§ Lord Kennetasked Her Majesty's Government:
Whether in their view the Japanese shipbuilding industry has received, over recent years, support that is not compatible with the uninhibited operation of market forces and, if so, what steps they have taken or propose to take to secure the rectification of such a situation; and
Whether in their view the South Korean shipbuilding industry has received, over recent years, support that is not compatible with the uninhibited operation of market forces and, if so, what steps they have taken or propose to take to secure the rectification of such a situation.
§ Lord BeaverbrookThe Japanese and South Korean authorities maintain that their shipbuilding industries do not receive state aid. However, because Far East yards have quoted prices below European building costs, the new European Council Directive on aid to shipbuilding includes provision for an aid ceiling set with periodic reference to the market gap between Far East prices and shipbuilding costs for a range of ship types in the most efficient EC yards. We regard the new directive as providing both an opportunity for UK merchant shipbuilders and an incentive to improve their performance in the face of Far East competition. It may also encourage some Far East yards to follow more realistic pricing policies.
The main channel for international influence on shipbuilding is through the OECD. Within the OECD Shipbuilding Working Group, pressure is being applied with strong UK support for Japan to act in a way that will permit a return to normal market conditions. South Korea is not a member of the OECD but similar pressure is being applied through informal links with the Working Group.