INT 221

1. EESC OPINION ON THE COMMISSION’S LeaderSHIP 2015 REPORT (INT 221 / CCMI 011) Presentation by Mr Joost van IERSEL member of the EESC INT 221

2. BACKGROUND

3. The shipbuilding and shiprepair sector • Strategic sector • Strong state intervention, in Europe & world-wide • Means of transport for international trade • Contribution to defence and security • Early exposure to globalisation • Failure to implement anti-dumping rules  uncontrolled distortions of competition

4. The shipbuilding and shiprepair sector /2 • Strong continuous growth in the production of ships for more than two decades • Rapid technological progress, reduction of costs • Shipbuilding market is determined by offer prices • Damaging business practices from South Korea  market loss of the EU • Around 2003: strong economic growth in China  record number of new orders • Developments may not last, Europe should seek sustainable solutions

5. The shipbuilding and shiprepair sector /3 • Alternately over-capacity and under-capacity • Until recently shrinking market, lay-offs • Strategic state investment in Asia  supply/demand discrepancy • 2004: €34 billion turnover, 9,000 companies, a workforce of 350,000, 10% of turnover ploughed back into R&D

6. Policy characteristics • Emphasis on trade policy and competitiveness • Efforts towards an internationally applicable agreement guaranteeing a level playing field • Difficulty to apply the existing multilateral trade rules to the shipbuilding sector • Unfair pricing practices and subsidies of certain competitors, South Korea!!! • Essential to start a bilateral dialogue with China • Dual Council policy: WTO complaint + TDM

7. Evolution of shipbuilding policy • Strategic importance  traditionally strong government intervention • Focus on state-aid systems since the '70s • OECD agreement concerning shipbuilding no entry into force • EC 1540/98, abolition of operating aid as of 2000 • Council/South Korea talks on damaging business practices  lack of implementation

8. Evolution of shipbuilding policy /2 • Commission brings the case to the WTO + TDM (temporary defensive mechanism) • New OECD efforts (without USA) • COM (2002) 714: Industrial policy in an enlarged Europe • Council call for European competitiveness policy • LeaderSHIP 2015 • High Level Advisory Group + Commission report: 30 recommendations in eight areas for the competitiveness of the European shipbuilding and repair industry

9. Industrial Policy new-style • After the Liikanen report commissioner Verheugen devises conditions: • No state aid • Improving conditions for industry • Internal market • Technological platforms • Consultation at a preliminary stage • Trade policy • Intellectual property • Skills

10. New Approach = LeaderSHIP 2015

11. Why? • The industry needs not only competition and trade policy, but also COMPETITIVENESS policy • Aggressive South Korean policy needs urgent response

12. What? • Objectives: improved leadership through strengthened competitiveness • EU's role should cover: - financing and guarantee schemes - safety and environmental standards - intellectual property • Common policy for naval defence • New vessel types and new generations of marine equipment • Restructuring the industry to arrive at a limited number of large companies • Small, very flexible companies networking to serve smaller niche markets.

13. The High Level Advisory Group  Commission report • Chaired by Commissioner Liikanen, discussions on LeaderSHIP 2015. Necessary are: • level playing field in world shipbuilding through the EU trade policy, enforcement of applicable WTO rules and enforceable OECD disciplines • EU/industry cooperation on R&D and innovation • Pre- and post-delivery financing • Quality assessment improvement, safety and control of shipbuilding and ship repair • Protection of intellectual property rights • Optimal industrial structure  "aid for consolidation“

14. The High Level Advisory Group  Commission report/2 • The Council endorses the Commission report • The Commission report on LeaderSHIP 2015 transposes the work of the High Level Advisory Group into formal Community policy

15. Commission report • Leading role for European shipbuilding and shiprepair by 2015 • Strategic dimension of shipbuilding and shiprepair • Need for WTO rules to be obeyed • 8 areas: • Level playing field in world shipbuilding • R&D and innovation investment • Financing and guarantee schemes • Safer and more environment-friendly ships • European approach to naval shipbuilding • Protection of intellectual property rights • Access to a skilled workforce • Sustainable industry structure

16. EESC opinion Conclusions and recommendations

17. EESC opinion /1 • European approach instead of national policies • Yearly progress report • World-wide level playing field • Monitoring of the application of state-aid rules and unfair practices • R&D and innovation

18. EESC opinion /2 • A guarantee fund as suggested in LeaderSHIP should be a priority for the Commission • Appropriate standards for maintenance of ships • Cooperation between coastguards concerning safety and security • The Social Dialogue should address differences in labour productivity world-wide • Consolidation • Naval sector: synergy between yards for knowledge and know-how

19. EESC opinion /3 • Strengthen and modernise the "invisible" ship repair and conversion sector • Dependence of competitiveness on RDI • "Securing the access to a skilled workforce" is of key importance • Establishment of a sectoral social dialogue is positive • Competitiveness without weakening the European social acquis

20. EESC opinion /4 • Key aspects: industrial cooperation between shipyards and suppliers, access to foreign markets and consolidation of the industry • Common market in defence equipment • Importance of implementation • Monitoring: European observatory? Marine Industries Forum • Commission should consider price stabilisation on international markets through Community support measures

21. EESC OPINION ON ERIKA II & PHASING IN DOUBLE-HULL OIL TANKERS (TEN 067 + TEN 251) INT 221

22. Background • The Commission’s ERIKA II package for maritime safety and prevention of pollution • MARPOL regulation : prohibiting the carriage of heavy grade oil in single-hull oil tankers on a world-wide basis

23. EESC opinion • The economic and social concerns related to the exemption from MARPOL invoked by one member state should be specified • A definition of “heavy grade oil products” is necessary

24. EESC opinion /2 • Need for the ILO's maritime conventions to be incorporated in Community law • The "human factor" in accident prevention and crisis management is missing from ERIKA II • ILO's maritime conventions and recommendations should be ratified and implemented • stricter and more effective standards on navigation safety and pollution prevention • Several technical recommendations