Cesa supports revival of OECD shipbuilding talks

The Community of European Shipyards’ Associations (Cesa) has backed calls for the resurgence of international shipbuilding talks at a scheduled meeting of the Organization for Economic Co-operation and Development in July. In a statement, Cesa’s secretary general Reinhard Luken said that European shipbuilding has been suffering as a result of uncontrolled expansion of the shipbuilding sector in Asia.

He said that comprehensive government intervention in the region was only aggravating the situation further, in reference to efforts by the Chinese and South Korean governments that have been ploughing billions of dollars to prop up their shipbuilding sectors through loans and guarantees.

“Cesa experts warned in 2006 that a massive supply and demand imbalance of at least 50% was building up. However, the expansion course mainly in Asia further accelerated and was stimulated by a distinct absence of globally applicable trade rules,” he said. “Since September 2008, demand for new ships declined 92%. During the first quarter of 2009 a global production volume of 11.5m gt was in stark contrast with new orders of 1.1m gt. In this situation, substantial parts of the global shipping and shipbuilding community will face bankruptcies,” he added.

Dr Luken said: “Cesa strongly supports an effective international agreement, which we believe could deliver vital contributions to ensure normal competitive conditions in the world shipbuilding market. If these would prevail, overcapacity would be far less likely in the future which in turn would reduce the damaging results of speculation.”

Dr Luken said that apart from the non-ratified OECD shipbuilding agreement the World Trade Organization framework fails to provide applicable rules for the shipbuilding sector. “Also anti-subsidy provisions of the WTO are difficult to apply as the European Union case against South Korea demonstrated a few years ago,” he said.

Cesa’s call for a level playing field through the OECD’s shipbuilding agreement follows similar protests by the Japanese government in May, when senior officials within the Ministry of Land, Infrastructure, Transport and Tourism said they would use the OECD forum in Paris to push for a renewal of talks on the shipbuilding agreement after a four-year hiatus.

Representatives of more than 21 countries are scheduled to meet on 9 July at the OECD headquarters in Paris for the organization’s Council Working Party on Shipbuilding. The meeting has been called as a platform to exchange views on the impact of the global financial crisis on shipbuilding and how member governments are addressing it.