CELEX: 51977PC0517
Language: en
Date: 1977-10-28
Title: Proposal for a COUNCIL DIRECTIVE on aid to shipbuilding (submitted to the Council by the Commission)

ARCHIVES HISTORIQUES
DE LA COMMISSION
COLLECTION RELIEE DES
DOCUMENTS "COM"
COM (77) 517
Vol. 1977/0164
 ---pagebreak--- Disclaimer
Conformément au règlement (CEE, Euratom) n° 354/83 du Conseil du 1er février 1983
concernant l'ouverture au public des archives historiques de la Communauté économique
européenne et de la Communauté européenne de l'énergie atomique (JO L 43 du 15.2.1983,
p. 1), tel que modifié par le règlement (CE, Euratom) n° 1700/2003 du 22 septembre 2003
(JO L 243 du 27.9.2003, p. 1), ce dossier est ouvert au public. Le cas échéant, les documents
classifiés présents dans ce dossier ont été déclassifiés conformément à l'article 5 dudit
règlement.
In accordance with Council Regulation (EEC, Euratom) No 354/83 of 1 February 1983
concerning the opening to the public of the historical archives of the European Economic
Community and the European Atomic Energy Community (OJ L 43, 15.2.1983, p. 1), as
amended by Regulation (EC, Euratom) No 1700/2003 of 22 September 2003 (OJ L 243,
27.9.2003, p. 1), this file is open to the public. Where necessary, classified documents in this
file have been declassified in conformity with Article 5 of the aforementioned regulation.
In Übereinstimmung mit der Verordnung (EWG, Euratom) Nr. 354/83 des Rates vom 1.
Februar 1983 über die Freigabe der historischen Archive der Europäischen
Wirtschaftsgemeinschaft und der Europäischen Atomgemeinschaft (ABI. L 43 vom 15.2.1983,
S. 1), geändert durch die Verordnung (EG, Euratom) Nr. 1700/2003 vom 22. September 2003
(ABI. L 243 vom 27.9.2003, S. 1), ist diese Datei der Öffentlichkeit zugänglich. Soweit
erforderlich, wurden die Verschlusssachen in dieser Datei in Übereinstimmung mit Artikel 5
der genannten Verordnung freigegeben.
 ---pagebreak---         COMMISSION OF THE EUROPEAN COMMUNITIES
                                                             COM(77)517 final.
                                                             Brussels , 28 October 1977
                                       Proposal for a
                                     COUNCIL . DIRECTIVE • /
                                  on aid -to shipbuilding
                       ( submitted to the Council by the Commission)
C OLT(77 ) 517 final .
 ---pagebreak---     Introduction
. 1 . State of the shipbuilding industry
      Over recent years the state of the shipbuilding industry worldwide has
      worsened considerably .    Excessive surplus shipping capacity has been
      created and as a result new orders placed by shipbuilders have fallen
      off rapidly ; consequently shipyards ' order books are becoming empty .
      Substantial worldwide surplus capacity is forecast for the
      years to come ; it may be estimated at 40 % of the industry 's produc­
      tion capacity .    In these circumstances the competition from certain
      non-member countries ( Japan , Korea , etc .) is being felt more sharply .
      Many Community shipyards can no longer meet this competition and are
      having difficulty in remaining in business .      Employment in the ship­
      yards can no longer be maintained at the level of 1974 and 1975 .      The
      Member States are being obliged to introduce national measures to tackl
      the crisis which will most probably continue beyond 1980 .
2.    Possible Community action
      The Community     cannot remain indifferent to this development .   When
      Parliament adopted the Resolution on the Shipbuilding industry in
      February ( 1 ), the Commission undertook to take action without delay .
      Moreover , discussions with the Member States have revealed that action
      is required at Community level and that the Member States definitely
      prefer to pursue the action defined in the threee previous Directives
      by adapting their guidelines to the current crisis conditions affecting
      the industry .
)    Resolution of 10 February 1977 ,    181 e / 77 ASS 109 .
 ---pagebreak---                                           - 2 -
      1.3 .   Guidelines for the Directive
      1.3.1 . Previous Council Directives on aid to shipbuilding were mainly designed
              to harmonize intervention in the field and bring down the intensity
              of aids most damaging to competition between Member States such as
              production aids . Moreover , these Directives have   been gradually
              extended to forms of aids not originally covered .   This is true parti­
              cularly of the Third Directive which expires at the end of 1977 and
    j         contains provisions on investment and rescue aids .   The new Directive
    i         follows the same lines although it has been adapted to the particu­
               larly difficult conditions mentioned at 1.1 .
      1.3.2 . Pursuing the guideline contained in the previous directives on with­
              drawal of production aids , the draft Fourth Directive excludes the
              granting of such assistance under normal circumstances .   However , to
              meet the crisis , specific provisions have been made authorizing such
              assistance provided it is bound up with restructuring the industry
              and does not affect trading conditions    to an extent contrary to the
   i          common interest .  This boils down to stating that this assistance
              can only be tolerated if it is used exclusively to align Community
              shipyard prices with those of non-member countries and does not dis­
              courage orders which would normally have    been placed with other
              Community shipyards if no assistance at all had been granted . '
  i 1.3.3 . As far as certain aids limited directly to the purchase of ships
  j           by shipowners are concerned , checks are to be made after the assis­
              tance has been granted to prevent Member States using it to encourage
              the placing of orders with national yards only .
              This would not only create discrimination among shipbuilders but
              restrict the shipowners' freedom to order ships where they find the
              most favourable economic terms .
i                                                 • ^                                i
                                            M
                                                                                ./.
 ---pagebreak---                                  - 3 -
1.4 . The Directive in the Light of industrial measures
      In preparing the draft Fourth Directive account was taken of all
      generally available information on the industry . The OECD , Commis­
      sion and specialists in the field more or less agree on the main
      probable trends in the industry up to 1980 . These were briefly
      described in 1.1 . National experts have generally confirmed this
      information when discussing   the proposal for a Directive at a
      series of multilateral meetings .
      The proposal takes full account of the industry 's structural problems
      and therefore must not be considered as a simple legal framework
      designed to limit the granting    of assistance ; it represents an
      essential factor in the approach to the industry .
1.5 . The Directive 's flexible approach
      In preparing this Directive emphasis was placed on the close link
      between the proposed crisis-measures and their period of implemen­
      tation . Such measures are only warranted in cases of serious diffi­
      culty and therefore the Directive provides for possible amendments ,
      more particularly if conditions in the industry should improve . Such
      steps could be taken if discussions at international level produce
      practical results or if market conditions improve .
 ---pagebreak---                                       - 4 -
 2.     The Directive 's components
 2.1 . Production and sales aid ( Articles 1 and 2 )
       The Directive does not authorize production aids in normal circumstances .
       This development follows from the gradual reduction of ceilings in pre­
        vious Directives .
        The measures concerning credit facilities for sales refer to the rele­
        vant OECD arrangement .
        It must be stressed that for ship conversions , the permitted threshold
       may be reduced to 1 500 grt in cases of alignment to terms offered by
       a shipyard in a non-member country .
 2.2 . Investment aid ( Article 4 )
       This Article provides for prior notification of schemes involving invest­
       ment aids which have the effect of increasing production capacity .      In
       this way , the Commission can raise objections to schemes which would
       be contrary to the common interest .
       Moreover , the Commission must be informed every six months of all deci­
       sions on the granting of investment aids in the industry exceeding
       5 million EUA .   In this way , the Commission has an overall picture
       of investments made in the industry .
2.3 .  Aid to rescue and industry ( Article 5 )
       This Article states that aid to rescue shipbuilding , ship-conversion
       or ship-repair undertakings may be considered compatible with the com­
       mon market provided that the measure is a step towards an acceptable
       longer-term solution .   This type of intervention is likely to prevent
       sudden shipyard closures having a disastrous effect on employment .
                                                                            ./.
 ---pagebreak---                                       - 5 -
2.4 . Anti-crisis aid   ( Article 6 )
      This Article is designed to enable the Member States to take coordina­
      ted action to meet the crisis .
      Under this Article , aid and notably production aid may be considered
      compatible with the common market provided that they are linked to the
      restructuring aims and are not likely to affect trading conditions to
      an extent contrary to the common interest .
      Moreover , this Article provides for the establishment of a list of aid
      schemes considered compatible with the common market .
2.5 . Non-discrimination clauses ( Articles 7 and 9)
      These Articles state that assistance granted to shipowners and measures
      for shipbuilding , ship-conversion and ship-repair may not discriminate
         ι
      against products from other Member States .
      Article 8 also states that the Member States must regularly submit infor­
      mation on decisions to grant assistance to shipowners .
2.6 . Review clauses ( Article 10 )
      This Article specifies that the Directive may be amended if the situation
      improves or if international discussions produce practical results .   The
      Directive thus follows the strategy of our OECD partners who reached
      agreement on adapting measures to actual crisis conditions .
                                                                         ./.
 ---pagebreak---                                     - 6 -
2.7 . Duration of the Directive
      Since this Directive provides       particularly for measures to meet
      the crisis , it should not continue for more than three years . The si­
      tuation should be examined at the end of this period to determine
      whether these measures are still required or possibly are inadequate .
                                      *
                                  *       *
 ---pagebreak---                                COUNCIL DIRECTIVE
                             on aid to shipbuilding
The Council of the European Communities ,
1 . Having regard to the Treaty establishing the European Economic Community /
    and in particular Articles 92(3 ) ( d ) and 113 thereof ,
2 . Having regard to the proposal from the Commission ,
3 . Having regard to the Opinion of the European Parliament ,
4 . Having regard to the Opinion of the Economic and Social Committee ,
5 . Whereas the position of shipbuilding has considerably worsened during
    the last few years , and Community shipyards face a general fall in demand
    and acute price competition on a contracted world market ; whereas the
    result of this has been a serious reduction in orders on hand , aggravating
    the structural problems of the industry and indeed threatening its exis­
    tence ;
6 . Whereas a sound and competitive shipbuilding industry is necessary to the
    Community and contributes to its economic and social development , as a
    substantial market for a range of industries , including those using ad­
    vanced technology , and as an employer in a number of Community regions ;
    whereas this is also the case with ship conversion and ship repairing ;
 ---pagebreak--- 7 . Whereas if the situation in the industry were normal the continuation
    of aids to production would not be justified since they would serve only
    to protect the industry and would not bring about any solid and lasting
     improvement of the Community shipbuilding industry 's competitiveness on
    the world market ; whereas , however , such aids may be permitted in the
    present crisis provided that they are introduced on a temporary basis ,
    to allow the industry to meet the new market conditions , and that they are
    progressively reduced to encourage the industry to adapt to these condi­
    tions ; whereas it should be possible to grant such aid with enough flexi­
    bility to allow Community shipyards to meet particular market situations
    and which can be complemented in the event of a worsening crisis ; whereas
    such aid should be subject to control to ensure that distortions of com­
    petition within the Community contrary to the common interest are avoided
    and that the measures are linked to the restructuring of the industry ;
8 . Whereas in order to resolve the present difficulties facing the industry
    the member countries of the OECD have approved general guidelines provi­
    ding that , in order to correct the serious structural imbalance in the
    industry , all shipbuilding countries are to take steps to ensure that the
    inevitable reduction of world shipbuilding capacity is fairly distributed
    and proceeds with as few harmful effects as possible ; whereas the Commu­
    nity , in applying this agreement , intends to pursue its efforts to ensure
    that the burden of the crisis is shared more evenly, by defining a secto­
    ral approach on a Community level as well as on the international level
    particularly in the context of the OECD .
                                          *
                                     *        *
9 . Whereas Council Directive 75 / 432/ EEC on aid to shipbuilding , which was
    designed to correct distortions in competition on the world market , has
    helped to reduce and to harmonize direct aids to shipbuilding in the
    Community ; whereas that Directive expires on 31 December 1977 ;
 ---pagebreak---                                       -3-
10 .  Whereas even in this difficult situation distortions in competition on
      the world market have been reduced through a series of undertakings con­
      cluded by the main shipbuilding countries within the framework of the
      OECD with the object of harmonizing export credit conditions for ships ;
      whereas , within this same organization , the principal shipbuilding coun­
      tries have concluded    a general   understanding which provides for the
      progressive reduction of specific aid measures which distort competition
      in the shipbuilding industry ;
 11 . Whereas production structures should be adjusted to the new market
      conditions so that undertakings in the industry are eventually enabled
      to follow general economic developments and meet competition on the
      world market without the support of intervention by the public authori­
      ties   and so that the investment efforts of the industry are compatible
      with the world balance between supply and demand ; whereas , in its ap­
      praisal of the aids which are concerned by the Directive , the Commis­
      sion should also take account of common objectives to restore the
      sector 's health in the Community as a whole , when such objections have
      been defined by the Council ;
 12 . Whereas , furthermore , effective action requires a solution covering all
      aids and interventions directly or indirectly affecting competition and
      trading conditions on the market for the building , conversion or repair
      of ships ;
 13 . Whereas in these circumstances aid or intervention aimed at the tempora­
      ry maintenance of a shipbuilding , ship-conversion or ship-repair under­
      taking should be limited to that necessary if serious social problems
      are to be avoided ;
 14 . Whereas the measures in favour of national shipowners may have harmful
      effects on the competitive position of other shipyards or on the struc­
      ture of the Member States , shipping       industries ; whereas such mea­
      sures should in no case discriminate against certain Community shipyards ;
 15 . Whereas , in order to remedy a certain lack of interpenetration inthe Com­
      munity market , it is important that EEC shipowners address their calls
      for tenders as far as possible also to shipyards in the other Member States .
 Has adopted this Directive :
 ---pagebreak---                                           Article 1
    For the purposes of the present Directive the following terms and expressions
    shall have the meanings hereunder assigned to them :
    a ) " Building " means the building , in the Community / of the following   metal-
          hulled , seagoing vessels :
         - merchant vessels for the carriage of cargo and / or passengers , of not    •
            less than 150 gross registered    tons ;
         - fishing vessels of not less than 150 gross registered tons ;
         - dredgers or ships for other works at sea of not less than 150 gross
            registered tons ;
         - tugs of not less than 500 hp .
 »
    b ) " Conversion" means the conversion of metal hulled seagoing vessels of not
         less than 5,000 gross registered tons , aP art fr°m the exception mentioned in
         Article 2 >on condition that the conversion operations entail radical alte­
         rations to the cargo plan , the hull or the propulsion system .
i c ) " Repair" means the repair of the vessels referred to under ( a ) above .
    d ) " Sale" means the sale of vessels referred to under ( a ) above to national
          shipowners ,to shipowners in other Member countries and to those in third
          countries .
                                         Article 2
1 Aids and interventions in the from of credit facilities may be considered
       • compatible with the common market on condition they respect the conditions
   set out in the 0ECD Council Resolution of 18 July 1974, or in agreements repla­
   cing that resolution -, in the following cases :
   _    for   all sales or conversions of vessels ;
i -       for         the conversion of vessels of not Less than 1,500 gross registered
       tons where      there  is      ■ alignement with terms offered by a contractor
       of a country not signatory to the 0ECD resolution           18 July 1974 .
 ---pagebreak---                                        Article 3
     Notwhithstanding the particular provisions of this Directive, the general
    provisions of Articles 92 and 93 of the EEC Treaty are fully applicable
     to the shipbuilding and ship-conversion and ship-repair industry .
                                       Article 4
      Aid to investment
    1 . A Member State which intends to grant aid , in application of any aid sys­
        tem whatsoever , to an individual investment project in a shipyard ,
        which would have the effect of increasing the yard 's existing production
         capacity shall notify this plan to the Commission , pursuant to the provi­
        sions of Article 93(3 ) of the Treaty .  Such plans cannot be put into ef­
        fect before the Commission has given its agreement .
         In assessing such plans , the Commission shall take particular account
        of any reductions in capacity in other yards in the same Member State
        which offset this increase and of the regional context of the investment .
    2 . The Member States shall inform the Commission of their decisions to grant
        aid to investment in shipbuilding , conversion or repair yards where the
        amount of such investment is in excess of five million units of account .
        This information shall be provided every year in the form of a table
        based on the specimen at Annex I : on 1st March in respect of decisions
        taken in the second half of the previous calendar year and on 1st Septem­
        ber in respect of those taken in the first half of the current calendar '
                                                                                   !
        year .                                                                  ' ,
 ί
 ;                                                           1                    1
 I                                    Article 5                                   j
i Aids to rescue an undertaking                                                   t
;                                                                                  I
   Aids and interventions intended as a temporary solution for the rescue
   of a shipbuilding , ship-conversion or ship-repair undertaking pending a
   solution to the problems confronting the undertaking concerned, where          i
   this aid or intervention is warranted by . acute social pro
 ---pagebreak---                                            - 6 -
        blems may be considered compatible with the common market under this Direc­
        tive .  Plans for such aid shall , pursuant to Article 93(3 ) of the Treaty ,
        be notified to the Commission individually and in advance .    They cannot be
        put into effect before the Commission has given its agreement .
                                        Article 6
        Anti-crisis aids
  1 . Production aids and interventions may be considered compatible with the
        common market under this Directive if they are granted in order to alleviate
    - the serious crisis , which is causing a substantial reduction in orders on
        hand in a Member State and subsequently a decrease in production .    Such aids
        shall be progressively reduced ; they shall be granted only if linked to the
        realisation of industrial restructuring objectives with a view to making
        the industry competitive and able to operate without aid .
    2 . The Commission   shall be given prior notification of any plan for indivi­
        dual intervention measures under the scheme referred to in paragraph 1 '
        above  where the project is in competition with an offer from a yard in
        another Member State .   The aid proposal cannot be implemented before the
        Commission has given 'ft s agreement . The Commission shall verify that these
        aids do not affect   trading conditions to an extent contrary to the common
        interest .
3 . The Member States shall supply to the Commission a table , for the exclusive
j       use of the Commission, based on the specimen at Annex II , setting out the
        decisions on the aid and intervention referred to in paragraph 1 and an
        estimate of their effects .   They shall also provide a report on the reali-
        sation of the industrial restructuring objectives .
        This information shall be provided on 1st March of each year in respect of
       decisions taken during the second half of the previous calendar year , and
       on 1st September in respect of those taken in the first half of the cur­
        rent calendar year .             '       "
 ---pagebreak---     The Commission shall verify on the basis of these reports whether theefforts
^ to implement the industrial restructuring objectives mentioned in paragraph 1
    of this article are contributing effectively to the adaptation of the
    sector tot'nenew conditions of the world shipbuilding market .
    The Commission shall regularly draw up an overall report to serve as the
    basis for discussion with national experts .
4 . Interventions in the form of cost-escal lation insurance can be considered as
    being compatible with the common market under the present Directive provided
    that the conditions noted in paragraph 1 above^. are   respected .
5 . The aid and intervention measures listed in Annex   III are considered com­
    patible with the common market under paragraphs 1 and 4 of the present Article .
    The Commission shall modify the list at Annex III on the basis of the deci­
    sions it takes regarding new schemes or existing aid schemes .
                                  Article 7
Aid for the purchase of ships shall not be granted to shipowners in a Member State
a way which discriminates against shipyards in other Member States .
A biannual report on aid granted on a selective basis to domestic shipowners
shall be made by the Member States , on 1st March in respect of decisions taken
in the second half of the previous calendar year and on 1st September in res­
pect of those taken in the first half of the current calendar year .             j
This information shall be provided in the form of a table based on the speci­
men at Annex IV .   The Commission shall draw up reports at regular . intervals
summarizing the information supplied .                                          I
                                                                                ?
These reports shall be discussed with the Member States in order to ensure •
                                                                                »
that competition between shipbuilders    is not distorted by such aid .   These
provisions      are   without prejudice to any future Community rules
 on aid to shipowners .                                                         !
 ---pagebreak---                                  Article 8
  In its appraisal of the national aids which are concerned by this Directive ,
  the Commission shall take account of the common interest as defined in
  common objectives for restoring the industry 's health when such common
• objectives have been defined by the Council on a proposal from the Com­
  mission .
                                  Article 9
  The Member States shall refrain from any intervention measures to promote
  within their national territories the building , conversion or repair of
  ships as defined in article 1 and the manufacture of products intended
  to form part of such   ships other than those provided for in Articles 2
  to 7 or those considered compatible with the common market under Articles .
  92 and 93 of the Treaty .
                                  Article 10
  The Council , acting by a qualified majority on a proposal from the Commis­
  sion , shall amend this Directive as and when appropriate .     '
  Such amendment may follow an improvement in demand or favourable develop­
  ments in international contacts .
                                    Article 11
  This directive shall apply until 31 December 1980 .                         ,
                                    Article 12
  This directive is addressed to the Member States .
 ---pagebreak---                                                                       ANNEX I
                   Table of investment      aid under Article 5
    Description        Purpose of         Amount of    Form of       Net grant equi­
    of investment      iveSt mervt (1 )   investment   assi stance   valent as a
                                                                     percentage of
                                                                     the investment
                                        I
                                                                   I
(1)   Where applicable , indicate whether part of an industry <Dr régional
      development programme
 ---pagebreak---                                                             ANNEX  II
     Information to be furnished    by Member States concerning the aid
     and intervention referred to in Article 7 ( 1 )
 Seri al         Type of            Gross            Financial effect , as a
 number -        vessels        registered tons      percentage of the contract
                                                           price ( 1 )
C1 ) Grant equivalent is calculated by discounting at a rate of 8% . Where
     payment is by instalments , the relevant grant equivalents are shown
     in the table relating to the period in which the payments were made .
 ---pagebreak---                                                              ANNEX III
               List of aids considered to be compatible with
      the Common Market in application of Article 7 paragraph 1
1)  Aid measure for ship-building notified to the Commission on the
    22.3.77 which was the subject of the Commission 's letter dated
    1 / 7/ 77 advising the Dutch Government that the Commission had no
    objections regarding the measure .
 2) Aid measure for ship-building notified to the Commission on the
    18/ 2/ 77 which was the subject of the Commission 's letter dated
    1 / 7/ 77 advising the British Government that the Commission had
    no objections regarding the measure .
 ---pagebreak---                                                              ΛϊΠ'ΤΕΧΗ IV
      Information on aid to shipowners , to be furnished "by Member States
                          pursuant to Article 8
Sériai      ïype of ! Gross re-   Form      Financial effect      Country of
number      vessel  I gistered    of aid    as a percentage       building
                    I   tons                of the contract
                    ι
                    >
                    f                            price
                                          j
         l
                                                               l
                                                               I
          I