Brussels, 25/07/2001 (Agence Europe) - After having sounded out the Fifteen (see EUROPE of 17 July, p.8), the European Commission presented to the Council and to the European Parliament, a proposal aimed at establishing a temporary support mechanism in favour of Community shipbuilding in the context of the two-part strategy for facing up to the unfair practices of Korean shipyards on the world market. Implementation of the second part of the strategy, involving the opening of arbitration procedure in Geneva against South Korea, will depend on the go-ahead given by Member States (which, it is known, are divided over this), stressed the spokesman on Wednesday.
The "defence" mechanism will only come into effect once the multilateral procedure is launched and will only remain in place until it is resolved, probably in two years' time. "This proposal is an exceptional response to a difficult problem: it does not at all represent a general introduction of operating aid to shipbuilding, which came to an end on 31 December 2000, but will strengthen the Community's efforts to combat damaging anti-competitive practices by Korea", recalled Commissioner Mario Monti, responsible for competition policy, after the Commission's weekly meeting. We recall that this proposal follows a Commission inquiry allowing the existence of major Korean subsidies to be established, in contradiction with the WTO anti-subsidy code, as well as the existence of considerable injury in certain segments of European industry. The defence measure is at this stage limited to these segments (which guarantees that the mechanism is compatible with multilateral agreements), namely container ships, as well as vessels carrying chemical products and oil. For these categories, the proposal provides, under certain circumstances, for authorisation of a maximum public aid ceiling of 14% of the contract value. Also, in order to avoid all competition distortion within the EU, specific transparency rules are provided for aid of above 6% (such aid must be notified to and approved by the Commission, which should verify that the amount of aid corresponds to the minimum required to keep the contact within the EU).