Shipbuilders ask for EU help on Chinese subsidies

Shipbuilders ask for EU help on Chinese subsidies

POLITICO — 2024-01-23

News from Brussels

European shipbuilders want the European Commission to tell them what it plans to do to tackle Chinese subsidies for rivals that have undermined the European industry for years.

Since ships and shipping services aren't always imported directly into the European Union and often operate in international waters, it isn't always clear whether European firms can call on new legal tools to clamp down on unfair competition from global rivals.

The Shipyards' & Maritime Equipment Association told the EU executive's competition department earlier this month that it needs clarity on "which existing toolbox can be applied to shipbuilding."

It wanted to know if the new Foreign Subsidies Regulation can be used for building, maintaining and refitting ships and maritime equipment. A separate 2016 regulation against injurious pricing of vessels has been stalled because China and South Korea haven't ratified an international shipbuilding agreement that it rests on.

The new foreign subsidies rules are "applicable to foreign subsidies to EU-based activities, and therefore do not apply to the import in the EU of subsidized goods," Commission spokesperson Lea Zuber told POLITICO. Shipbuilding in China should be covered by World Trade Organization rules since it isn't an economic activity in the EU, she said.

Christophe Tytgat of the Shipyards' & Maritime Equipment Association said the EU industry will struggle to hold on to its remaining market share unless it gets help soon. Chinese companies are now looking at taking a larger bite of the cruise construction market, one of the EU's last strong points.

“Losing the industrial capability and know-how to build highly technological ships in Europe would become an economic security risk," he said in an interview.

"It’s a problem of strategic autonomy. If we don’t have the capacity to build ships ourselves, we will have to rely on rival countries,” he said.

EU shipbuilders have been struggling to keep up with Asian competitors for decades, with European yards supplying less than 10% of ships delivered to the global market in the first half of 2023, far away from the about 70% market share it had at the start of the 1960s. The EU industry is still only a significant global player in building cruise ships.

The Commission has shown itself willing to go after Chinese subsidies, opening an anti-subsidy investigation into Chinese electric vehicles last year and leaving the door open for another into windmills.

Losing out to Chinese shipyards will also mean a loss of construction capabilities in the EU, Tytgat said.

“We are not yet the solar panel industry,” he said, "but the EU needs to act."