Luxembourg, 27/06/2002 (Agence Europe) - On Thursday the EU Council of Ministers finally adopted by qualified majority voting the twin-track strategy proposed by the European Commission to counter unfair Korean practices in the shipbuilding sector (see EUROPE yesterday p 6).. The EU has set a deadline of the end September to resolve the dispute amicably, failing which it will immediately launch procedures for a Panel against Korea in the WTO and activate a temporary defensive mechanism for European shipbuilding. The United Kingdom, Netherlands and the three Scandinavian members of the EU have opposed the position of the Commission for a long time and have published a joint declaration expressing their disappointment at the decision of the Council.
In this declaration the Netherlands, United Kingdom, Finland, Denmark and Sweden criticise the reintroduction of operating aid for shipbuilding and pointout that the Commission itself has recognised on several occasions that this aid is not the appropriate instrument for making the sector more competitive. They also stress that Member States committed themselves to reducing state aid, at the Stockholm Summit, with the aim of achieving the ambitious goals for the European economy, as formulated at the Lisbon Summit by recognising that, "the reintroduction of this type of sectoral state aid is not in line with the Lisbon and Stockholm objectives."
The three European Commissioner, however, responsible for the case welcomed the adoption of the mechanism by the Council. EU Trade Commissioner Pascal Lamy said "Korea now knows that if we fail to resolve this dispute in the few weeks between now and the end of September, we will take them to the WTO and provide the opportunity for our industry to benefit from temporary support for the period during which the case is heard. This time Korea knows it is for real". Competition Commissioner Mario Monti underlined: "This is of course not a reintroduction of the generalised operating aid of up to 9% for all shipbuilding activities a regime which was definitively abolished at end 2000. If activated under the conditions set out in the Regulation, the support under our temporary defensive mechanism will be strictly limited in scope, time and also aid intensity to a maximum of 6%, as proposed by the Commission, rather than the 14% originally envisaged." Enterprise Commissioner Erkki Liikanen said, "European ship yards are suffering as the world shipbuilding market faces serious difficulties, while Korea continues to price ships below cost. I welcome today's decision by the Council. It clarifies our position and I hope that it will allow us to move quickly forward towards reaching an agreement with Korea to correct this unfairness." In a statement to the Council, the Commission promised to report to the next Industry Council on the latest developments regarding the negotiating process and on the situation in world shipbuilding. As regards the further investigations covering the period of 2002 (see EUROPE yesterday), the Commission indicated that it is committed to launching the TBR questionnaires (Trade Barrier regulation) to industry already in early December 2002. On the basis of the replies by the industry, the Commission expects to present the result of this further investigation at the beginning of 2003 and no later than in the course of March 2003.