Monti to call for end to EU shipyard aid

Date: 30/11/00

INDUSTRY ministers will hear evidence from the European Commission next week of how illegal state subsidies are keeping Korean shipbuilders afloat and sinking shipping jobs in the EU - but the executive will nevertheless call for an end to the aid regime for Union firms.

A Commission report on the sector blames many of the problems facing the EU industry on Seoul, which has allegedly intervened to allow its shipping firms to underprice their products and grab markets from European rivals.

Competition Commissioner Mario Monti will tell ministers the report justifies demands from Union shipbuilders for World Trade Organisation action against Korea, amid suspicions that Seoul has channelled International Monetary Fund handouts to its ailing shipyards.

But he will urge ministers to reject demands from Germany, Spain, Greece and Italy for the renewal of a special subsidy regime for EU shipbuilders beyond the end of this year.

Union sources say the Com-missioner will be supported by other member states which insist that if shipbuilders continue to receive aid, the same treatment will have to be given to other industrial sectors.

Monti has always opposed granting aid to the sector, which his officials claim does little to bridge the 20% price gap with Korean shipyards and mainly goes towards funding the EU's already-booming cruise ship sector.

Instead of proposing to renew the aid regime, which allows subsidies of up to 9% of a shipbuilding contract's value, Monti and his industry and trade counterparts Erkki Liikanen and Pascal Lamy want to pursue the Korean issue at the Geneva-based WTO.

They will argue that special aid to Union shipbuilders should only be reinstated if the dispute is not resolved by next May, to offset the damage wrought by Korean yards.

Industry ministers are to hear evidence from the European Commission of how illegal state subsidies are keeping Korean shipbuilders afloat and sinking shipping jobs in the EU - but the executive will nevertheless call for an end to the aid regime for Union firms.