13 EU shipbuilding initiative (LeaderSHIP
2015)
| (25094)
15288/03
COM(03) 717
| Commission Communication: LeaderSHIP 2015 — Defining the Future of the European Shipbuilding and Repair Industry — Competitiveness through excellence
|
| Legal base | — |
| Document originated | 21 November 2003
|
| Deposited in Parliament | 27 November 2003
|
| Department | Trade and Industry
|
| Basis of consideration | EM of 15 December 2003
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| Previous Committee Report | None
|
| Discussed in Council | 26-27 November 2003 Competitiveness Council
|
| Committee's assessment | Politically important
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| Committee's decision | Not cleared; further information requested
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Background
13.1 LeaderSHIP 2015 is an ambitious initiative which seeks to
ensure the long-term prosperity of the European shipbuilding and
repair industry. The aim is to make EU shipbuilders, naval and
commercial, and marine equipment suppliers world leaders in their
field by 2015. It is part of the Council's new integrated strategy
for improving European industrial competitiveness and follows
similar exercises already undertaken in the pharmaceutical (G10
Medicines) and aerospace (STAR21) sectors.
13.2 The industry first proposed this initiative
to the Commission in March 2002, following which a High-Level
Advisory Group was established, supported by working groups for
eight key areas. It consists of leading industrialists, trade
association and union personalities, seven European Commissioners
and two Members of the European Parliament. As well as the Shipbuilders
& Shiprepairers Association (SSA), individual UK companies
are participating.
The Commission Communication
13.3 In a report published in October 2003, the High-Level
Advisory Group made a number of recommendations for improving
the competitiveness of the sector. The Communication explains
and assesses the issues addressed by the Group and comments on
its recommendations. These are as follows:
- The Group recommends that the
current EU approach on trade policy should be continued "with
determination"; that there should be full enforcement of
applicable World Trade Organisation (WTO) rules to shipbuilding
and that enforceable Organisation for Economic Cooperation and
Development (OECD) disciplines should be developed through a new
shipbuilding agreement by 2005 and an unambiguous interpretation
of existing rules. The Commission says that these recommendations
are consistent with its policy and that it has been particularly
active in pursuing this path in tackling the unfair trading practices
of the Republic of Korea.
- The Group recommends that investment in innovation
should be more strongly supported and better tailored to the specific
needs of the industry. The Commission states that it is aware
of the problem raised and is in the process of adapting the state
aid rules that apply to aid for innovation. The Minister of State
for Industry and the Regions, and Deputy Minister for Women and
Equality, at the Department of Trade and Industry (Jacqui Smith)[28]
comments that this is a reference to the Commission's new framework
on support measures for shipbuilding adopted on 26 November 2003.
Under the framework, which comes into effect on 1 January 2004,
the state aid rules on innovation have been adapted to take account
of the requirements of the industry and the level of aid has been
doubled from 10% to a maximum of 20%.
- The Group recommends that the possibility should
be explored of a European body, such as the European Investment
Bank, taking a lead in financing shipbuilding projects. The Commission
agrees with this recommendation.
- The Group recommends a number of measures to
improve maritime safety and environmental protection. The Commission
says that these are very much in line with its existing policies.
- The Group proposes a "Europeanised"
approach to the naval shipbuilding industry, through greater co-operation
and consolidation between EU yards and suppliers and the harmonisation
of the operational requirements and procurement programmes of
national navies. The Commission supports these recommendations.
- The Group makes a number of proposals aimed at
giving greater protection to the intellectual property rights
of European yards and suppliers. The Commission supports these.
- The Group recommends various forms of action
to address a wide range of skills and training issues. The Commission
agrees with these recommendations and proposes to develop targeted
activities through the social dialogue that has recently been
established in the sector.
- The Group advises that consolidation among European
producers across the entire marine manufacturing sector, including
the Accession States, many of which have major shipbuilding interests,
should be facilitated in order to achieve a sustainable future
industry. The Commission agrees, although noting that this is
primarily the responsibility of the industry, while Member States
have a key role to play in matters of defence.
13.4 The Commission calls on the Member States to
cooperate with it in developing and implementing the approach
outlined in the Communication, which was adopted at the Competitiveness
Council of 27 November 2003. It undertakes to keep the Council
informed as the LeaderSHIP 2015 initiative progresses.
The Government's view
13.5 The Minister says that the Government welcomes
the LeaderSHIP 2015 initiative and broadly supports the High Level
Advisory Group's recommendations, although it will need to look
closely at the detail of some of these:
"For example, while we support the changes the
Commission are introducing on innovation aid we will need to study
the detail of these in the new framework when this becomes available
(it is expected to be published in the Official Journal by the
end of the year [2003]). It should be noted that, as with the
current state aid regime, the provisions of the framework are
permissive rather than mandatory and it is a matter for Member
States to decide whether to provide the industry with the permitted
support. Any applications for support from UK yards for innovation
aid, or for any other aid allowed under the framework, will need
to be rigorously assessed against the criteria of the Department's
new arrangements for business support, including budgetary considerations.
"The Government welcomes the importance that
the Communication attaches to skills and training for improving
the competitiveness of the industry. It also welcomes the Commission's
proposal to follow up the Group's recommendations through the
social dialogue process, in which the SSA is participating.
"The Government believes that the call for the
harmonisation of the operational and procurement requirements
of national navies is outside the Commission's area of competence.
Moreover, the General Affairs and External Relations Council
(GAERC) has just agreed to create a new agency for capability
development, which is designed, among other things, to provide
a forum in which Member States, in co-operation with the Commission
where appropriate, can look at market issues where they touch
on defence matters.[29]
"Following representations made by the UK, supported
by several other Member States, reference to naval shipbuilding
was removed from the draft Conclusions to the 26-27 November 2003
Competitiveness Council. The Government will nevertheless maintain
a close watch and seek clarification of the potential impact of
the LeaderSHIP 2015 initiative on European defence industrial
policy as necessary.
"The Government will submit further Explanatory
Memoranda as concrete proposals emerge."
13.6 The Minister says that the Government has discussed
the contents of the Commission Communication with the UK industry
through the SSA, which supports the initiative. The Government
has also discussed LeaderSHIP 2015 with the Commission and other
Member States, for example in the Working Party on Competitiveness
and Growth (Industry). He adds that Council Regulation 1540/98
of 29 June 1998 governs state aid to the commercial shipbuilding
and repair industry. The scope of this Regulation extends to
the European Economic Area (EEA), as EEA yards are, for the purposes
of applying the Regulation, considered as Community yards. This
will continue to be the case when the new Framework on State Aid
to Shipbuilding replaces the Shipbuilding Regulation with effect
from 1 January 2004.
Conclusion
13.7 Commenting on 15 May 2003 on the Commission
Communication, European Defence — Industrial and Market
Issues — towards an EU Defence Equipment Policy, the
Secretary of State for Defence noted that the Commission recognised
that the development of capability and defence equipment demand
was an issue for the Member States.[30]
He warned, however, that the question of competence could arise
if the Commission were to pursue some of the action points it
identified for a Regulation, for instance on procurement rules.
The Government's success in having the reference to naval shipbuilding
removed from the Conclusions of the November 2003 Competitiveness
Council demonstrates that it has the support of other Member States
in maintaining a firm line on this issue. We ask him to inform
us of any significant developments in future.
13.8 The Commission comments that it is particularly
active in pursuing the Republic of Korea through the WTO Dispute
Settlement Procedure. We ask the Minister whether this long drawn-out
procedure is proving effective in this case and whether the recommendations
of the LeaderSHIP 2015 Advisory Group suggests that it is advocating
a tougher and more determined stance.
13.9 Meanwhile, we shall not clear the document.
28 The Secretary of State for Trade and Industry has
primary responsibility for this issue. The First Minister for
Scotland, the Secretary of State for Northern Ireland and the
First Secretary of the National Assembly for Wales also have an
interest, as does the Minister for Defence Procurement in view
of the defence industrial policy issues raised. Back
29
(25035) -; see HC 63-xxxviii (2002-03), para 18 (19 November 2003). Back
30
(24451) 8484/03; see HC 63-xxiii (2002-03), para 22 (4 June 2003). Back
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