EC PROPOSES RESUMPTION OF SHIPYARD SUBSIDIES

EC PROPOSES RESUMPTION OF SHIPYARD SUBSIDIES    The European Commission proposed on Wednesday the temporary resumption of state aid to European shipyards for the construction of containerships and of product and chemical tankers.
   The EC described the program of aid to European shipyards as a “temporary defensive mechanism for shipbuilding against unfair Korean practices.”
   The Brussels agency also said it will press on with dispute settlement proceedings against Korea before the World Trade Organization.
   The EC alleged that Korean shipyards engaged in unfair practices and received substantial subsidies that are incompatible with the WTO rules. Several shipbuilding market segments in Europe “are considerably injured by these practices,” according to the EC.
   The complaint to the WTO and the temporary program of state aid to shipyards will be submitted to the council of European ministers.
   Under the proposed state aid program, financial aid of up 14 percent of the contract value will be approved by the EC in certain circumstances.
   “This proposal is an exceptional response to a difficult problem,” said Mario Monti, EC competition commissioner. “It does not at all represent a general reintroduction of operating aid to shipbuilding, which came to an end on Dec. 31, but will strengthen the Community’s efforts to combat damaging anticompetitive practices by Korea,” he added.
   The EC said that it had a series of negotiations with Korean government officials which “failed to produce an agreement that would restore normal trading conditions.” No amicable solution has yet been achieved, the EC said.