ext/celex/31987L0167

12 . 3 . 87 Official journal of the European Communities No L 69 / 55

COUNCIL DIRECTIVE

of 26 January 1987

on aid to shipbuilding

( 87 / 167 / EEC )

THE COUNCIL OF THE EUROPEAN COMMUNITIES , Whereas, a competitive shipbuilding industry is of vital interest to the Community and contributes to its economic and social development by providing a substantial market for a range of industries , including those using advanced Having regard to the Treaty establishing the European technology; whereas it contributes also to the maintenance Economic Community, and in particular Articles 92 ( 3 ) ( d) of employment in a number of regions, including some and 113 thereof, which are already suffering a high rate of unemployment; whereas this is also true of ship conversion and ship repair ; Having regard to the proposal from the Commission ( 1 ),

Having regard to the opinion of the European Whereas it is now clear that the sector is suffering from a Parliament ( 2 ), fundamental structural crisis , rather than a cyclical problem of demand , in which it would be short-sighted to continue to respond to the aggravation of the crisis by multiplying the volume of operating aids which tend to Having regard to the opinion of the Economic and Social increase the segregation of the internal market and Committee ( 3 ), constitute a continuing drain on the scarce budgetary resources of the Member States without inducing any lasting improvement in the competitiveness of the Whereas Council Directive 81 / 363 / EEC of 28 April 1981 Community's shipbuilding industry; on aid to shipbuilding ( 4), as last amended by Directive 85 / 2 / EEC ( 5 ), will expire on 31 December 1986 ;

Whereas , in view in particular of the cost differences which Whereas, although progress had been made in the exist for most categories of ship in comparison to shipyards structural adaptation of the Community's shipbuilding in some third countries , the immediate abolition of aid to industry since the adoption of Directive 81 / 363 / EEC (the the sector may not be possible in view of the need to Fifth Directive), the world crisis in shipbuilding continues encourage restructuring in many yards ; whereas a tighter to deepen together with the imbalance between and more selective aid policy is nevertheless necessary in shipbuilding capacity and demand , causing prices to fall to order to support the present trend in production towards a level which is often below the fixed cost of European more technologically advanced ships and in order to ensure shipyards ; whereas the price problem has been aggravated fair and uniform conditions for intra-Community by the development of very cost-competitive capacity in competition ; whereas such a policy constitutes the most third countries particularly in the production of appropriate approach in terms of ensuring the maintenance standardized vessels in series ; of a sufficient level of activity in European shipyards and thereby the survival of an efficient and competitive European shipbuilding industry ; Whereas the recovery in demand envisaged in the Fifth Directive has not taken place , given that the demand outlook for shipbuilding is not encouraging and in view of Whereas these considerations call for a differentiated the fact that any resumption in demand is likely to lead approach with regard to the various types of aid at present immediately to an expansion of production facilities in certain third countries ; granted by Member States; whereas a level of production aid which is geared towards supporting production where the Community's cost disadvantage is lowest and where there is a real possibility of restoring long-term competitiveness seems to offer the most appropriate approach in response to the abovementioned objectives of O ) OJ No C 281 , 7 . 11 . 1986 , p. 4 . ( 2 ) OJ No C 7 , 12 . 1 . 1987 . improving competitiveness and reducing intra-Community ( 3) Opinion delivered on 16 December 1986 ( not yet published in distortions in trade ; whereas this level of aid should be the Official Journal ). attained by means of a common maximum ceiling to be ( 4 ) OJ No L 137 , 23 . 5 . 1981 , p. 39 . revised periodically after consultation with the Member ( s ) OJ No L 2 , 3 . 1 . 1985 , p. 13 . States and on the basis of an independent expert study

No L 69 / 56 Official Journal of the European Communities 12 . 3 . 87

HAS ADOPTED THIS DIRECTIVE : which takes due account of the expected long-term development of the shipbuilding industry so as to ensure both the optimal activity levels justifiable on economic grounds and the continuation of structural adjustment ; whereas , since increased efficiency is a principal objective CHAPTER I pursued by the premises of this Directive , the yearly review of the production aid ceiling should always aim at its GENERAL progressive reduction ; whereas it is necessary , in order to avoid discrimination , to make all forms of operating aid subject to the common maximum ceiling , including loss compensation and such aid as is granted indirectly through Article 1 third persons ; whereas , in order to permit all Member States to compete equally and in view of the persistent For the purpose of this Directive the following definitions structural disparities of yards in the different Member shall apply: States , it may be necessary to authorize restructuring aid to enable desirable structural changes to be carried out provided that they do not lead to increases in capacity; whereas , although it is proposed to treat ship conversion in ( a ) 'shipbuilding': the same way as shipbuilding , it is not appropriate to means the building in the Community of the following permit aid to the ship-repair sector in view of the metal-hulled sea-going vessels : continuing overcapacity in this sector , except for closure — merchant ships for the carriage of passengers and research and development aid ; and / or cargo , of not less than 100 grt , — fishing vessels of not less than 100 grt , — dredgers or ships for other work at sea of not less Whereas the restructuring process in Spain and Portugal is than 100 grt excluding drilling platforms , less advanced than in the other Member States and the — tugs of not less than 365 kW ; immediate application of the common maximum ceiling for production aid may cause some difficulties in these two Member States , particular arrangements should be allowed to enable them gradually , after a further period of ( b ) 'ship conversion ': restructuring, to comply with the aid regime applicable to means the conversion in the Community of the Community as a whole ; metal-hulled sea-going vessels , as defined in ( a), of not less than 1 000 grt, on condition that conversion operations entail radical alterations to the cargo plan , the hull or the propulsion system or the passenger Whereas , in order to ensure full transparency , which is accommodation ; a vital element in assuring the proper functioning of a Community aid system both in respect of operational aids and burden-sharing with regard to restructuring efforts , it will be necessary to strengthen the notification rules , ( c) 'ship repair': including notification of aid to shipowners for the building means the repair of the vessels referred to in ( a ); or conversion of ships , together with the a posteriori reporting obligations of Member States as regards actual aid payments and the achievement of restructuring objectives ; ( d ) 'aid ': means State aid within the meaning of Articles 92 and 93 of the Treaty , including not only aid granted by the State itself but also that granted by regional or local Whereas the reductions in world shipping capacities should authorities and any aid elements contained in the be made in such a way as to cause the least possible damage financing measures taken by Member States in respect and to be as fair as possible ; of the shipbuilding or ship repair undertakings which they directly or indirectly control and which do not count as the provision of risk capital according to standard company practice in a market economy . Whereas additional measures should be adopted in order to Such aid may be considered compatible with the alleviate the social and regional consequences of the common market provided that it complies with the restructuring of the shipbuilding sector ; criteria for derogation contained in this Directive ;

( e) 'contract value before aid ': Whereas Community measures should also be adopted in order to improve demand for new ships from Community means the price laid down in the contract plus any aid shipyards, granted directly to the shipyard .

12 . 3 . 87 Official Journal of the European Communities No L 69 / 57

Article 2 However, the Commission shall pay particular regard to ensure that the aid for the building of small specialized No aid granted pursuant to this Directive may be vessels , a market segment normally served by small yards , conditional upon discriminatory practices as to products in particular small ships costing less than 6 million ECU , originating in other Member States . and for which the competition is mainly inter-European , is kept at the lowest possible level , nevertheless allowing for the particular situation in Greece .

Article 3

Aid to shipowners 3 . The ceiling shall be reviewed every 12 months , or sooner if warranted by exceptional circumstances , with the 1 . All forms of aid to shipowners or to third parties which aim of progressively reducing the ceiling. In its review of are available as aid for the building or conversion of ships the ceiling, the Commission shall also ensure that there are shall be subject to the notification rules in Article 10 . no undue concentrations of shipbuilding activities in specific market segments to an extent contrary to Community interests . These aids shall include credit facilities , guarantees and tax concessions granted to shipowners or third parties for the purposes referred to in the first subparagraph . 4 . The ceiling shall apply not only to all forms of production aid — whether under sectoral , general or 2 . The grant equivalent of these aids shall be subject in regional aid schemes — granted directly to the yards but full to the rules set forth in Article 4 and the monitoring also to the aid covered by Article 3 ( 2). procedures laid down in Article 11 , where these aids are actually used for the building or conversion of ships in Community shipyards . 5 . The combined effect of aid under the various aid schemes applied must in no case exceed the ceiling fixed 3 . Aid granted by a Member State to its shipowners or to according to paragraph 2 ; the granting of aid in individual cases shall not necessitate prior notification to , or third parties in that State for the building or conversion of authorization from , the Commission . ships may not lead to distortions of competition between national shipyards and shipyards in other Member States in the placing of orders . i However, where there is competition between yards in different Member States for a particular contract, the 4 . These provisions shall be entirely without prejudice to Commission shall require prior notification of the relevant any future Community rules on aid to shipowners. aid proposals at the request of any Member State . In such cases , the Commission shall adopt a position within 30 days of notification ; such proposals may not be implemented before the Commission has given its authorization . By its decision in such cases the Commission CHAPTER II shall ensure that the planned aid does not affect trading conditions to an extent contrary to the common interest. OPERATING AID

Article 4 6 . Aid in the form of credit facilities for the building or conversion of vessels complying with the OECD Council resolution of 3 August 1981 ( Understanding on Export Contract-related production aid Credits for Ships) or with any agreement replacing the Resolution shall not be counted within the ceiling. Such aid 1 . Production aid in favour of shipbuilding and ship may be considered compatible with the common market conversion may be considered compatible with the provided that it complies with the abovementioned common market provided that the total amount of aid Resolution or any agreements which replace it . granted in support of any individual contract does not exceed , in grant equivalent , a common maximum ceiling expressed as a percentage of the contract value before aid, hereinafter referred to as the ceiling . 7 . Aid related to shipbuilding and ship conversion granted as development assistance to a developing country shall not be subject to the ceiling. It may be deemed compatible with 2 . The ceiling shall be fixed by the Commission with the common market if it complies with the terms laid down reference to the prevailing difference between the cost for that purpose by OECD Working Party No 6 in its structures of the most competitive Community yards and agreement concerning the interpretation of Articles 6 to 8 the prices charged by their main international competitors of the Understanding referred to in paragraph 6 of this with particular regard to the market segments in which the Article or with any later addendum or corrigendum to the Community yards remain relatively most competitive . said Agreement.

No L 69 / 58 Official Journal of the European Communities 12 . 3 . 87

Prior notification of any such individual aid proposal must no shipbuilding facilities or to investments in a Member be given to the Commission . The Commission shall verify State's only existing yard , provided that the effect of the the particular development content of the proposed aid and yard in question on the Community market is minimal . satisfy itself that it falls within the scope of the agreement referred to in the preceding subparagraph . 3 . In accordance with paragraph 1 , investment aid may be deemed compatible with the common market provided that : Article 5 — the amount and intensity of such aid are justified by the Other operating aid extent of the restructuring involved ,

— it is limited to supporting expenditure directly related to 1 . Aids to facilitate the continued operation of the investment . shipbuilding and ship conversion companies , including loss compensation , rescue aid and all other type of operating aid not directly supporting particular restructuring measures covered in Chapter III , may de deemed 4 . In examining the aid referred to in paragraphs 1 and 3 , compatible with the common market provided that such the Commission shall take account of the extent of the aid together with production aid allocated directly to contribution of the investment programme concerned to individual shipbuilding and ship conversion contracts in such Community objectives for the sector as innovation , accordance with Article 4 (4 ) does not exceed the ceiling specialization , working conditions , health , safety and expressed as a percentage of the aid recipient's annual environment . turnover in shipbuilding and ship conversion .

2 . It shall be incumbent on the Member States to furnish evidence of the extent to which the turnover and losses of Article 7 the recipient of the aid result , on the one hand , from shipbuilding and ship conversion and , on the other, from Aid for closures its other activities , if any , and , if some of the aid is intended to offset losses or expenditure arising from the restructuring measures referred to in Chapter III , to 1 . Aid to defray the normal costs resulting from the identify and specify those measures . partial or total closure of shipbuilding or ship repair yards may be considered compatible with the common market provided that the capacity reduction resulting from such aid is of a genuine and irreversible nature.

CHAPTER III 2 . The costs eligible for such aid are , in particular:

RESTRUCTURING AID — payments to workers made redundant or retired before legal retirement age ,

Article 6 — counselling services to workers made or to be made „ redundant or retired before legal retirement age Investment aid including payments made by yards to facilitate the creation of small undertakings , 1 . Investment aid , whether specific or non-specific, may not be granted for the creation of new shipyards or for — payments to workers for vocational retraining, investment in existing yards if such aid would be likely to increase the Member States' shipbuilding capacity . — expenditure incurred for the redevelopment of the yard , its buildings , installations and infrastructure for use other than that specified in Article 1 ( a ), ( b ), and ( c ), Such aid may not be granted for ship repair unless linked to a restructuring plan which results in an overall reduction in — in the event of total closure of a yard , the residual book the ship repair capacity of the Member State concerned . In value of its installations ( ignoring that portion of any this context the Commission may take into account revaluation since 1 January 1982 which exceeds the capacity reductions carried out in the immediately national inflation rate). preceding years .

3 . The amount and intensity of aid must be justified by 2 . Paragraph 1 shall not apply to the opening of a new the extent of the restructuring involved , account being shipyard in a Member State which otherwise would have taken of the structural problems of the region concerned

12 . 3 . 87 Official Journal of the European Communities No L 69 / 59

and , in the case of conversion to other industrial activities , — the shipbuilding industry or — should only certain of the Community legislation and rules applicable to the yards be involved , those yards — has undertaken a new sector concerned . systematic and specific restructuring programme , aiming at capacity reductions , which can be considered capable of allowing it, within four years , to operate competitively , Article 8 — the aid is progressively reduced . Aid for research and development

1 . Aid to defray expenditure by shipbuilding and ship repair undertakings for research and development projects CHAPTER V may be considered compatible with the common market. MONITORING PROCEDURE

2 . For the purposes of this Directive , the eligible costs Article 10 shall be only those relating to fundamental research , basic industrial research and applied research and development, 1 . In addition to the provisions of Articles 92 and 93 of all as defined by the Commission in Annex I to the Community framework for State aids for research and the Treaty , aid to shipbuilding, ship conversion and ship repair undertakings covered by this Directive shall be development {*), excluding those related to industrial application and commercial exploitation of the results . subject to the special notification rules provided for in paragraph 2 .

2 . The following shall be notified to the Commission in CHAPTER IV advance by the Member States and authorized by the Commission before they are put into effect: SPAIN AND PORTUGAL ( a ) any aid scheme — new or existing — or any amendment of an existing scheme covered by this Article 9 Directive ;

1 . Chapter II of this Directive shall be applicable neither (b ) any decision to apply any general or regional aid in Spain nor, subject to paragraph 3 of this Article , in scheme to the undertakings covered by this Directive ; Portugal . (c) any individual application of aid schemes in the cases referred to in the second subparagraph of Article 4 ( 5 ) 2 . Operating aid for shipbuilding and ship conversion in and in Article 4 ( 7 ) or when specifically provided for by Spain may be considered compatible with the common the Commission in its approval of the aid scheme market provided that: concerned .

— Spain's shipbuilding industry has undertaken a systematic and specific restructuring programme , Article 11 including capacity reductions , which can be considered capable of allowing it , within four years , to operate 1 . For the Commission's monitoring of the competitively , implementation of the aid rules contained in Chapters II and III , Member States shall supply the Commission for its — the aid is being progressively reduced . exclusive use with :

— current reports on each shipbuilding and ship 3 . The Portuguese Republic will be subject to all the conversion contract at the time of ordering and provisions of this Directive . However , Portugal may , at completion containing details of the financial contract any time before 31 December 1987 with immediate effect, support , in accordance with the form set out in the or at the latest by 29 February 1988 , with effect from annexed schedule 1 , 1 January 1988 , opt for being exempted from the rules laid down in Chapter II either generally or as regards certain — six-monthly reports — to be provided by 1 October and yards . Should Portugal choose this option , operating aid 1 April in respect of the preceding half calendar years for shipbuilding and ship conversion may be considered — on aid granted to shipowners , in accordance with compatible with the common market provided that : the form set out in the annexed schedule 2 ,

— yearly reports giving details of the annual results of, and total financial support granted to , each individual national shipyard which has received aid , in accordance O ) OJ No C 83 , 11 . 4 . 1986 , p. 2 . with the form set out in the attached schedule 3 ,

No L 69 / 60 Official Journal of the European Communities 12 . 3 . 87

— yearly reports on the attainment of the restructuring 1 January 1987 which relate to activities initiated before objectives as regards the undertakings which have that date and on which , by the date on which this Directive received aid according to Articles 6 , 7 and 9 , in enters into force , no Commission decision has been accordance with the form set out in the annexed taken . schedule 4 .

2 . On the basis of the information communicated to it in 2 . Two years after notification of this Directive ( J ) the accordance with Article 10 and paragraph 1 of this Article, Commission shall report to the European Parliament and the Commission shall draw up an annual overall report to the Council on its application and propose any necessary serve as a basis for discussion with national experts . This adjustments . report shall state inter alia the level of contract-related aid and other operating aid granted in each Member State Article 13 during the period in question , and both the total volume of restructuring aid awarded and the progress made towards This Directive shall apply from 1 January 1987 to the attainment of the restructuring objectives in each 31 December 1990 . Member State during the same period .

Article 14 CHAPTER VI This Directive is addressed to the Member States . FINAL PROVISIONS

Article 12 Done at Brussels , 26 January 1987 . 1 . This Directive shall replace Council Directive 81 / 363 / EEC . For the Council

The President The provisions of the aforementioned Directive shall , however, remain applicable to aid projects notified before L. TINDEMANS

(') This Directive was notified to the Member States on 5 February 1987 .

12 . 3 . 87 Official Journal of the European Communities No L 69 / 61

of % price contract

) : ECU rate (Prevailing : Date Signature

Currence

or ) any (if concession customer loss : : yard fiscal to arrangements facilities support facilities support to owners concession contract price support grants credit specific other grants credit fiscal other ) ) ) ) ) ) ) ) inquiries Financial Granted (a (b (c (d Granted ultimate (a (b (c (d : for COMPLETIONS 3 : Contract Estimated Contract A. B. . . . AND 14 15 16 Section Contact Position

1 ORDERS

SHIP ANNEX Schedule )

(CGT MERCHANT OF No date tonnage Yard . gross REPORT 4 /delivery

Completion Compensated . . 9 13

Yard . 3

COMMUNITY registration ) of signed (GT details /conversion owner owner country details vessel ECONOMIC building 's contract of tonnage Contract Ship : 1 : 2 New Company Registered Holding Vessel Date Type Deadweight Gross . . . . . . . . . 1 2 5 6 7 8 1 10 1 12 EUROPEAN Section Section

No L 69 / 62 Official Journal of the European Communities 12 . 3 . 87

Name yard

concerned Performing

Country contract 5

) conversion or (CGT Tonnage

Acquisition SHIPS type OF Ship

of CONVERSION 4 granting Month OR aid

: : 2 Date Signature ACQUISITION Schedule FOR Details

3 granted SHIPOWNERS Aid TO

AID Volume ON

REPORT Form

COMMUNITY 2

Identification :

ECONOMIC inquiries for : 1 1 2 3 4 5 6 7 8 9 10 Case EUROPEAN Contact Position

12 . 3 . 87 Official Journal of the European Communities No L 69 / 63

direct under Previous Previous losses received year year having Most Most recent registered recent ) have ship ship companies 1987 sources 1987 all which and developing and for public in January to 1 January 1 ony filled companies be before after all from shipbuilding assistance shipbuilding (to for ) contracts provisions in on expenditures loss funding capital /( ) in concluded concluded merchant merchant filled depreciation guarantee development support support ) /(loss be profit to to to received shareholders shareholders sources sources aid working state (to before and contracts contracts ) profit movement restructuring in have grants to to to to to contract with contract related any flow public private overdrafts public private related related losses (if and expenditure receipts expenditures change and Turnover production Cash 12 Funds from from from hereof from hereof hereof related related hereof countries related related related : ) ) ) ) ) ) : of ) ) ) ') ) SUPPORT 2 3 ') ) Turnover Hereof conversion (a (b (c Losses Hereof conversion (a (b (c Trading Capital Other Other Equity (a (b Loans (a (a (b (b Government (a . . . . . . . . . . . 10 11 12 13 Expenditures 14 15 16 17 Source 18 19 20 Section Section 3 FINANCIAL

Schedule ) 1 . COMPANY support sched Aid OF Indirect received aid (of company of aid REPORT Name Direct received : ) : (1 ) Costs (2 Date Signature value /loss

Costs Contract

, and costs concluded concluded costs developing COMMUNITY development ) 5 aid aid to operation costs /receipts costs to 1987 compensaion contracts contracts . 1987 Article costs : . other . development aid to to payments 1 related costs Operating 1.1 . loss (cf closure Support 1 of and ECONOMIC Restructuring aid cash restructuring Public disposal inquiries : 1 related before related after hereof assistance countries ) ) ) for : Contract (a (b (c Payment inclusive rescue Investments Redundancy Other Asset Conversion Research Other . . . . . . . . . 1 2 3 4 5 6 7 8 9 EUROPEAN Section Contact Position

No L 69 / 64 Official Journal of the European Communities 12 . 3 . 87

Schedule 4

EUROPEAN ECONOMIC COMMUNITY

REPORT OF MERCHANT SHIPYARD FACILITIES AND EMPLOYMENT

Section 1 : Facilities Date : Company :

1 . Berth / dock / pad 2 . Current use 3 . Size 4 . Capacity

Section 2 : Merchant orderbook Date :

5 . Berth No 6 . Ship No 7 . Ship type 8 . CGT 9 . Completion date

10 . Total new orders ... 19 Number CGT

11 . Total completions .. 19 Number CGT

Section 3 : Shipbuilding employment Date :

12 . By activity 19 . By occupation

1 3 . Merchant 20 . Manual

14 . Offshore 21 . Staff

15 . Naval 22 . Total merchant

16 . Repair 23 . Subcontractors

17 . Other 24 . Net change in employment 18 . Total

25 . Total man-hours for the shipyard

26 . Hereof for merchant shipbuilding and conversion

Contact for enquiries : Date :

Position : Signature :