New directions in shipbuilding policy

The capacity of the world’s shipbuilding industr y has exceeded the demand for new ships for more than three decades. Thus shipyards have been protected for many years by some form of state aid in practically every country where shipbuilding is carried on. Negotiations aimed at restoring normal competitive conditions to the industry began in 1989. They were conducted under the auspices of the OECD and involved all the major shipbuilding blocs then in existence. Five years later an agreement was reached, but it is not yet in force. Thus, the European Council has decided to act unilaterally by introducing measures that will put into effect a state aid regime which is consistent with the main provisions of the OECD Shipbuilding Agreement and which places the shipbuilding industry on the same footing as other industries within the European Union. This paper traces the background to the development of this policy and considers some of its implications.