The European Union, Japan, South Korea and Norway have agreed to begin negotiations on a treaty aimed at outlawing government subsidies for shipbuilders. A similar agreement negotiated with the United States in the mid-1990s collapsed four years ago after Congress refused to ratify it. The U.S. declined to join the new talks, which will be held under the aegis of the Paris-based Organization for Economic Cooperation and Development (OECD). But the four participants, who control over 80% of world shipbuilding output, are hopeful they can involve China, Russia and Ukraine in their efforts to curb government aid.
The initiative coincides with an acrimonious row in the EU over a plan to revive handouts for its shipyards while it pursues a case against alleged unfair practices by South Korean builders in the World Trade Organization. EU Trade Commissioner Pascal Lamy said shipbuilders need subsidies to help survive the WTO case which could take over a year, but Mario Monti, the competition commissioner, fears reviving aid, which the EU phased out at the end of 2000, will weaken its campaign to end subsidies for other industries. EU governments have failed to agree on subsidies of up to 14% for builders of containerships and product and chemical carriers because Paris wants the handouts to apply also to liquefied natural gas (LNG) carriers, a key sector for Chantiers de l'Atlantique, France's biggest shipyard.