Page 9: of Maritime Reporter Magazine (July 1995)

OECD Accord On Subsidies Faces D.C. Vote by Bridget A. Murphy, assistant editor r he future of shipbuilding in the U.S. will be influenced by an upcoming Congressional ote on a measure that, if passed, ill eliminate government subsi- ies to shipyards, and necessitate lodifications to the Title XI loan uarantee program that has been luded by many as the fuel for a ^launch of commercial shipbuild- lg in the U.S. The Organization >r Economic Cooperation and De- elopment (OECD) organized a r orld forum of shipbuilding giants ist year and ratified an accord that illed for worldwide elimination of overnment subsidies to the ship- uilding industry in order to create ivel ground that would foster fair )mpetition among international ards. The U.S., Japan, the Euro- ean Union and Korea were all arties to the OECD accord, and le subsidy regulation policy is :heduled to commence in 1996, ending the passage of cooperative overnment policy in each nation, s the U.S. government prepares ) address the OECD accord, de- ate over subsidy elimination has )me into the forefront of the ation's maritime policy.

As the debate begins to heat up 1 Washington, the underlying is- le has become apparent, namely: . the domestic shipbuilding indus- y ready to convert to commercial upbuilding without the support of avernment loan guarantees, as rovided by the existing provisions ? Title XI? Those opposed to the

ECD accord say that U.S. yards eed more time, a longer "transi- onal phase" to convert yard pro- iiction techniques from those re- aired to build military vessels to lose suited to building ships for ie commercial market.

It has been estimated that close ) ninety percent of the shipbuild- ig jobs in the U.S. are represented y six major yards, whose interests re jointly represented by the merican Shipbuilding Association lSA), the organization that broke tvay from the Shipbuilders Coun- 1 of America (SCA) after judging tat its interests were not being presented by the U.S. Trade Rep- isentative to the OECD conven- on. The ASA member yards are: ational Steel and Shipbuilding o., San Diego, Calif.; Newport ews Shipbuilding, Newport News, a., Avondale Shipyards, New Or- ans, La.; Ingalls Shipbuilding, ascagoula, Miss.; Bath Iron Works, ath, Maine; and General Dynam- s' Electric Boat Division, Groton, onn. In an interview with MR /

N, Tom Bowler, a former Navy iptain, and recently appointed sad of the ASA, said, "If this agree- ent is signed it will be the death lell for the commercial opportuni- es for these six yards. This agree- ent would lock these shipbuilders it of the international market, oreign shipbuilders have been subsidized on a massive scale where we've been focusing on naval build- ing ... You can't turn off U.S. subsi- dies when other countries turn on the subsidy faucet at full throttle."

Mr. Bowler went on to say that: "OECD will slam the door shut on

Title XI, and revert the U.S. back to old terms, erasing the first glimmer of hope for the commercial ship- building industry."

Some decision makers on Capitol

Hill have echoed similar sentiments, including Congressman Billy

Tauzin (D-La.), who said the OECD accord will damage the U.S. indus- try dramatically unless there are comparable reductions of subsidies across the world. "If we make the unilateral step, the question is, will they follow?" asked Congressman

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