Proposal for a Council Regulation concerning a temporary defensive mechanism to shipbuilding
Date: 2001-07-26
Institutions: European Commission
Subjects: EU Member State, EU aid, South Korea, container, market protection, restriction on competition, shipbuilding, single market, tanker

C 304 E/208

EN

Official Journal of the European Communities

30.10.2001

Proposal for a Council Regulation concerning a temporary defensive mechanism to shipbuilding

(2001/C 304 E/12)

(Text with EEA relevance)

COM(2001) 401 final (cid:151) 2001/0153(CNS)

(Submitted by the Commission on 27 July 2001)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European
Community, and in particular Articles 87(3)(e) and 89 thereof,

Having regard to the proposal from the Commission,

Having regard to the opinion of the European Parliament,

Whereas:

(1) The European Commission and the Government of Korea
signed the Agreed Minutes relating to world shipbuilding
on 22 June 2000 ((cid:145)the Agreed Minutes(cid:146)), with the aim of
competitive conditions;
restoring fair and transparent
however,
the agreed minutes,
notably the commitment of ensuring an effective price
surveillance mechanism, have not been effectively imple-
mented and therefore a satisfactory result has not been
obtained.

the commitments under

is

not

shipbuilding

(2) Operating aid has not been effective in ensuring that the
European
by
industry
competition not respecting normal competitive conditions
in the shipbuilding market. Accordingly, and as provided
for by Article 3 of Council Regulation establishing new
rules on aid to shipbuilding (1)
((cid:145)the 1998 Shipbuilding
Regulation(cid:146)), contract-related operating aid to shipbuilding
may not be granted in respect of contracts agreed as from
1 January 2001.

injured

(3) However, as an exceptional and temporary measure, by
way of derogation from Article 3 of the 1998 Shipbuilding
Regulation and in order to assist Community shipyards in
those segments that have been considerably injured by
temporary defensive
unfair Korean competition,
mechanism should be authorised for
limited market
segments and for a limited period only, until the Agreed
Minutes have been effectively implemented.

the

(4) The situation in the Community shipbuilding industry is
heterogeneous; whereas according to the Commission’s
Fourth Report on the Situation in World Shipbuilding,
approximately half of compensated gross tonnage ((cid:145)cgt(cid:146))
produced in Community shipyards concerns the market
segments, in which Community shipyards are in a strong
position on the international market; however,
in other
the Community
segments,
shipyards are being considerably injured by unfair Korean
competition. Therefore, contract-related temporary support

evidence

there

that

is

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

may be authorised in certain circumstances
segments, namely container
chemical tankers.

ships

and product

in those
and

(5) Support of 6 % of contract value before aid may be auth-
orised in order to effectively enable Community shipyards
to overcome unfair Korean competition. Support of up to
14 % of contract value before aid may be necessary in
certain circumstances.

(6) The temporary defensive mechanism must not result in
distortions of competition between Community shipyards.
Support above 6 % may only be authorised if it is the
minimum necessary to enable a Community shipyard to
compete in a fair way for a particular contract, and if it
respects the transparency requirements.

(7) In order to ensure that the aid is the minimum necessary
and to ensure the provision of
is as
complete as possible, all Community shipyards capable of
building the shiptype for which a notification is received
should be informed of the notification and have the oppor-
tunity to submit observations directly to the Commission
on such notifications.

information that

(8) The temporary defensive mechanism should only be auth-
orised after the Community initiates dispute settlement
proceedings against Korea, by requesting consultations
with Korea, in accordance with the World Trade Organi-
sation’s Understanding on the Rules and Procedures for the
Settlement of Disputes and may no longer be authorised if
these dispute settlement proceedings are resolved, or
there is an agreement
suspended on the grounds that
between Korea and the Community that
the Agreed
Minutes have been effectively implemented,

HAS ADOPTED THIS REGULATION:

Article 1

For the purposes of this Regulation, the definitions listed in
Article 1 of
the 1998 Shipbuilding Regulation shall apply.
Additionally, the following definitions shall apply:

(a)

(cid:145)containerships(cid:146) shall mean ships designed with a single
deck hull with an arrangement of holds to carry containers
(standard or non-standard; refrigerated or non-refrigerated),
whose holds are fitted with cell guides to facilitate the
positioning of
the
deck storage space. Other ships combining cargo carrying
capacity for containers and other cargo are considered as
containerships if
the cargo carrying
capacity is dedicated to containers;

the containers, as may be some of

the larger part of

30.10.2001

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Official Journal of the European Communities

C 304 E/209

(b) (cid:145)chemical tankers(cid:146) shall mean ships designed with a single
deck hull with an arrangement of
integral and/or inde-
pendent tanks suited to carry chemical products in liquid
form. Chemical tankers are characterised by the ability to
carry and handle several substances at the same time and
the particular equipment of
the tanks with coatings,
reflecting the nature and hazard of the cargo carried;

(c)

(cid:145)product tankers(cid:146) shall mean ships designed with a single
integral and/or inde-
deck hull with an arrangement of
pendent tanks suited to carry refined petroleum products
in liquid form.

Article 2

1.
Subject to the following paragraphs, and by way of dero-
gation from Article 3 of the 1998 Shipbuilding Regulation,
direct aid in support of contracts for the building of contai-
nerships and product and chemical tankers, may be considered
compatible with the common market when there has been
competition for the contract from a Korean shipyard offering
a lower price.

Aid under this Article may be authorised for shipbuilding
2.
contracts up to a maximum intensity of 6 % of contract value
before aid.

3.
The aid referred to in paragraph 2 may be increased if a
Member State demonstrates that a higher aid intensity is
necessary to ensure that the contract in question is awarded
to a Community shipyard. The proposed aid amount must be
the minimum necessary to achieve this purpose and may in no
case exceed 14 % of contract value before aid. The conditions
set out in Article 3(2) must be satisfied.

4.
For shipbuilding contracts with a contract value before
aid of less than EUR 10 million, the ceiling shall be half of the
ceiling mentioned in paragraphs 2 and 3.

5.
This Regulation shall not apply in respect of any ship
delivered more than three years from the date of signing of
the final contract. The Commission may, however, grant an
extension of the three-year delivery limit when this is found
justified by the technical complexity of the individual ship-
building project concerned or by delays resulting from unex-
pected disruptions of a substantial and defensible nature in the
working programme of a yard due to exceptional circum-
stances, unforeseeable and external to the company.

6.
The Commission will keep under review the market
segments eligible for aid under paragraph 1, with regard to
evidence clearly proving that a specific market
segment
within the Community has been directly injured by unfair
and intransparent competitive conditions.

Article 3

Aid covered by Article 2 shall be subject to the provisions

1.
of Article 88 of the Treaty.

Any aid under Article 2(3) whether granted on the basis
2.
of a scheme or outside any scheme, shall be subject to indi-
vidual notification and may be compatible with this Regulation
only subject to the following conditions:

(a) On receipt of a complete notification the Commission shall
the following information to all
without delay transmit
Member States:
the applicant
the name and address of
shipyard and prospective purchaser; the relevant shiptype
and size; and the amount of aid notified;

(b) Each Member State

shall

immediately

this
information to all shipyards within its territory that are
capable of building the shiptype in question and shall
inform such shipyards
to the
Commission observations on the notification within ten
working days.

they may submit

transmit

that

3.
The Commission shall communicate to the Member
States a standard form type to be used for the purposes of
paragraph 2(a) above.

4.
The Commission shall adopt a decision in accordance
with Council Regulation (EC) No 659/1999 of 22 March
1999 laying down detailed rules for the application of Article
88 of the EC Treaty (1).

Article 4

The Regulation shall be applied to final contracts signed from
the entry into force of this Regulation until its expiry, with the
exception of final contracts signed before the Community gives
notice in the Official Journal of the European Communities that it
has initiated dispute settlement proceedings against Korea by
requesting consultations in accordance with the World Trade
Organisation’s Understanding on the Rules and Procedures for
the Settlement of Disputes and final contracts signed one
month after
the Commission gives notice in the Official
Journal of the European Communities that these dispute settlement
proceedings are resolved, or suspended on the grounds that
there is an agreement between Korea and the Community
that the Agreed Minutes have been effectively implemented.

Article 5

This Regulation shall enter into force on the day following that
of
the European
Communities and shall expire on 31 December 2002.

its publication in the Official

Journal of

This Regulation shall be binding in its entirety and directly
applicable in all Member States.

(1) OJ L 83 of 27.3.1999, p. 1.