European shipbuilders are asking for help from the European Commission to fight Chinese subsidies for competitors that have undermined European industry for years.
It is not always clear whether European companies can use new legal tools to fight unfair competition from global rivals, as ships and shipping services are not always imported directly into the European Union and often operate in international waters.
This month, the Shipyards and Marine Equipment Association told the antitrust division of the EU executive that it wanted clarity on “which of the existing instruments can be applied to shipbuilding”.
The association wanted to know whether the new Regulation on foreign subsidies for the construction, maintenance and repair of ships and marine equipment could be used. A separate 2016 regulation to combat harmful ship pricing has stalled because China and South Korea have not ratified the international shipbuilding agreement it relies on.
The new rules on foreign subsidies “apply to foreign subsidies for activities in the EU and therefore do not apply to EU imports of subsidised goods,” Commission spokeswoman Lea Zuber told POLITICO. She believes that shipbuilding in China should be subject to World Trade Organisation rules because it is not an economic activity in the EU.
Christophe Tytgat of the Association of Shipyards and Marine Equipment said the EU industry will find it difficult to hold on to its remaining market share if it does not get help soon. Chinese companies are now keen to get as much as they can from the cruise ship construction market, one of the EU’s recent strengths. he said in an interview. He said:
Losing the industrial capability and know-how to build highly technological ships in Europe would become an economic security risk. 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.
EU shipbuilders have not been able to keep up with Asian competitors for decades: in the first half of 2023, Europe will supply less than 10 per cent of the world market with ships, a far cry from the 70 per cent market share they had in the early 1960s. The EU industry is still only a significant global player in cruise ship construction.
The European Commission has shown it is willing to tackle Chinese subsidies, launching an investigation last year against subsidies for Chinese electric cars and leaving the door open for another investigation into windmills.
Losing out to Chinese shipyards also means a loss of construction capacity in the EU, Tytgat said. He added:
We are not yet the solar panel industry. But the EU needs to act.
