An agreement to phase out shipbuilding subsidies in industrialized countries must be reached by the end of this year or negotiations probably will collapse, sources close to the talks said Tuesday.
The chairman of the Organization for Economic Cooperation and Development's Working Party No. 6 on shipbuilding will present a compromise draft agreement to the 17 member countries in November after a round of bilateral consultations, one source said after a day and a half of meetings wound up here.This will give governments and negotiators time for reflection before a final meeting to adopt the text is held in late November or early December, he added.
"Everyone wants an agreement, but three major points of disagreement are still outstanding," another source said.
However, the chief spokesman for the U.S. shipbuilding industry has already pronounced the talks a failure.
Little progress has been made on resolving differences over unfair pricing, domestic shipbuilding credits and the U.S. Jones Act since the OECD ministerial meeting at the beginning of June, one missed deadline for an agreement to be signed, a source here said.
The end-1991 deadline "should concentrate the minds," he added. But if this one comes and goes without an agreement signed, the damage to credibility could be too great to permit the negotiations to continue, the source said.
Nonetheless, most obstacles have been cleared on export credits, said this source. The working party has agreed to adhere to the interest rates applied by the OECD consensus on export credits, aimed at stopping unfair competition for sales to developing countries.
A timetable for scrapping shipyard subsidies also will be included in the chairman's proposal to be drawn up by Georg Lennke, Austrian ambassador to the OECD. The most likely solution is for all supports to be abolished over three years, "with a five-year lead time for convincing exceptions," one source said. Debate also is continuing over the types of research and development aid that should be included in the pact.
John Stocker, president of the Shipbuilders Council of America, said this week: "As far as I'm concerned the talks have failed . . . There are so many differences of opinion that the likelihood of (the negotiators) reaching an agreement now or in six to eight weeks are very, very slim."
The council turned its back on the international talks - which began in 1989 largely at the behest of U.S. shipbuilders - earlier this year in favor of a push for anti-subsidy legislation pending in the House.
The bill, which is before the House Ways and Means Committee, would slap sanctions on owners of vessels built with foreign subsidy that call at U.S. ports, if the subsidy is not repaid.