EC proposes extension of subsidies to EU shipyards
The European Commission on Wednesday proposed to extend a regime of payment of subsidies to European shipyards until March 2005.
Under the scheme, shipyards that build container ships, product and chemical tankers or liquefied natural gas tankers can receive state aid of up to 6 percent of contract value.
The EC said that the “temporary defensive mechanism” state aid is justified because of the harm done by Korean shipyards to European yards.
The Brussels-based executive will send its proposal to the council of ministers and to the European Parliament for approval.
“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,” said European trade commissioner Pascal Lamy.
Mario Monti, European competition commissioner, said that the EC “recognizes the exceptional circumstances in cases where community interests are at stake.”
As part of what it describes as a twin track strategy against unfair trade practices by South Korea, the EC will also continue to request action against Korean shipyards through the World Trade Organization.
The WTO panel on the issue started its work in December 2003. Its final report is expected in August of this year or later.
The EC said that its shipyard subsidy payments would be deactivated if an agreement is found with Korea or if WTO proceedings are suspended.