Page 9: of Maritime Reporter Magazine (November 1993)

The President's Plan (Continued, from page 9) • Step 2: Adapt Naval Skills To

Commercial Applications: U.S. shipyards have invested heavily in modern facilities and technology.

Additionally, labor rates in U.S. yards are competitive, and U.S. shipyard workers are highly skilled.

However, U.S. yards have been building ships to order for the mili- tary requirements of the U.S. Navy and the sporadic demands of the

Jones Act fleet. At the same time, foreign yards have been building ships in series from standard de- signs optimized for producibility as well as functionality, thereby ben- efiting from scale economies and learning efficiencies. Although the steps required to adapt to the de- mands of this commercial market vary among U.S. shipyards, in gen- eral yards must: • Shorten the time required to de- velop a ship design in response to a specific demand by adopting mod- ern design procedures and develop- ing designs in advance of need; • Strengthen relationships with suppliers to reduce the time re- quired to procure materials and parts; and • Fully employ modern technolo- gies in the construction of ships including construction techniques such as modular construction, manufacturing processes, and pro- cess flow. The lay-out of at least some facilities may have to be re- vised to adopt these tools.

THE PLAN

Throughout the U.S., shipbuild- ers are focusing on the challenges of entering the international mar- ket for ocean-going vessels. Indi- vidually, yards are working to im- prove the technologies and produc- tion processes needed for building commercial ships. In addition, some yards have entered joint ventures or alliances with foreign yards to develop new designs and produe tion capabilities. The Administra- tion's plan is intended to assist in- dustry efforts to compete interna- tionally. Furthermore it is intend- ed to be a transitional program, consistent with federal assistance to other industries seeking to con- vert from defense to civilian mar- kets. The plan has five elements: ensuring fair international compe- tition, improving commercial com- petitiveness with MARITECH, eliminating unnecessary govern- ment regulations, assisting with the financing of ship sales, and assist- ing with marketing efforts.

Ensuring Fair International

Competition

The U.S. government is seeking to level the international playing field at the Organization for Eco- nomic and Cooperative Develop- ment (OECD). To this end, the

Administration initiated interna- tional negotiations to end foreign subsidies. U.S. negotiators believe that there is a reasonable chance that these negotiations will be suc- cessful. (November 1993 has been set as a target date for completion.)

The OECD draft agreement that is currently under negotiation is com- prehensive in its coverage. It pro- hibits direct and indirect subsidies to shipbuilders in the form of loans, grants, debt forgiveness, tax bene- fits, and research funding above de- fined limits. It also bans export credit financing programs with terms more generous than agreed interna- tional terms. ft

Official regulations and practices such as those that allow anti-com- petitive arrangements or impose domestic build requirements and other discriminatory regimes are forbidden (although the U.S. has proposed a derogation for the Jones

Act). The draft agreement also es- tablishes an injurious pricing disci- pline for ships, similar to anti-dump- ing laws which do not apply to ships.

Binding dispute settlement proce- dures are envisaged to enforce the agreement. A target date of Janu- ary 1, 1995 has been set for the elimination of subsidies and other distortive practices. While the Ad- ministration believes that a multi- lateral agreement provides the best way of dealing with the problem of foreign subsidies, it will work with

Congress on legislation to bolster those efforts. Any such legislation should provide for the investigation (Continued on page 12)

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November, 1993 11