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Possible Threat to EU Shipbuilding Prompts EC to Mull WTO Action
The European Commission is thinking of invoking an element of WTO’s a
greement on subsidies and countervailing measures in a bid to save the
European Union shipbuilding industry.
The Commission fears the European shipbuilding industry is being cripp
led by unfair Korean competition. In its “Situation in World Shipbuil
ding” report to the EU Council of Ministers, the Commission said it w
ould increase monitoring of the Korean industry to find out to what ex
tent it is being kept solvent through state subsidies.
It pointed out that global yard capacity was now way ahead of demand.
It amounts to 20million compensated gross tons (cg/t), while new order
s of 7.86million cg/t were recorded for the first half of this year. P
rices have been collapsing as a result “and have now reached a level
that in many cases do not allow shipyards to cover operating costs.”
The report blames the South Koreans, whose shipbuilding capacity rose
from 1.7million cg/t in 1988 to 4.6million cg/t in 1997.