TALKS MAY PRODUCE ACCORD ON YARD AID

TALKS MAY PRODUCE ACCORD ON YARD AID

Industrialized countries are expected to promise at the end of May to stop subsidizing their domestic shipbuilders, a source close to the Organization for Economic Cooperation and Development said Wednesday.

A pledge for an early end to shipbuilding subsidies should be included in the final communique of the annual OECD ministerial meeting at the end of this month, according to the source who asked not to be identified.A liaison group between the OECD's Working Party No. 6 and South Korea met this week for the last time before the ministers will gather here on May 30-31.

The impetus to eliminate shipbuilding subsidies has come from the United States, whose delegation to the meeting was led by U.S. Deputy Trade Representative S. Linn Williams. Mr.Williams left Paris immediately after the talks ended and could not be reached for comment Wednesday; other members of the U.S. delegation refused requests for interviews.

A source gave this account of the two-day meeting, which wound up Tuesday evening:

* The liaison group agreed to recommend that the ministers express determination to reach agreement on the issue as soon as possible.

* Delegates agreed to set up two working groups to hammer out proposals on two of the biggest stumbling blocks. The two groups will start work in June, focusing on unfair pricing and a timetable for phasing out direct and indirect subsidies.

* Discussions on unfair pricing will center on the possibility of establishing an anti-dumping mechanism similar to the General Agreement on Tariffs and Trade.

* The timetable group will draw up a list of subsidies that can be scrapped immediately and those that will have to wait for legislative and other reasons.

* Other working groups might be formed on research and development subsidies and legal implications.

* Most delegates at this week's meeting now accept the U.S. proposal for an arbitration panel, whose decisions would be legally binding. Before the meeting, a number of countries had wanted an executive agreement, which could be quicker to implement as it would not be subject to parliamentary approval.

The latest round of talks also covered export subsidies for shipbuilding, and seemed to "move in the direction of abolishing tied-aid," the source said. This would leave only modest support "similar to the terms and conditions of the OECD consensus" on overall export subsidies, he added.

The problem of indirect aid to finance shipowners' new vessel purchases was not discussed in detail.

The liaison group will meet again here during the week of June 18, probably just after the working groups have convened, the source said.

The Shipbuilders Council of America had set a March 31 deadline for an agreement to phase out support, but dropped its petition for sanctions under the 1988 Trade Act after U.S. Trade Representative Carla Hills promised to seek a multilateral accord on the issue.