Brussels, 21/01/2004 (Agence Europe) - On Wednesday the European Commission presented a draft regulation for extending by a year the temporary defensive mechanism- (TDM) for European shipyards. The mechanism, granting temporary state aid will continue till 31 March 2005. A Commission spokesperson indicated in substance that this extensions was justified not only because European shipbuilders suffer the consequences of unfair Korean practices but also because they continue to defend their case against these practices in the WTO. The WTO panel started its work only in December 2003 and its final report is expected not earlier than in August 2004. Taking into consideration a possible appeal by one of the parties, a final decision of the WTO Appellate Body is not awaited before beginning 2005. The Commission indicated that the TDM would be deactivated, however, at any earlier date of conclusion of an agreed solution or suspension of the WTO proceedings. The TDM authorises direct aid in support of contracts for the building of container ships, chemical and product tankers and LNG carriers. Maximum aid intensity of 6% of contract value.
Presenting this decision, Commissioner Mario Monti stated: "While State aid is certainly not the way forward to make EU shipbuilding more competitive globally, today's decision does show that the Commission recognises the exceptional circumstances in cases where Community interests are at stake. EU Trade Commissioner Pascal Lamy added: "Today's decision is a clear signal that we are not ready to let European shipbuilders down while they suffer the consequences of unfair Korean practices. In the meantime we will continue to defend our case against these practices in the WTO".