Letter from the Chairman to Alan Johnson
MP the Chairman
Thank you for your Explanatory Memorandum dated
29 May 2002 which Sub-Committee B considered at its meeting on
24 June. As you know, I have already lifted the Scrutiny reserve
on this document.
Your EM makes it clear that the UK would wish
to see the Commission, on behalf of all Member States, take action
with the World Trade Organisation (WTO) against Korean subsidies.
In paragraph 11 you write "WTO action has, however, been
severely delayed because the Commission has since proposed the
reintroduction of limited shipbuilding subsidies". In the
same paragraph you confirm that the Commission's approach has
consistently failed to gain the support of Member States.
We should be grateful if you could clarify for
us whether or not a case has been lodged by the Commission in
the WTO against Korea. We note that your Department has consistently
argued in the Working Groups, and in the Council, to press the
Commission to launch WTO action against Korea as soon as possible,
and to de-link this from the proposal to reintroduce limited operating
subsides. We infer from this that a case has not been lodged,
that it cannot be lodged until there is agreement in the Council,
and that only Commission can lodge such a case on behalf of Member
States. We should be grateful for your confirmation that this
understanding of the situation is accurate.
We support, wholeheartedly, the policy which
the Government has adopted in this matter, and we support the
line taken by your Department in negotiation.
27 June 2002
Letter from Alan Johnson MP, Minister
of State for Employment Relations, Industry and the Regions to
Thank you for your letter of 27 June 2002 concerning
the EU/Korea dispute on shipbuilding, in which you ask whether
the Commission has launched WTO action against Korea. WTO action
has not yet been launched but the decision has not been taken
for the Commission to do this. The current position on this complicated
issue is as follows.
The Industry Council gave further consideration
to this matter at its 6 June meeting, which I attended, but again
the Commission's dual approach of WTO action linked to limited
subsidies was not supported. However, the Spanish Presidency/Commission
attempted to win French support with an amended proposal with
a clear commitment to include liquid natural gas carriers in the
subsidy proposal, albeit subject to further analysis of the market
and a reduced subsidy ceiling of 6 per cent for all the market
sectors covered. In addition, the amended proposal recommended
a further round of bilateral consultations with Korea, to be completed
by the end of September. If this brought no progress the Commission
would immediately launch WTO action and activate the subsidies
mechanism, as a "temporary defensive mechanism" until
March 2004. However, as France was in the middle of its general
election French Ministers could not give a view at that stage.
The UK continued to resist the reintroduction of subsidies and
pressed for the immediate launch of WTO action.
The new French administration has since given
its support to the Commission's amended proposal, thereby ending
the blocking minority that had been in place over the past year.
Following the change in the French position, the Spanish Presidency
was determined to finish this business before its term expired
and put this issue on the agenda of the 27 June Agriculture Council
as an "A" Point (ie for clearance without discussion),
despite the objections of the UK and its allies (Netherlands,
Finland, Sweden and Denmark). The Commission subsidies measure
was subsequently adopted by a Qualified Majority at the Agricultural
Council. We and our allies restated our opposition to the subsidies
proposal at the Council and voted against it, joining in a joint
declaration with our allies opposing it. We urged the Commission
to pursue quickly the talks with the Korean authorities and to
launch immediate WTO action if those negotiations were to fail.
The Commission will now hold a series of further
negotiations with the Korean authorities and we will keep a close
watch on how these progress. But much as we would like to see
a bilateral settlement, which we had seen as the best remedy,
we have no real expectation that the new round of negotiations
will be any more productive than the previous round, where Korea
failed to offer any effective bilateral solution and hence the
EU decision to pursue WTO action. Our current view therefore remains
that WTO action offers the only effective way to tackle Korean
unfair subsidies and if the new round of bilateral negotiations
is not successful the Commission will lodge, on behalf of Member
States who cannot themselves initiate such action, the WTO case
9 July 2002
Letter from the Chairman to Alan Johnson
Thank you for your letter dated 9 July which
Sub-Committee considered at its meeting on 22 July.
We are naturally disappointed that the Spanish
presidency was able to push through the proposal on subsidies
in the face of opposition from HMG, the Netherlands, Finland,
Sweden and Denmark.
We note that the Commission intends to hold
further negotiations with the Koreans before launching action
at the WTO. We look to the Government to keep the Commission focused
on the need for WTO action at the earliest possible opportunity.
23 July 2002