Brussels, 26/06/2002 (Agence Europe) - Pascal Lamy, European Commissioner for Trade, and Mario Monti, his counterpart for competition, confirmed to the press on Wednesday that, on the agenda of the Agriculture Council of 27 June, the Spanish Presidency had included the adoption without debate of the provision aimed at implementing a temporary defence mechanism for the European shipbuilding sector, which has fallen victim to the dumping practices of South Korean competitors.
On 25 July 2001, the European Commission presented a proposal of regulation aimed at setting in place a mechanism to temporarily protect the container carrier segment and that of carriers for chemical and oil products, market segments for which it established that the European industry suffers considerable injury because of the unfair practices on the part of South Korea. For these segments, the Commission initially proposed, in some circumstances, a maximum aid ceiling of 14% of the contractual value. The Commission has always made the launching of proceedings at the World Trade Organisation subject to the adoption of this regulation, and provided for the mechanism not to take effect until the proceedings are initiated.
It rapidly came to light that the Council would not reach a qualified majority around this proposal of regulation, with France calling for the inclusion of oil tankers. In the meantime, the European Commission published, in May, its fifth report on shipbuilding in the world (see EUROPE of 1 May, p.10), which establishes presumption of South Korean dumping in the oil tanker segment. This new element probably helped to bring the issue out of the rut in which it had fallen. During the Industry Council of 7 June (see EUROPE of 8 June, p.10), the hostility of some to the inclusion of oil tankers seemed to have waned, and a majority in favour of the proposal of regulation seemed within reach. Given this turn in the situation, the Commission decided to present several compromise changes to its initial proposal on condition that there was a clear majority in favour.
Now that this majority is acquired within the Committee of Permanent Representatives of Member Sates with the EU (see EUROPE of 26 June, p.10), it is these changes that the Agriculture Council will endorse on Thursday. We recall that they provide for: - inclusion of oil tankers, to be confirmed by the Commission in March 2003 at the latest on the basis of elements contained in the new report on trade barriers that take up data relating to 2002; - entry into force of the regulation (that is, the possibility to grant aid) and the simultaneous launching of a procedure at the WTO if the Commission concludes that negotiations with South Korea have failed; - the fall to 6% of the maximum aid intensity; - expiry of the Regulation of 31 March 2004 (instead of 31 December 2002); - and the presentation by the Commission of a Council report on the outcome of negotiations with the Koreans by 30 September 2002 at the latest.
On Wednesday, speaking before the press, Mario Monti, who is known to be in favour of restoring State aid in sectors where they are no longer authorised, recalled that the defence mechanism should not be seen as "bringing back operating aid that was abolished after January 2001". He said the mechanism was "temporary" and that aid intensity was limited to 6% of the amount of the contracts. Furthermore, he deplored the dissension and the procrastination within the Council over this issue, considering that the Commission had done its work in good time. Pascal Lamy clearly pointed out, for his part, that the "aim is not to bring back public support to the shipbuilding sector" but to "convince the Koreans and the Korean shipyards to give up their current practices". The Commission, moreover, felt that the magnitude of Korean dumping was between 10 and 15%. In answer to questions on similar practices on the part of China with regards shipbuilding, Mr Lamy said that, although there is such conjecture, "it concerns different sectors" and that "at the present time, there is no proof of dumping".