WRITTEN QUESTION P-1180/02 by Piia-Noora Kauppi (PPE-DE) to the Council. South Korea's distortion of the shipbuilding market: referral to the WTO.
Date: 2002-04-17
Institutions: European Parliament, Provisional data
Subjects: Dispute Settlement Body, EU production, European Union, South Korea, World Trade Organisation, competition policy, production aid, restriction on competition, shipbuilding

17.4.2003

EN

Official Journal of the European Union

C 92 E/41

Project

Language

Community Contribution

For school
programmes

As organisation
advancing the idea
of Europe

Year

1996

1997

Training kit European schools SaarLorLux
Region Commitment No 91305 (Video)

Questions & Answers book for teenagers
Commitment No 094305

French

30 000

French

30 000

1998

EC contribution to NGO

1999

2000

No request as NGO. Utilisation of avail-
able funds

Getting micro-enterprises to prepare for
the euro

No fear for the euro (aged people)

2001

EC contribution to NGO

French

German

27 700

30 000

Total Committed

117 700

10 000

10 000

0

10 000

40 000

(2003/C 92 E/044)

WRITTEN QUESTION P-1180/02

by Piia-Noora Kauppi (PPE-DE) to the Council

(17 April 2002)

Subject: South Korea’s distortion of the shipbuilding market: referral to the WTO

South Korea has long been distorting competition on the shipbuilding market by pricing its vessels below
their real cost. The European Union and South Korea have held talks with a view to bringing about
healthy competition on the shipbuilding market, but to no avail.

Disagreements over international competition issues are dealt with in the appropriate dispute settlement
bodies of the World Trade Organisation (WTO). Both the Union Member States and South Korea belong to
the WTO.

Because the above negotiations ended in summer 2000 without levelling the playing field, the Member
States meeting within the Council in December 2000 unanimously agreed that the EU should complain to
the WTO because South Korea was breaching its obligations regarding support for ship exports.

Parliament also supported that view in its report on the second report from the Commission to the
Council on the situation in world shipbuilding (A5-0371/2000), in which it ‘[called] on the Commission to
initiate a dispute settlement procedure with the Republic of Korea before the World Trade Organisation
(WTO)’.

In spite of these facts, the Commission has still not referred the matter to the WTO dispute settlement
body.

Instead it has, totally artificially and with no solid legal justification, linked the start of a proper WTO
dispute settlement procedure to its proposal for a regulation which stipulates that limited production aid to
individual European shipyards could be temporarily allowed, while the WTO procedure was taking place,
so as to counterbalance South Korea’s action. Differences of opinion among the Member States as to the
legitimacy and rationality of production aid have made it impossible to bring the proposal for a regulation
into force.

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17.4.2003

The South Korean Government has said that South Korea is aiming to build even bigger ships, especially
cruise liners, and still does not consider its aid policy to have been in any way wrong or contrary to
international agreements.

From the point of view of the European shipbuilding industry the situation is completely intolerable.
When will the Council urge the Commission to abandon its inaction and ensure that the matter can at last
be dealt with by the WTO?

Reply

(19 December 2002)

1.
Since 1999 the Council has repeatedly voiced its serious concern at the critical situation facing the
shipbuilding industry, attributable mainly to overcapacity in the sector and to the unfair practices of South
Korean shipyards on the world market.

In May 2000 the Council called on the Commission to engage Korea in negotiations, which led to the
conclusion, on 19 June 2000, of agreed minutes.

However, since its meeting on 4 and 5 December 2000, the Council, noting the failure of Korea to
2.
comply with the terms of
the agreed minutes, has called on the Commission to envisage the
implementation of all measures against Korea under procedures approved by international bodies, and to
examine swiftly the complaint lodged with the WTO by European operators under the TBR procedure.

At that meeting the Council also welcomed the Commission’s determination to support and adopt trade
measures against unfair competition by Korea, and asked it to report back to the Council by 1 May 2001
at the latest and to fulfil
its obligations under Article 12 of Council Regulation (EC) No 1540/98 of
29 June 1998. Finally, it took note of the Commission initiative, failing a satisfactory agreement, to put in
place a temporary and appropriate mechanism intended to counter Korea’s unfair practices, pending
conclusion of the procedure under way before the WTO.

3.
At its meeting on 14 and 15 May 2001, the Council reiterated its position by ‘taking note of the
Commission’s intention as set out in its decision of 8 May 2001 to propose an appropriate temporary
support mechanism’, and by strongly supporting ‘the Commission’s intention as set out in the same
decision to launch a WTO procedure if a solution is not achieved with Korea by 30 June 2001’.

4.
The Commission having forwarded a proposal for a Council Regulation to establish a temporary
defensive mechanism to assist the Community shipbuilding industry to the Council on 30 July 2001, the
Council established following its discussions on 5 December 2001 that it was not in a position at that
point to obtain the necessary qualified majority on the proposal.

Moreover, the Commission was also asked to consider the elements of a strategy to remedy the specific
problems encountered by the shipbuilding sector. The Council agreed to return to the dossier at a future
meeting.

5.
At its meeting on 6 and 7 June 2002, the Council instructed Coreper to finalise a solution on the
basis of the Council’s discussions. Following these proceedings, on 27 June 2002 the Council adopted, by a
qualified majority, a Regulation setting up a temporary defensive mechanism for the Community
shipbuilding industry in order to counter the Republic of Korea’s unfair commercial practices on the world
shipbuilding markets; the Danish, Netherlands, Finnish, Swedish and United Kingdom delegations voted
against the Regulation. The Regulation will apply as long as necessary until the conclusion of dispute-
settlement proceedings initiated against Korea at
the World Trade Organisation and will expire on
31 March 2004. It is restricted to market segments where it has been shown that unfair commercial
practices have caused direct damage to the Community shipbuilding industry. The conditions for the
authorisation of the temporary defensive mechanism are stated in recital 7 of the Regulation (1).

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Official Journal of the European Union

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In the context of the solution referred to in the previous paragraph, the Commission was given a
6.
mandate to find a solution with Korea by 30 September 2002. Meetings with Korea in August and
September 2002 ended in failure, and so the Council, at its meeting on 30 September 2002, took note, on
the basis of a statement by the Commission representative, of the negative outcome of the negotiations
between the Commission and the Korean authorities and of the measures to be taken in this area.

(1) OJ L 172, 2.7.2002, p. 1 et seq.

(2003/C 92 E/045)

WRITTEN QUESTION E-1221/02

by Michael Cashman (PSE) to the Commission

(29 April 2002)

Subject: The safety of lorry drivers with left-hand drive cabs on roads in the United Kingdom

Could the Commission give details as to the number of accidents caused by non-UK lorries on United
Kingdom roads that cause accidents due to the fact that drivers are on the left-hand side of the cab? Could
the Commission also give details of the number of accidents caused by UK drivers on the continent due to
their right-hand drive cabs? Can the Commission state what measures are being taken to ensure that lorry
drivers are equipped to cover their ‘blind side’ when travelling on roads abroad, where they find themselves
in this position?

Answer given by Mrs de Palacio on behalf of the Commission

(6 June 2002)

The Commission is not in a position to give details as to the number of accidents caused by non-British
lorries on United Kingdom roads due to the fact that drivers are on the left-hand side of the cabin, nor can
it give details as to the equivalent number of accidents on the continent.

The Community data base on road accidents is built on administrative police reports which give factual
information without
in-depth
investigations that are carried out under the responsibility of judicial authorities in the Member States.

indicating the causes of accidents. Determining the causes needs

With regard to the measures taken by the Commission, the Honourable Member is kindly requested to
refer to the answer to the written question E-0852/02 by Mr Wiersma (1) about blind spot mirrors. The
proposed amendments to the rear view mirrors directive will in general improve the field of vision for
truck drivers.

(1) OJ C 277 E, 14.11.2002, p. 96.

(2003/C 92 E/046)

WRITTEN QUESTION E-1253/02

by Charles Tannock (PPE-DE) to the Commission

(6 May 2002)

Subject: Rules governing the provision of state aids with particular reference to Mecklenburger Metallguss

A British company Stone Manganese Maríne, a world leader in its field, has made propellers for the Queen
Mary, the Queen Elizabeth, the QE2 and many of the Royal Navy’s best-known aircraft-carriers and
battleships. It is now about to lay-off most of its employees because it has found that its tenders are
constantly being undercut by the German company Mecklenburger Metallguss, which has been
transformed over the last three years, together with the help of direct subsidies that have been approved
by the Commission, from a struggling relic of East-German Communism to the world’s largest marine
propeller manufacturer in the world.

Under certain circumstances, subsidies are permitted under the rules governing state aid. Commissioner
Monti has also gained an impressive reputation for acting ‘without fear or favour’ regarding the application
of state aids. Nevertheless, does the Commission believe that it is appropriate to permit subsidies which
will allow an otherwise struggling firm to wipe-out its major competitors by undercutting their tenders by