COMMISSION OF THE EUROPEAN COMMUNITIES

This sixth report from the Commission to the Council on the situation in world shipbuilding follows the Commission's obligation to report on the situation in the world shipbuilding market, laid down in Article 12 of Council Regulation (EC) No. 1540/98¹ and is in line with the previous five reports². Moreover, it responds to the request expressed by the Council during its meeting on 6 June 2002, namely to report on latest developments in the shipbuilding sector in time for the Industry Council in November³.

　

The Council decided on 27 June 2002 that the Commission should make a final effort to solve the problems stemming from certain business practices by Korean yards and achieve an amicable agreement with South Korea by 30 September 2002 at the latest. Should the Commission report the failure of these talks, it would be authorised to request a dispute settlement at the WTO. At the same time a temporary defensive mechanism⁴ should be authorised for certain market segments and for a limited period only.

　

Two rounds of talks with the Government of Korea and shipyard representatives were conducted by the Commission (26-27 August 2002 in Seoul and 24-27 September 2002 in Brussels), but positions could not be reconciled and the talks therefore failed.

　

In the absence of a negotiated solution, the Commission has initiated WTO action. The Commission's Decision on WTO action has been published in the Official Journal of 19 October and the request for bilateral consultations with the Republic of Korea has been introduced on 21 October. A first consultation meeting will take place before the end of November.

　

Given that fully consolidated market data for the year 2002 will only be available towards the end of the first quarter of 2003, this report is limited to the key market developments in the first half of 2002.

　

In addition it provides an update of the previously undertaken cost investigations and summarises the new cost investigations made since the presentation of the fifth report.

　

As with previous reports, certain underlying key elements, e.g. concerning scope and methodology of the market monitoring undertaken by the Commission, are not repeated here. Those elements are covered in the previous reports and are listed in the introduction to the fifth shipbuilding report.