The world shipbuilding industry for large oceangoing vessels represents a single international market, of which each shipbuilding nation shares a limited volume of demand. The competitive environment in this international market can be greatly affected by the policy of any one nation or the order taking practices of builders from any one country. Therefore, policy co-ordination among the major shipbuilding nations is indispensable to ensure the sound development of the shipbuilding industry. Based on this perception, Japan has been actively seeking international co-operation both in the framework of the OECD Council Working Party on Shipbuilding and through bilateral consultations.

　To take an overview of the international shipbuilding market today, the world total of newbuilding orders in 2000 marked a new high since the first oil crisis, due to the fact that many large oceangoing vessels were due to be replaced, the shipping market was buoyant thanks to the booming U.S. economy among other factors, and low newbuilding Prices attracted many shipowners, However, the excessively large supply capacity is still keeping shipbuilding prices at a low level. While the supply capacity is likely to keep on expanding with a capacity increase in emerging shipbuilding countries and a productivity rise in existing facilities, the demand is expected to fall after maintaining a decent level for some time to come. Therefore, it is feared that the supply-demand gap may widen in the future, resulting in increasingly intensified international competition.

　

　In view of these circumstances, it is extremely important for all shipbuilding nations to endeavour to meet the following challenges:

　The OECD(Organisation for Economic Co-operation and Development)Council Working Party on Shipbuilding is the sole forum for multilateral policy discussions on shipbuilding issues. The working party consists of principal shipbuilding countries, such as Japan, member countries of the European Union (EU) and Korea. Since its first meeting in May 1966, the working party has been discussing market issues including the need to stabilize the supply-demand balance and issues regarding how to ensure normal competitive conditions.

　The working party on shipbuilding is currently addressing the following major issues:

　The combined newbuilding output of Japan and Korea accounts for about 70%of the world total. Therefore, the shipbuilding policies of the two countries significantly impact the business climate in the international market. Co-operation between the two countries is not just a bilateral issue, but is of vital importance to the steady development of the world shipbuilding industry. To this end, the Japanese and Korean governments have been exchanging views about twice a year through periodic bilateral consultations since 1984.

　

　European shipbuilders construct mainly passenger vessels and other high value-added vessels, and are major players in the world shipbuilding market together with their Japanese and Korean counterparts. They are also playing a leading role in the forums of international policy coordination, including the OECD Council Working Party on Shipbuilding, regarding the problems facing the international shipbuilding market. In view of their important presence, bilateral discussions between Japan and the EU have been held from time to time with a view to ensuring smooth policy co-ordination.

　

　China has successively completed new shipbuilding facilities and expansion of existing facilities for oceangoing vessels since 1980, and both the shipbuilding output and the newbuilding order intake have been rapidly increasing over the last few years. It is now the third biggest shipbuilding country in the world. Furthermore, as China continues to install more modern shipbuilding facilities, it is expected to have an even greater potential impact on the market in the future. In view of these circumstances, Japan began government-level dialogue with China in 2000. It will seek further opportunities for dialogue to achieve co-ordination with China on shipbuilding policy.

　In many developing countries, ships play a vital part in people's daily lives as well as in socio-economic development as an important means of passenger and cargo transport. However, many of these countries at present have inadequate facilities for shipbuilding and the maintenance of existing ships on account of the lack of financial and technical resources.

　Moreover, public concern has been growing in recent years about the safety of marine transport and the prevention of marine pollution, and the need for institutional arrangements to address these issues is now increasing more than ever before. At the same time in the context of the move toward eliminating substandard vessels, some countries are particularly interested in developing shipbreaking yards. Developing countries are now expecting Japan not only to supply vessels but also to provide specific international co-operation in both hardware and software aspects covering diverse areas including the construction of shipbreaking yards and guidance in pertinent legislation.

　Furthermore, to take note of the ripple effect of shipbuilding on the related industries, co-operation in the field of shipbuilding will Stimulate general economic development in those countries.

　To this end, Japan, availing itself of its advanced shipbuilding technology, will actively partake in economic and technical co-operation in the fields of shipping and shipbuilding.

　Grant Assistances under item 1) and Aid under items 2) through 4) are provided through the Japan International Cooperation Agency(JICA), while Loan Assistance under 1) are provided through the Japan Bank for International Cooperation (JBIC) in co-operation with the Ministry of Land, Infrastructure and Transport (MLIT) and the Overseas Shipbuilding Cooperation Center (OSCC).

　The Asian-Pacific Shipbuilding Experts Meeting (APSEM) is held once a year with the aim of facilitating regional co-operation in the field of shipbuilding and contributing to the development of shipbuilding in the countries of the region. At these meetings, shipbuilding experts from participating countries exchange opinions and information on shipbuilding. The 24th APSEM was held in November 2000 in Langkawi, Malaysia.

　

　International exchange is also ongoing in private sector organizations.

　Once a year there is a regular meeting of top executives from major shipbuilding concerns in Japan, Europe, the ROK and the US. This group (also known as the JEKU Top Executive Meeting) considers topics such as trends in the shipbuilding market, the supply-demand balances, and substandard vessels. In November 2000, the ninth meeting was held in Japan.

　The Shipbuilders' Association of Japan(SAJ)has been continued to hold expert meetings on new building requirement forecasts and shipbuilding capacity evaluations with both the Association of European Shipbuilders and Ship Repairers (AWES), the Korean Shipbuilders' Association (KSA) and The American Shipbuilding Association (ASA).

　Regarding the problem of substandard vessels, all the major shipbuilders' associations are committed to the activities of the Committee for the Elimination of Substandard Ships (CESS).

　At these meetings, shipbuilders are endeavoring to develop common perceptions and thereby encourage international co-operation at the private industry level.