The European Union may end subsidies to the bloc's shipbuilding sectors in spite of worries about stepped up competition from cheap South Korean yards.
British government officials said abolition of so-called operating aid for European shipbuilders looks likely when European industry ministers meet May 7.''We are cautiously optimistic this can be done,'' Bill Stow, European affairs director at Britain's Department of Trade and Industry, told a conference here on subsidies.
Europe's Competition Commissioner Karel Van Miert warned at the same conference that the South Korean situation was being used by some anti-abolitionists as a reason not to scrap the aid but he added that it was unlikely to swing the argument.
Britain, the current agenda-setter for EU business as president of its Council of Ministers, is pushing hard for operating aid to end but faces opposition from a handful of countries, led by France. Paris wants payments to continue for a few more years at least.
The British EU presidency ends on June 30.
The European Commission last year proposed to end operating aid to the struggling sector after 2000, but industry ministers from the 15 EU nations disagreed on the plan when discussing it for the first time last November. The aid now stands at 9 percent of the contract price of a vessel.
The European decision to end operating aid would not be conditional on a successful outcome to the current Organization for Economic Cooperation and Development talks on aid to the sector.
Apart from abolition, the level of operating aid that might be offered in a phaseout period, the length of the phaseout period itself, and the issue of whether shipbuilders could claim EU and regional subsidies are still being discussed by national experts ahead of the May meeting. A two-year phaseout of aid looks likely.