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C 137 E/78 Official Journal of the European Union EN 12.6.

2003

(2003/C 137 E/086) WRITTEN QUESTION E-2359/02


by Charles Tannock (PPE-DE) to the Council

(2 August 2002)

Subject: The Commission’s refusal to make a complaint to the WTO re South Korean shipbuilding
subsidies unless the Council first agrees to its proposal for countervailing subsidies

The Commission has stated, in accordance with its twin-track strategy, that it will make a complaint
against South Korea at the WTO only if the Council first adopts the Commission’s proposed Temporary
Defensive Mechanism which authorises countervailing subsidies to shipbuilders in at least some EU
Member States. As a result, although the Commission first began making preparations for a WTO referral
over a year ago, no complaint has yet been made.

Is the Council content for the Commission to use its powers in this way, and is there no mechanism
through which the Council can require the Commission to make a WTO referral without preconditions of
this kind?

Does the Council wish to see South Korea referred to the WTO for subsidising its shipbuilding industry or
any other major industry and does it see the current impasse as a failure of the Community Method?

Reply

(6 February 2003)

The Council has repeatedly voiced its serious concern at the critical situation facing the shipbuilding
industry, attributable mainly to overcapacity in the sector and to the unfair practices of South Korean
shipyards, the output of which is sold at below real cost.

At its meeting in May 2001, the Council took note of the Commission’s intention of proposing a
temporary support mechanism for the Community shipbuilding industry and of launching a WTO dispute
settlement procedure.

On 27 June 2002, the Council finally adopted, by qualified majority, a Regulation setting up a temporary
defensive mechanism for the Community shipbuilding industry in order to counter the Republic of Korea’s
unfair commercial practices on the world shipbuilding markets; the Danish, Netherlands, Finnish, Swedish
and United Kingdom delegations voted against the Regulation. The Regulation will apply as long as
necessary until the conclusion of dispute-settlement proceedings initiated against Korea at the World Trade
Organisation and will expire on 31 March 2004.

It was also agreed to set 30 September 2002 as a deadline to enable the Commission to have one last
attempt at negotiating with Korea before opening the WTO procedure. The Commission was invited to
report to the Council on this dossier at its meeting on 30 September 2002, on the basis in particular of
the outcome of final negotiations between the parties scheduled for 24 and 25 September 2002.

At that meeting, the Council took note, on the basis of a presentation by the Commission, of the negative
outcome of the negotiations between the Commission and the Korean authorities and of the next steps to
be taken in this connection. The Council would inform the Honourable Member that the Commission
Decision of 8 October 2002 under the provisions of Council Regulation (EC) No 3286/94 concerning
trade practices maintained by Korea affecting trade in commercial vessels was published. (1)

(1) OJ L 281,19.10.2002, p. 15.