DEADLINE NEARS FOR US TO SIGN SHIPBUILDING SUBSIDY TREATY

DEADLINE NEARS FOR US TO SIGN SHIPBUILDING SUBSIDY TREATY

Time is running out for the United States to sign onto a landmark international treaty for ending shipbuilding subsidies.

Legislation approving the shipbuilding deal, negotiated through the Organization for Economic Cooperation and Development, should be approved before Jan. 1, 1996. The Clinton administration's bill has yet to be introduced. And in the meantime, a key legislator has voiced opposition to the pact.That worries government and industry officials here and abroad who support the treaty. They are worried that faltering in the United States, where the subsidy-curbing campaign was born in 1989, will lead to an unraveling of support among OECD signatories.

There is a glimmer of hope, however. Sen. John Breaux, D-La., a Senate maritime advocate, will introduce legislation of his own today.

The bill would implement an agreement covering the construction and repair of ships of more than 100 gross tons. It eliminates subsidies and other market distorting practices and provides mechanisms to enforce new prohibitions. The pact also sets common rules for domestic and export credit financing, and rules governing injurious pricing to prevent dumping.

But Sen. Trent Lott, R-Miss., said he harbors grave reservations about the agreement.

''I don't think much of the OECD agreement," Mr. Lott said in an interview Friday. "I think we (the United States) got taken" in the negotiations.

The OECD's shipbuilding committee chairman, Per Martin Olberg, will visit Washington next week. Mr. Olberg, Norway's ambassador to the OECD, downplayed the significance of his visit, calling it a courtesy call.

There may be a measure of diplomacy, however, in Mr. Olberg's characterization. U.S. and foreign representatives said more candidly he is being dispatched here to address U.S. inaction and its potential consequences.

The Norwegian ambassador said he has no indication the agreement won't take effect Jan. 1 and asserted that all delegations are working to finalize approvals before the end of this year. But other signatories to the agreement, which includes the United States, the European Union, Norway, Japan and South Korea, also have yet to complete work on it.

PANEL TO MEET IN MID-DECEMBER

Mr. Olberg said his shipbuilding subsidy committee is scheduled to convene in mid-December. At that time, the committee will address the problem of non-ratification, if needed, he said. He said he does not expect support to fall apart if the year-end deadline is not met.

Another foreign official who asked not to be named expressed the opposite view. Noting that Japan also is not in a good position to sign off on the agreement, and that the so-called standstill provisions in last year's agreement expire Dec. 31, he indicated there is real danger that advocates will see the "package start to unravel."

Standstill provisions prevent signatory countries from adding new yard subsidies or enlarging existing programs during the time period set aside for the gaining all signatories' final approval.

The foreign official said that congressional attention to the budget and other issues had hindered progress on a bill implementing the treaty.

A major segment of the U.S. shipbuilding industry, represented by the American Shipbuilders Association, vigorously opposes the OECD pact. The group, which represents six of the nation's largest yards, has favored direct government subsidies that it says are needed to help make the transition from defense to peacetime ship construction.

'GOOD DAY' FOR ASSOCIATION

''Every day that goes by that it (an implementation bill) doesn't pass is a good day for the American Shipbuilding Association," said R.T.E. ''Tom" Bowler III, the association president.

There may not be sufficient time left for Congress to act, especially if multiple House and Senate committees assert jurisdiction, Mr. Bowler said.

The chance that international commitments will fizzle increases if the first few months of next year go by without U.S. approval, he said.

"We are increasingly concerned" and hope that Congress will pick up the pace, an administration trade official said. The danger that international support will fall off without U.S. action is genuine, he said.

"It's not so much a problem" if other countries believe U.S. inaction stems from a lack of time or the press of budget matters, he said. "But it is a danger if they just perceive nothing is ever going to happen."

"If it doesn't pass this year, it doesn't turn into a pumpkin," said Penny Eastman, president of the Shipbuilders Council of America, the U.S. shipyard faction that strongly supports the OECD pact.

'CAN DO IT NEXT YEAR'

''It's not that the support is not there," Ms. Eastman said. "We can do it next year."

Mr. Lott, who is both the chairman of the Surface Transportation and Merchant Marine Subcommittee of the Senate Commerce, Science and Transportation Committee and the majority whip, the GOP's second-highest Senate post, opposes implementation and would raise procedural objections to having it included in the annual budget reconciliation package.

"We had been working on legislation with the administration," an aide to Mr. Breaux said Tuesday. "But other issues, where there were differences of opinion, crept into the way."

The Finance Committee has jurisdiction over the bill, but Mr. Lott is considering a Commerce Committee hearing into the issue of shipbuilding subsidies later this year, a Commerce staffer said.