Shipbuilding Industry (Hansard, 22 January 2002)

§ Mr. Wilson

We share the UK industry's very real concerns about Korean unfair competition, which we take very seriously. We believe the best means of tackling Korean unfair competition is to launch action in the World Trade Organisation (WTO), on which all member states are agreed, and to help yards improve their competitiveness. However, we are strongly opposed to the Commission proposal to reintroduce, in parallel, temporary operating subsidies.

We do not believe that subsidy is an appropriate response to this complex and longstanding problem. Operating subsidies have not been effective in countering Korean unfair competition or in improving the competitiveness of EU yards in the past and we believe the Commission's new proposal will be even less effective at countering Korea. The Commission proposal is likely to be difficult to operate in practice and is open to abuse. Furthermore, it will distort competition within the EU as only some member states stand to gain. The proposal will not benefit UK yards as they do not build the relevant types of ships, namely containerships and product/chemical tankers, and could well be damaged by the subsidies that competing yards stand to receive.

At the December 2001 meeting of the Industry Council, the Commission tried for the third time to secure agreement on its dual approach of subsidies and WTO action but again failed to secure sufficient support from member states. Member states remained firmly split on the subsidies proposal. The UK vigorously pressed the Commission to launch the WTO action but to no avail. The deadlock on the Commission approach therefore continues, with no action against Korea. The Commission will now review the market situation and present its findings in March as a basis for further discussion.