OECD halts negotiations on shipbuilding agreement

The OECD said negotiations between 26 governments on an agreement to tackle market-distorting measures in the shipbuilding industry have been halted. The negotiations, involving OECD members and non-member countries which together account for 96% of world shipbuilding, started in 2002.

But Wilhelm Jaggi, Switzerland’s ambassador to the OECD, who was chairing the talks, concluded at a meeting in Paris this week that there is currently little prospect of agreement. Following frank and open discussions during the meeting, the chairman concluded that there was insufficient common ground for the successful conclusion of an agreement.

The 26 governments, which include 17 OECD members and nine non-members such as China, Brazil and Russia, agreed to a proposal from Jaggi to suspend the negotiations until such time as prospects for an agreement improve. This will allow the governments to reflect on their positions, to talk to each other and to observe developments in the market.

The OECD set up the special negotiating group on shipbuilding in September 2002 with the aim of cutting overcapacity and addressing plunging prices in the ailing shipbuilding industry. It was mandated to look at government support measures, pricing and other practices which distort normal competitive conditions in the industry.

The OECD said one of the main blockages in the talks concerns the question of whether pricing should be included in the agreement. There are also differences of opinion on the balance to be struck between limits on support measures and differential treatment for developing and emerging economies.