§ Mr. Flight
To ask the President of the Board of Trade if she will make a statement on the policy of Her Majesty's Government towards the proposed extension of the Seventh European Council Directive on aid to shipbuilding. 253W
§ Mr. Battle
The Government support the proposed extension of the Seventh Directive on aids to shipbuilding until the end of 1998 as it is conditional on the EU negotiating a tougher replacement regime. This will lead to an earlier reduction in EU state aids for this sector, which is a key Government objective.
The extension of the Seventh Directive is part of the EU contingency arrangements in the light of the continuing delay in US ratification of the OECD Shipbuilding Agreement and is accompanied by a Commission proposal for a replacement shipbuilding aids regime. The Government support the main thrust of this Commission proposal as its overall impact will be to reduce EU shipbuilding aids and it is a transitional regime leading to the final elimination of special shipbuilding aids after 5 years. It envisages the removal of contract related aid by the end of 2000 and switches the emphasis to improving the competitiveness of the shipbuilding industry. (Further details of these two proposals are contained in Explanatory Memorandum 11165/97 and 11167/97 which are available in the Library of the House).
The Government still believe that the OECD Shipbuilding Agreement offers the best multilateral basis for removing shipbuilding aids and for restoring normal competitive conditions to the world shipbuilding market and hopes that the US will be able to complete its ratification. However in the meantime it regards the EU contingency arrangements as the next best option.