In-depth | STATE AID


Deliberation on state aid for yards enters critical phase


Te 6 December was the deadline for submissions regarding the European Commission’s (EC) consultation paper on the framework of state aid for shipbuilding; paving the way for a decision on what support shipbuilders can expect, when the current agreement expires on 31 December 2011.


submissions to retain the framework aſter the deadline and to suggest amendments they would like to see introduced post 2011. The consultation process is taking


M


place against the backdrop of European shipbuilders’ concerns over state aid provided to Asian shipbuilders, Anthony Woolich competition partner at law firm Holman Fenwick Willan points out. “A key concern for the European industry will be that whatever structure emerges will have the effect of having a level playing field with Asia”. Other than the concern not to lose subsidies, shipping has moved to Asia to a massive extent in recent years and “this looks like a trend that will continue”. European shipbuilders have recently


been raising concerns that Asian yards are beginning to compete in niche areas on which they have concentrated aſter being out-bid on series ship construction. However, shipbuilding is still an important


industry in the European Union (EU) and the problem it has, Mr Woolich says is: “the European Commission does not like having specific guidelines for specific sectors. Tat is a real issue. It is not necessarily the end of the story.” In EU competition law there is still a block exemption for liner consortia. “In order to retain the block exemption for


liner consortia, the industry had to persuade the Commission that there were specific things about cooperation arrangements in maritime matters that merit having a specific piece of legislation. Te question is whether you can make the same case for shipbuilding. Te counter-argument is that there are lots of other industries who have moved their activities to Asia at the expense of Europe. “What is special about shipbuilding that it


30


ajor shipbuilders in Europe, and other interested parties, have had two months to prepare


needs to have special rules?” Tere are several options going forward,


whether to extend the regime, restrict it or dispense with it altogether, Mr Woolich explained. He said he hopes the Commission will look at the issue with an open mind. Commission vice president in charge of competition policy, Joaquín Almunia, has already indicated that this will be the case. As Commission maritime transport


director Fotis Karamitsos pointed out at the London Shipping Law Centre’s Cadwallader lecture in November: “We are under the strict obligation to carry out, each time we propose a piece of regulation, a full impact assessment study which shall not analyse only the qualitative effects of what we will finally propose, but shall show a full quantitative analysis. Te basic pre-requirement is to have wide consultation with all interested parties.” Te other interesting issue Mr Woolich


highlighted in relation to the consultation is the “greener ship concept”. Holman Fenwick Willan has been advising on this and on concepts for greener ships. Although, he could not comment on this


in detail he said: “Te idea that aid should be linked to having greener ships is a very interesting concept, which ties in with other policy objectives”. He said he could see that would be “interest and attraction to a lot of people in innovation aid being conditional on the result of the innovation being a greener ship.” Tat concept was, he believed, one possible outcome of the review. Te linkage between innovation aid and greener ships was made in the questionnaire put out as part of the consultation process, notably as to whether innovation aid should be retained only if linked to greener ships. Te framework: “provides the rules for


the Commission to assess whether state support for shipbuilding is compatible with


the EU internal market”, a briefing note put out by Holman Fenwick Willan in October explained. The current framework was effective from 1 January 2004 and has been extended twice since then. Shipbuilding, the note explained, is one of


the few sectors still subject to a specific state aid regime which derogates from the general state aid rules: “Te explanation being that this derogation is justified by historical features of the industry and certain features of the markets: in particular, shipbuilding is a global market by nature and is recognised as suffering from cyclical over-capacity”. In the framework, definitions of


shipbuilding and the different categories of vessel eligible for aid under it are set out. Tere are specific provisions for innovation aid, regional aid, closure aid, export credits, employment and development aid. In its industry questionnaire, DG


Competition stressed that innovation aid to shipbuilding is “unique and has been justified by the yard industry’s short production series, vessel size, value, complexity and the fact that prototypes are generally used commercially,” Holman Fenwick Willan explained. Other questions included whether there were projects that could be completed without state aid. Innovation aid in Germany alone has


been estimated to be worth €22 million to the shipbuilding sector this year. According to Werner Lundt, general


managing director of the Hamburg-based German Shipbuilding and Ocean Industries Association (VSM) German yards have been concentrating more on the construction of specialised ships as competition with Far Eastern yards was difficult for standard vessel types. Te move to specialised ship production


was easier than might have been expected, he said as German yards have a history in


The Naval Architect January 2011


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56  |  Page 57  |  Page 58  |  Page 59  |  Page 60  |  Page 61  |  Page 62  |  Page 63  |  Page 64  |  Page 65  |  Page 66  |  Page 67  |  Page 68  |  Page 69  |  Page 70  |  Page 71  |  Page 72