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<p><span style="font-size: 14pt"><span style="font-weight: bold">June 29, 2005 <i>(5:15 p.m. EDT)</i><br>
No. 121</span></span></p>
<br>
<p style="text-align: center"><span style="font-weight: bold"><span style="font-size: 14pt">GOVERNMENT OF CANADA TO ADDRESS SHIPBUILDING SUBSIDIES </span></span></p>
<p style="text-align: center"><span style="font-weight: bold"><span style="font-size: 14pt">IN INTERNATIONAL NEGOTIATIONS</span></span></p>
<br>
<p>The Government of Canada today announced it is joining international negotiations to
curb government subsidies to the shipbuilding industry, as part of a drive to enhance
the competitiveness of Canadian shipbuilding companies in the world market.</p>
<br>
<p>“We are committed to the success of the shipbuilding and industrial marine industry,”
said the Honourable David L. Emerson, Minister of Industry. “Addressing market-distorting practices at the international level complements the work we’re doing with the
industry here at home on a new shipbuilding strategy, and will go a long way to help
transform the sector to compete successfully in today’s market.”</p>
<br>
<p>Representatives from Industry Canada and International Trade Canada will participate
at the Organisation for Economic Co-operation and Development (OECD) shipbuilding
negotiations, joining other countries that together represent about 90 percent of the
world’s shipbuilding capacity.</p>
<br>
<p>“Canada’s participation at the OECD negotiations has the potential to deliver significant
commercial benefits to Canadian shipbuilding companies,” said the Honourable
Jim Peterson, Minister of International Trade. “Canadian companies have proven
expertise in niche markets, and will need to continue to exploit these and other
opportunities. The OECD initiative is just one of the ways in which we hope to help the
industry enhance its competitiveness.”</p>
<br>
<p>The OECD initiative is one element of a comprehensive new shipbuilding strategy,
currently being developed in consultation with Canadian industry and expected to be
released this fall. Discussions to date have focused on transformative strategies to
strengthen the industry’s competitiveness, including work in the areas of research and
development, and technology.</p>
<br>
<p>Historically, the global shipbuilding sector has been marked by government
subsidization. Such support has led to supply and demand imbalances, as well as
global overcapacity. In its shipbuilding policy framework, the Government of Canada
committed to address support practices in international forums. Today’s announcement
is another step toward fulfilling that commitment. In addition, the importance of the
export market to Canadian shipbuilders and the increasing globalization of the industry
make it critical for Canada to have a seat at the table.</p>
<br>
<p>The Government of Canada is committed to developing strategies for key industrial
sectors, such as shipbuilding and automotive, to ensure they can compete in a global,
21st-century economy in which further trade liberalization is inevitable.</p>
<br>
<p style="text-align: center">- 30 -</p>
<p>For further information, media representatives may contact:</p>
<br>
<p>Jacqueline LaRocque<br>
Director of Communications<br>
Office of the Minister of International Trade<br>
(613) 992-7332</p>
<br>
<p>Media Relations Office<br>
International Trade Canada<br>
(613) 995-1874<br>
<a href="https://bac-lac.wayback.archive-it.org/web/20070220185341/http://www.international.gc.ca/"><span style="color: #0000ff"><span style="text-decoration: underline">http://www.international.gc.ca</span></span></a><span style="color: #000000"></span></p>
<br>
<p><span style="color: #000000">Christiane Fox<br>
Office of the Honourable David L. Emerson<br>
Minister of Industry<br>
(613) 995-9001</span></p>
<br>
<p><span style="color: #000000">Media Relations<br>
Industry Canada<br>
(613) 943-2502</span></p>
<br>
<br>
<br>
<p style="text-align: center"><span style="color: #000000"><span style="font-weight: bold"><span style="font-size: 14pt">Backgrounder</span></span></span></p>
<br>
<p style="text-align: center"><span style="color: #000000"><span style="font-weight: bold"><span style="font-size: 14pt">FOREIGN SUBSIDIES IN THE INTERNATIONAL SHIPBUILDING
INDUSTRY: GOVERNMENT ACTION TO SUPPORT CANADIAN
COMPETITIVENESS</span></span></span></p>
<br>
<p><span style="color: #000000">The Government of Canada will participate as a member of a Special Negotiating
Group (SNG) at the Organisation for Economic Co-operation and Development (OECD)
to address government support practices in the international shipbuilding industry.</span></p>
<br>
<p><span style="color: #000000">The mandate of the SNG is to “review and address market distorting factors, in
particular government measures, pricing, and other practices that distort normal
competitive conditions in the world shipbuilding industry, as well as mechanisms to deal
with these.”</span></p>
<br>
<p><span style="color: #000000">Canada’s work at the OECD is aimed at helping level competitive conditions in the
world commercial shipbuilding industry—a commitment set out in the 2001 Shipbuilding
and Industrial Marine Policy Framework. </span></p>
<br>
<p><span style="color: #000000">Countries representing about 90 percent of the world’s shipbuilding capacity are
participating at the OECD negotiations. They include: Korea, Japan, China, the
European Union, Norway, Australia, Croatia, Turkey, Romania, Ukraine, Chinese
Taipei, Mexico and Canada. The United States is not participating.</span></p>
<br>
<p><span style="color: #000000">The Canadian shipbuilding and repair industry is competitive in a number of areas such
as productivity, technology and quality. However, foreign government subsidization
puts Canadian shipyards at a disadvantage when they compete in some international
markets. An OECD agreement on shipbuilding that would curb subsidization would
encourage competition based on product quality. </span></p>
<br>
<p><span style="color: #000000">The export market is key to the Canadian shipbuilding industry, and the Government is
committed to enhancing access to that market through active international engagement.
An OECD agreement that offers effective disciplines on government subsidies would
strengthen our industry’s ability to compete in today’s increasingly tariff-free
environment.</span></p>
<br>
<p><span style="color: #000000">The Canadian industry has established competitive niches in specific areas of
higher-value added technology, including building yachts, offshore and inshore patrol
boats, icebreakers, offshore supply structures and vessels, ferries and work boats. In
addition, Canadian companies have been successful in attracting repair work on both
domestic and foreign vessels.</span></p>
<br>
<p><span style="color: #000000">Historically, there has been extensive government intervention in the world shipbuilding
market. This has led to global overcapacity, which has resulted in supply and demand
imbalances and downward pressure on prices. To address this situation, a group of
OECD countries negotiated the 1994 Agreement Respecting Normal Competitive
Conditions in the Commercial Shipbuilding and Repair Industry. However, due to lack
of ratification by all parties, it did not come into effect. Government intervention and
imbalances have persisted. In 2002, the OECD established the current SNG.</span></p>
<br>
<p><span style="color: #000000">While Canada has attended past OECD discussions as an observer, it will now
participate formally to express its positions on issues under negotiation. The next
meeting will take place July 4 to 8, 2005, in Paris, France.</span></p>
<br>
<p><span style="color: #000000">Negotiations are scheduled to conclude in December 2005. It is expected that a draft
agreement to be considered for ratification by participating governments will be ready
in 2006.</span></p>
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