EC allows Spanish yard subsidies

The European Commission has allowed Spain to subsidise its shipbuilding industry ” to offset the effects of unfair competition” from South Korea. Spain can pay subsidies of up to 6 % of a ship’s contract value for the construction of container ships, product and chemical tankers and LNG, if yards can show that a lower bid has come in from a Korean yard.

But Spain cannot pay the subsidies to state-owned yards until earlier payments to these yards, which ran foul of the EC, are returned.

A Brussels statement says: “The authorisation of the Spanish aid measures is based on the Council Regulation concerning a temporary defensive mechanism to shipbuilding the so called “TDM” which is part of the EU’s twin-track strategy to counter unfair practices from the Republic of Korea in the shipbuilding sector after failing to reach an amicable settlement with Korea.

In October 2002 the EU initiated WTO proceedings against Korea but while the case is being heard the EC is allowing member states to pay shipbuilding subsidies.