy to continue subsidising this important industry, which has such a great impact on social and regional issues in similar cases in other Member States?

2. Following the conclusions of the Council of Industry Ministers of 9 November, has the Commission devised any short-term global strategy for this very important sector and, if so, can it state what the contents of the strategy are?

Answer given by Mr Monti on behalf of the Commission

(21 February 2000)

It should first be explained that the first of the two Italian cases to which the Honourable Member refers, relating to investment aid for the new shipyard at Oristano, was approved by the Commission under Article 6 of Council Directive 90/684/EEC of 21 December 1990, on aid to shipbuilding(1), which allowed investment aid for new capacity provided that this is offset by a corresponding irreversible reduction of capacity at other yards in the same Member State over the same period. In the Oristano case this capacity reduction was provided through the closure of the Clemna yard. In the second Italian case, involving the Belvedere yard, the Commission concluded that this new yard's activities involving the construction of vessels of less than 100 gross registered ton (GRT) would not constitute shipbuilding as defined under the directive.

Council Directive 90/684/EEC has now been superseded by Council Regulation 1540/98 of 29 June 1998 establishing new rules on aid for shipbuilding(2), which came into force on 1 January 1999. Under this Regulation, contract-related operating aid will be abolished at the end of the year 2000. However the Regulation also provides for a range of other aids that may be granted to shipbuilding subject to certain conditions up until 2003, including closure and restructuring aids, aids for research and development, aids for innovation, and regional investment aids for upgrading or modernising existing yards. In adopting this approach, the Council took the view that these aids would be more cost-effective in helping Community yards to improve their competitiveness than continued operating aid.

In accordance with Article 12 of the Regulation, the Commission is keeping 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 report to the 9 November 1999 Industry Council was the first such report.

The Commission considers that the various actions decided by the Council represent a balanced package of measures to tackle the problem of unfair competition. These are now being pursued and the Commission has now engaged Korea in bilateral dialogue with a view to halting injurious practices. At this stage there are no plans for other measures.

The Commission will continue to keep the market situation under review and evaluate all the information and evidence collected pursuant to the Council conclusions. It will submit its findings to the Council and to the Parliament as soon as necessary.

(1) OJ L 380, 31.12.1990.

(2) OJ L 202, 18.7.1998.