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PR(95)06: EFTA Surveillance Authority sets ceiling for aid to shipbuilding and authorizes shipbuilding aid schemes in Iceland


Following the integration of the Council Directive on aid to shipbuilding into the EEA Agreement which took effect on 1 May 1995. The EFTA Surveillance Authority today decided to set the common maximum ceiling for operating aid to shipbuilding at 9% of contract value for the period 1 May 1995 to 31 December 1995. The maximum level of aid permissible for the construction of small ships of a contract value of less than ECU 10 million as well as for all ship conversions covered by the Directive has at the same time been fixed at 4.5% for the same period. These limits correspond to the prevailing ceiling within the European Union as fixed by the European Commission in December 1994.

The Authority's decision was taken in the light of the results of a study carried out by an independent consultant on behalf of the Commission of the differences between, on the one hand, the costs of the most competitive shipyards in EU and EFTA States and, on the other hand, the prices charged by their main international competitors. The decision also took account of the prevailing global market conditions immediately before the expected entry into force on 1 January 1996 of the "OECD Agreement respecting normal competitive conditions in the commercial shipbuilding and repair industry".

The Authority today also authorized a new aid scheme in favour of shipbuilding and ship conversion in Iceland. The scheme applies to the construction of vessels of at least 100 GT (Gross Tonnage), whose contract value does not exceed ECU 10 million, as well as to conversions of ships exceeding 1000 GT. The scheme applies to contracts signed not later than 31 December 1995. It has a budget of ISK 40 million.

The vessels and conversions eligible for aid under the scheme correspond to those for which the Authority has fixed a maximum aid ceiling of 4.5%. The scheme respects this ceiling as it limits the aid to a maximum of 4.5% of the contract value (before aid), both for shipbuilding and ship conversion. In practice the aid level will typically be below the ceiling, as certain cost categories are not eligible for aid under the scheme and shall be deducted from the contract value before calculating the aid amount.

The EFTA Surveillance Authority also found that the scheme meets other relevant criteria of the Shipbuilding Directive. It therefore decided not to raise objections to the aid scheme as proposed by the Icelandic Government.

Today's two decisions are the first taken by the EFTA Surveillance Authority under the Shipbuilding Directive.

For further information please contact Gudlaugur Steffansson (Competition and State Aid Directorate) on tel.28618 52 or Jorma Pilhlatie on tel. 286 18 50.

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