WRITTEN QUESTION No. 265/99 by Jesús CABEZÓN ALONSO Aid for shipyards
Date: 1999-02-17
Institutions: CABEZON ALONSO, European Parliament
Subjects: International Monetary Fund, South Korea, Spain, loan, restriction on competition, shipbuilding, use of aid

29.11.1999

EN

Official Journal of the European Communities

C 341/77

Answer given by Mr Van Miert on behalf of the Commission

(18 March 1999)

On 18 February the Spanish authorities notified the Commission of their transitional regime for the electricity
market in accordance with Article 24(2) of Parliament and Council Directive 96/92/EC of 19 December 1996
concerning common rules for the internal market in electricity (1), and on 29 January 1999 they made the
notification required by Article 93(3) of the EC Treaty.

The Commission is currently examining these notifications; it is therefore too early to arrive at any conclusions
regarding the nature of the measure and its compatibility with the Community competition rules or the need
for Article 93(2) proceedings.

(1) OJ L 27, 30.1.1997.

(1999/C 341/105)

WRITTEN QUESTION E-0265/99

by Jesús Cabezón Alonso (PSE) to the Commission

(17 February 1999)

Subject: Aid for shipyards

Why is it that the Commission is initiating proceedings against Spain on the subject of public aid for shipyards
at the same time as favouring unfair competition from South Korea in the naval sector, for which aid from the
International Monetary Fund is being used?

How, in these conditions, can European shipyards possibly stand up to competition from Korean shipyards?

What does the Commission think about this unfair competition from South Korea?

Answer given by Sir Leon Brittan on behalf of the Commission

(18 March 1999)

It is true that the Commission has initiated an investigation into the €111 million special tax credit
(ESP 18 451 million) granted last year by Spain to its public-sector shipyards, which it believes may be
incompatible with its 1997 decision exceptionally authorising aid, which would otherwise breach the
Community rules forbidding state aid for shipbuilding, to be given for restructuring. This might constitute
distortion of competition within the Community.

The IMF loans are intended to stabilise the reserves of South Korea’s central bank. It is up to the IMF to see that
the international aid is used properly and ensure that Korea complies with the conditions for release of
successive tranches

Together with the Member States, who are members of the IMF, the Commission keeps a watchful eye on the
way South Korea uses the aid it receives from international institutions. In particular, it checks that loans are
not used for illegal subsidies to shipyards and that Korea continues to abide by its international obligations. If it
receives evidence of unfair practices it is prepared to take action using the available commercial policy
instruments. In this connection, implementation of the OECD agreement would clearly have given the
Commission extra leverage against such practices

Despite the devaluation of the Korean currency and extremely aggressive pricing by Korean shipyards
following the financial crisis in Asia, Community shipyards managed to perform well on the world market last
year, taking 29 % of new orders (compensated tonnage)as against South Korea’s 22 % (January-September
1998).