Adoption of the Minutes of the previous sitting
President
The Minutes of yesterday' s sitting have been distributed.
Are there any comments?

Poos
Mr President, with reference to the Minutes for the sitting of Thursday 18 November, item 11 "Treaty reforms and the next IGC" . Amendment No 19 is listed with the amendments adopted under item 11. It consists of an addition to paragraph 19 of the draft resolution. Well, this addition has not been included in the version of the text adopted as printed in the "Texts adopted" section of the Minutes distributed this morning. I should, therefore, like to ask you to amend the "Texts adopted" , in accordance with the votes which were taken in yesterday' s sitting.

President
We shall check the text in all the language versions and, if there is a mistake, it will of course be corrected.

Poos
It is not a mistake to do with the languages, since the addition is missing in all the language versions.

President
It will therefore be corrected, Mr Poos.

Posselt
- (DE) Mr President, according to the Minutes, we concluded voting yesterday at 2.35 p.m. whereas according to my records it was 2.45 p.m. Irrespective of this, however, I would like to say that we were subject to an inhumane three and a half hour voting procedure on account of some lazy individuals wanting to get away early and we therefore came under extreme pressure. I request that this procedure no longer be enforced in future. If someone leaves, that is nobody' s fault but their own or, to quote Lenin and Gorbachev, life will punish whoever leaves early. That person does not have a majority and will hopefully also be punished by the electorate one day.

President
Yes, Mr Posselt, I take note of your comment, and I congratulate the brave people who are here this morning.

Heaton-Harris
Mr President, on a point of order, or a point of concern almost, a number of Members on this side of the House have noticed that you may have lost your jacket and on a snowy day can we offer you one of ours just in case you get cold.

President
I shall check the Rules of Procedure to see if the colour and size of jacket are stipulated and I guarantee that I shall adhere to these conditions in future.

Berthu
On the subject of yesterday' s Minutes, Mr President. Yesterday, before the vote on the Dimitrakopoulos-Leinen report, I made a protest because the amendments that I had submitted in French were not identical to the French version which was officially published. It was not, therefore, a translation problem. My amendments had actually been reworked by an anonymous reviser. Well, I read in the Minutes that the President explained to Mr Berthu that two of his amendments had not been very well worded. It sounds as if I worded my amendments badly. Well I disagree, my amendments were very well worded, and some anonymous reviser has taken it upon himself to amend the text. I must protest. It is a matter of principle. The officials of the European Parliament have no call to be altering amendments submitted by a Member of Parliament.

President
I take good note of your comment, and the correction you wish will be made.
Are there any other comments?
(The Minutes were approved)

Vote
Lisi
Mr President, this is an additional amendment which, in our opinion, specifies the role and the help that therapeutical communities can give more clearly. I will read the Italian text out for the Members: "believes that rehabilitating drug addicts constitutes, in the same way as other areas, a fundamental aspect of the fight against drugs, in that action is targeted at demand; to this end, it supports and encourages the important social contribution as regards rehabilitating drug addicts on the part of the therapeutical communities, whose means should be increased" .

President
Are there any objections to this oral amendment being included?
(Parliament gave its assent to including the oral amendment)
(Parliament adopted the resolution)
Report (A5-0050/1999) by Mr Newton Dunn, on behalf of the Committee on Citizens' Freedoms and Rights, Justice and Home Affairs, on the Initiative of the Federal Republic of Germany with a view to the adoption of a Council Decision on the improved exchange of information to combat counterfeit travel documents (8457/1999 - C5-0011/1999 - 1999/0804(CNS))
(Parliament adopted the legislative resolution)
Report (A5-0051/1999) by Mrs Rühle, on behalf of the Committee on Budgets, on the proposal for a Council Decision granting a Community guarantee to the European Investment Bank against losses under loans for projects outside the Community (Central and Eastern Europe and Western Balkans, Mediterranean countries, Latin America and Asia, and the Republic of South Africa) (COM(1999) 142 - C5-0039/1999 - 1999/0080(CNS))
(Parliament adopted the legislative resolution)
Report (A5-0054/1999) by Mr Seppänen, on behalf of the Committee on Budgets, on the proposal for a Council Decision granting a Community guarantee to the European Investment Bank against losses under loans for projects for the reconstruction of the earthquake-stricken areas of Turkey (COM(1999) 498 - C5-0247/1999 - 1999/0212(CNS))

Seppänen
Mr President, ladies and gentlemen, in the spring we approved a ceiling for transfers of relevant funds to the guarantee fund. Later, in the summer, something unexpected happened: the earthquake in Turkey. We quite rightly decided to grant humanitarian assistance to Turkey via the European Investment Bank. But that will cause a technical problem with the budget, because now, as a result of this unexpected event, we are approaching the ceiling that has been imposed for such transfers to the guarantee fund. If anything else should occur unexpectedly, we will either have to exceed the ceiling or make cuts in other areas of financial aid.
We have brought this problem to the attention of the Commission and received a very vague reply from them to the questions we asked, but, despite that, we cannot jeopardise the implementation of this financial aid. It will be jeopardised if we now adopt the proposed amendments. For this reason, although the Commission has not given us a completely satisfactory reply regarding the technical aspects of the budget, I wish to withdraw these amendments, and at the same time I would say to the Commission that there is a problem here, which we have drawn attention to, and we hope that in the future the Commission will take account of it and propose the ceiling be exceeded in the event of unexpected situations in which funding is required.

President
Does the Commission wish to make a comment?

Liikanen
Mr President, I shall pass on Mr Seppänen' s comments to my colleagues, and I assure you we will discuss the matter.

President
The amendments are therefore withdrawn, at the request of the rapporteur.
(Parliament adopted the legislative resolution)

EXPLANATIONS OF VOTE - Giannakou-Koutsikou Report

Kauppi
Mr President, in my opinion it is vital to make the prevention of drug dependence a main priority in the EU' s internal and external action. That must also be clearly evident from Union acts. The rules will, however, be useless unless they are actually effective. Therefore it is essential to focus both on cooperation between developing and industrialised countries and on networking among the countries of the EU.
There is no lack of excellent plans and programmes within the EU. Examples we could mention are the drug prevention group in Finland that operates under the supervision of the National Research and Development Centre for Welfare and Health, and the Pompidou Group, a European Council cooperation group on drugs that was established in the 1970s on an initiative by the French President and that is planning several projects to reduce the supply and demand of drugs. Now we also need a strong and clearly expressed political will to render the exchange and comparison of information as efficient as possible. We will not achieve results merely through acts and plans, but it is through practical action that we can maximise the welfare of our people.

Fatuzzo
Mr President, following the adoption of the amendment tabled by Mr Lisi from the Group of the European People' s Party, who was elected from the Forza Italia lists, I have greater satisfaction in giving my explanation of vote, having voted for this measure. Therapeutical communities are certainly extremely important. As for my reasons for signing this as the pensioners' representative, I have to say that, unfortunately, we rarely find pensioners who are drug-addicts, because young people die prematurely from this terrible scourge. I would like to emphasise that this measure is very positive, but we must be the first to set young people an example, because only examples that lead them back to the family unit and to the sound principles of yesteryear will overcome the scourge of this century.

Schulz
- (DE) Mr President, I, along with many of my colleagues, have approved Mrs Giannakou-Koutsikou' s report. It should be emphasised here this morning, though, that controversial discussions on this report have been held in this House for months. In committee alone, there have been 130 amendments to this report. Weeks of compromise discussions were needed and such a report is then voted on here on a Friday morning with a relatively modest number of people present.
As I listened to the debates here yesterday, in particular the comments of Mr Poettering, as to how dramatic and important it all now was and saying that a vote definitely had to be taken here this week, that is not now borne out by the presence of his own group here this morning. I therefore regret that a procedure as important as this should enjoy such limited attention. What is even more splendid is when the authors of this matter become embroiled in intensive talks afterwards. In any case, we have given our approval so that Mrs Giannakou-Koutsikou can then see the report home with an extensive majority.

Meijer
I have voted against the Giannakou-Koutsikou report. It is a very lengthy document which represents all shades of opinion and contains a multitude of considerations and objectives. It gives enormous scope. It is opposed to trafficking and profiteers, rightly so. It endeavours to help people fight their addiction, again rightly so. But this means that it is spreading itself rather thinly and the thrust of the document is that with more funding and tougher prosecution, we can knock the problem on the head. Quite interestingly, Mr Schulz' s proposal to give urban and regional experiments more of a chance, has been rejected. I fear that this text will now be used incorrectly, namely to support those, in particular, who advocate more repression against drug users and think that they will solve the problem in this way. As such, the PPE viewpoint has, in principle, dominated after all and this was a reason for me not to go along with it.

Figueiredo
 - (PT) Each Member State has a crucial role in defining its policy on combating drug addiction. We feel that we are upholding a policy which genuinely attacks its causes and effectively combats drug trafficking and the associated money laundering. We are also upholding a policy that does not penalise those who suffer from drug addiction or their families, who should be supported by means of adequate public services, which are free, in terms of treatment and reintegration into society.
But the fight against drug trafficking and money laundering also requires action and coordination at EU level (and at UN level) in the fight that must be developed against powerful criminal organisations which, through illegal activities and money, undermine and tap into the economic and financial system. In order to achieve this, we need a genuinely "strong political will, expressed without any ambiguity" . We also need to turn words into deeds, by mobilising the necessary Community financial resources to combat this tragic situation that affects thousands of drug addicts and their families. We cannot continue to reduce "social costs" in order to meet the criteria imposed on national budgets by the Stability Pact, whilst repeating fine words about social support that are then never actually put into practice. We are convinced that if it has adequate resources, the European Monitoring Centre for Drugs and Drug Addiction based in Lisbon can make a major contribution to deepening the study and the proposals for measures to combat the scourge of drugs.

Theonas
 - (EL) Drugs are becoming more and more widespread and are reaching increasingly younger targets. The financial stakes involved and the vast profits made behind the scenes are the main factors in sustaining and expanding this inhumane market whose victims are in the more productive and dynamic section of the population. This therefore has particularly dramatic consequences not only for users and their families but also for society as a whole.
The association of drug trafficking with arms smuggling, terrorism and international crime, as well as police, judicial and governmental corruption is a problem which cannot be resolved by prayers alone, nor can it be resolved on a superficial level with half-hearted measures or with measures designed solely to tackle the problem of drug addiction.
At the same time, we must bring to the fore and address those social issues which cause, reinforce and exacerbate the problem. In a society where ideals and values are gradually perishing, competition and profit are intensifying, and in a society uncertain of its future in which a large number of young people are being hard hit by unemployment, inadequate social security and a lack of social support structures to nurture education and culture, the youth of today are not being armed with the right values and criteria to resist both physical and psychological addiction. They feel disorientated and are being skilfully driven to drop everything in search of other forms of escapism.
Because of the nature and urgency of the matter, we need to adopt a clear, coordinated and specific policy which must be examined and adapted to address the tragic extent of the problem.

We agree with many of the remarks and proposals in the report and we would like to stress the importance of developing the joint and simultaneous objective of reducing supply and demand and combating drug trafficking. We would also like to stress just how vital help and support is for drug users in helping them not only to overcome drug dependency but also to integrate into society. We would like to highlight the need to make funding available to cover the major needs which have arisen to address the problem in a fundamental, effective and coordinated manner. Neither the existing funds nor the funds proposed by the Commission cover even the most basic needs. We fear that any further cuts and reductions in social funding and policy will mean that this crucial objective will have to compete with others for funding and may prove too costly.
For that reason, we are asking and calling upon all social and collective organisations, including trade unions, and the cultural and scientific world, to coordinate their efforts, to exert more pressure at a national and European level and to step up the fight against this major problem which has so tragically reared its ugly head in our society.
Newton Dunn Report (A5-0050/1999)

Schulz
- (DE)Briefly, I would like to have it put on record that our Group has rejected the Newton Dunn report on account of the fact we did not agree with the legal basis to this report. What we have here is a classic ruling on the establishment of a process in one of the various pillars of our Treaty principles. Mr Newton Dunn chose the first pillar whereas we were of the opinion that the procedure should be left in the third pillar. The reason for this is that in the third pillar the group of offenders who are guilty of counterfeiting travel documents is more wide-ranging than in the first pillar where Mr Newton Dunn had established it, where the focus is exclusively on the tracking of the counterfeiting of documents for illegal immigrants. That may be appropriate from the ideological viewpoint but is politically wrong because someone who, as a drugs dealer, counterfeits documents must also be criminally prosecuted. In this respect, we did not want to vote against Mr Newton Dunn' s practical proposals with regard to the combating of document counterfeiting - which we support - as far as we are concerned it is exclusively a matter of the legal basis. Thank you for your attention. I would also like to thank Messrs Poettering and Pirker for their attention.

Fatuzzo
Mr President, I would like to explain the vote in favour of the Newton Dunn report by highlighting that, with its provisions, it fits into the fight against illegal immigration and the numerous criminal acts committed by many illegal immigrants, whether purposefully or not, to the detriment of all the citizens in the European Union, particularly the elderly. I would nevertheless like to draw your attention to the fact that it would be a good idea for all the expenditure, all the personnel and all the means used in the past to supervise the borders within the European Union - for example, between Italy and France, France and Germany etc., that is, between the European States which now have a common border - to be relocated to the external borders of the European Union in order to combat this phenomenon of crime and illegal immigration more effectively.

Turco
Mr President, I would like to take the floor regarding the Giannakou-Koutsikou report, in order to remind you that yesterday the Presidency was informed that that this debate would be opened contrary to the provisions of Rule 115 of the Rules of Procedure. I am only saying this so that it will be recorded in the Minutes. This Presidency does not know what to do with these Rules of Procedure any more. I hope that, at least in the future, some sort of order can be re-established; if this is not the case, then tell us clearly that Parliament' s work is in the hands of the Presidency and not the Rules of Procedure.
In any case, the fact remains that the debate and the vote have taken place contrary to Rule 115 of the Rules of Procedure, in that the last French version was distributed at 9.52 p.m. on Wednesday, and we opened the debate well before the 24 hours had passed.

President
Mr Turco, your comment will of course be noted, but the sessional services inform me that the deadlines were, in principle, respected, and that all the language versions were distributed in due time, but we have taken note of your comment.

Turco
Mr President, I did not ask a question and did not want a reply. I simply protested that Rule 115 of the Rules of Procedure was not complied with. I do not need a reply because this has already happened and can no longer be prevented. You did not comply with Rule 115 of the Rules of Procedure, full stop.

President
This has all been noted, Mr Turco.

Application of Community law to the Canary Islands
President
The next item is the report (A5-0053/1999) by Mr Medina Ortega, on behalf of the Committee on Legal Affairs and the Internal Market, on the proposal for a Council Regulation amending Regulation (EEC) No 1911/1991 on the application of the provisions of Community law to the Canary Islands (COM(1999) 0226 - C5-0127/1999 - 19990111(CNS))

Medina Ortega
Mr President, the Commission has presented a proposed regulation intended to amend another Community regulation, Regulation (EEC) 1911/91, which established a special legal status for the Canary Islands.
Regulation (EEC) 1911/91 is in turn a regulation which amends the statute established for these islands by the Act of Accession of Spain and Portugal to the European Community in 1985. The Act of Accession of Spain and Portugal to the European Community - in article 25 and in Protocol 2 annexed to that Act - provided the Canary Islands with a special status which was designed to reflect the fact that those islands were not integrated into the Common agricultural policy and, furthermore, because it was not subject to the Community Customs Union, the Community customs rules, nor Value Added Tax. In this way, the Act of Accession intended to maintain as far as possible the special status which the Canary Islands had had within the Spanish State since their incorporation into the Kingdom of Castile in the 15th Century. It was a region which was not subject to the ordinary tax regime nor, therefore, the customs rules, owing to its great distance from Peninsular Spain.
The Act of Accession of 1985 contained a future development clause - section 4 of article 25 - which was aimed at preventing the Canary Islands, as a result of European Union development, from being excluded from European construction. I would say that public opinion in the Canary Islands was, on the one hand, in favour of maintaining this special status but, on the other hand, had no desire whatsoever to remain outside the sphere of European construction.
When the Single Act was adopted in 1986, it became necessary to amend that special status and this was done by means of Regulation (EEC) 1911/91. That amendment establishes three or four very important changes: firstly, the Canary Islands were incorporated into the Common agricultural policy and the Common fisheries policy; secondly, they were incorporated into the Community Customs Union, and are therefore subject to ordinary customs duties; and thirdly, it removed the special tax rules which they had, specifically the island taxes - the so-called special licence tax arrangements - which were designed to protect local industry.
Regulation (EEC) 1911/91 has led to the progressive dismantling of the Canary Islands' special tax rules and their incorporation into the Community' s common rules. But this has caused difficulties, because the problem with the Canary Islands, as with the other outermost regions - the Azores, Madeira and the French overseas departments - is that they are a long way from European territory, divided into small island areas, with very small markets, with enormous transport problems and, furthermore, with problems due, for example, to over-population, very irregular rain patterns and poor soil, which hinder the development of normal activities. This explains why, in the past, the Canary Islands always enjoyed a special status within Spain.
The dismantling of the Canary Islands' special tax status, in terms of customs duties, would threaten to dismantle a series of small local industries - food, tobacco and small commercial industries - which would disappear if we were to remove that small degree of protection provided by their special taxes, specifically the tax on production and imports.
The Commission has been thorough and has taken account of this, and has therefore begun a negotiation of an adaptation of the tax on production and imports, in order that that tax may not disappear. There has also been another issue: the Treaty of Maastricht of 1992 included a declaration recognising the special status of the outermost regions - the Canary Islands, the Azores, Madeira and the French overseas departments - and section 2 of article 299 of the EC Treaty, after its amendment by means of the Treaty of Amsterdam of 1997, provides for special status for the outermost regions. The Treaty of Amsterdam is now in force.
In accordance with the thinking behind the new status for the outermost regions - which was also confirmed by the Cologne European Council which asked the Commission to present measures for the outermost regions before 31 December - at the moment the incorporation of these regions into the European Union does not necessarily require tax and customs harmonisation, but rather allows differentiated treatment, for example the maintenance of the port charges in the French overseas departments and the special rules for the Azores and Madeira.
Although the Commission' s proposed regulation began to be negotiated before the entry into force of the Treaty of Amsterdam, in the Committee on Legal Affairs - which in general approves the proposed regulation, since it is aimed at delaying the removal of the Canary Islands' taxes and therefore plays a protective role - we believe that, after the entry into force of article 299.2, rather than a simple easing of the limits of the special treatment, we need to paralyse the removal of this special treatment because it is possible that, in the measures which the Commission must propose for the outermost regions in accordance with the said article 299.9, which provides for special measures in the field of fiscal policy, the Commission may allow a limited reinstatement so that the relevant small local industries do not suffer.
As I said before, Mr President, the Committee on Legal Affairs unanimously approved the regulations, but proposes a series of amendments intended to indicate that article 299.2, which is already in force, establishes an additional basis for the Commission' s proposed regulation. We are not trying to oppose the Commission' s regulation, which establishes an additional basis. That additional basis would justify a measure which one could describe as containing and detaining the removal of customs duties. As a consequence of that reference to article 299.2 and the thinking which I am explaining at the moment, the Committee on Legal Affairs has proposed a series of amendments to the annexes of the regulation to halt the removal of customs duties in any of the areas where they are currently in force. It is a question of maintaining the current protectionist structure of the taxes until the Commission presents its new proposals in the field of tax policy.
As the Commissioner knows, next week in Brussels a partnership meeting will take place in which the Commission will discuss the proposals with the governments of France, Spain and Portugal, the governments of the Autonomous Regions and the MEPs from those regions. Therefore, it would seem appropriate that the Commission approve and express its agreement with Parliament' s proposals - the proposals of the Committee on Legal Affairs - which are very reasonable and are in accordance with the Commission' s thinking but reinforce it by referring to the new article 299.2, which will provide for and allow the development of a special status. It does not make much sense now to totally remove the system when in a few months it is possible that the Commission will have to propose its reinstatement. This is the thinking, this is the problem, and I hope that Parliament will follow the recommendations of the Committee on Legal Affairs, approve the regulation and also approve the 19 amendments which the said Committee has proposed.

Ripoll y Martínez de Bedoya
Good morning, Mr President. Firstly I would like to congratulate the rapporteur, the Committee on Legal Affairs and the Internal Market and the Members who have presented amendments.
I believe that the words of Mr Medina Ortega have clarified the approach and position which the Committee on Legal Affairs and the Internal Market has agreed unanimously, on this essential issue, an issue which is important for the Canary Islands, but which affects all the other outermost regions of the European Union.
With reference to the subject of today' s debate, the Canary Islands, I must say that few regions have lived or are living through such an intense process of European integration.
Since their incorporation in 1986, the Canary Islands have held significant and intense debates. There have been public demonstrations for and against the full incorporation of the islands, there have been governmental crises and even the resignation of the President of an autonomous government, the specific cause of which was the conditions for the accession negotiations.
After thirteen years, it is time to make an assessment. To this end the regulation which we are debating at the moment in Parliament is very useful, since from this assessment we can reach conclusions which will allow us to determine the position we must take. The assessment is clearly positive, although we must recognise that there are enormous worries and concerns attached to it, as the rapporteur has explained effectively. These concerns stem from what we are debating here, but also from other issues which are being studied and dealt with by this Parliament.
I would like to take this opportunity to remind you that at the moment in the Canaries there is a lot of uncertainty with regard to the future of bananas, since the Canary Islands are Europe' s top producer of that fruit, which is so important from economic, social, scenic and environmental points of view.
However - and I repeat - today we are talking about Regulation 1911/91 concerning the application of Community Law to the Canary Islands. The arguments and explanations which the rapporteur has given us today are clear and describe the long journey made by the Canary Islands to arrive at the process of incorporation into the European Union.
Nevertheless it is essential in our opinion that this reform is carried out within the time frame laid down. This is an absolutely essential issue. We should remember the mandate of the Cologne European Council to the Commission; we should remember that before the end of 1999 there was supposed to be specific and special treatment which has still not happened; we should remember that at the moment we are debating the Commission' s legislative agenda for 2000. It is important that in this legislative agenda we include the special treatments laid down in article 299.2 of the EC Treaty for the French overseas departments, the Azores, Madeira and the Canary Islands, because, otherwise, we would reach a situation or position in which these European regions, which are vital to each of the Member States and to the European Union, are put at an absolute disadvantage in relation to the European Union as a whole.
To end, I would like to say that our Group supports the 19 amendments and the legislative text, but asks that we do not proceed to a second reading, but that this regulation be approved within the time limits laid down. We ask the Commission to be sensitive to the rapporteur' s views, to the views of the Committee on Legal Affairs and the Internal Market and that, please, the regulation be approved within the envisaged time limits because, otherwise, the situation in the Canary Islands would be of great concern.

Martínez Martínez
Mr President, I am taking the floor at this point to express my support, and that of the Socialist Group, for the work and the conclusions regarding the proposals presented today to this Parliament, on behalf of the Committee on Legal Affairs and the Internal Market, by my good friend and colleague Professor Manuel Medina, in the well-founded hope that this Assembly will fully approve the proposals in question.
Of course our intention is not simply to support a colleague. In reality our position - now through this intervention and later through our vote - is that of Spaniards and Europeans, and perhaps even more as Spanish and European Socialists, who are expressing their solidarity with the Canary Islands and their men and women. I am speaking of a solidarity which the Canary Islands require in a specific and particular way, precisely because of the specific and particular characteristics of their geography and history.
Let it be clear therefore that what we want is to give a little more to the Canaries, to compensate for adverse conditions, and thereby prevent a situation where they have a little less than the other Europeans.
The rapporteur, Manuel Medina, has explained in a rigorous and full way the legal arguments which explain how the Canaries has been defended for centuries, within a Spanish context, by means of different mechanisms which allowed those distant islands to overcome the negative circumstances which I spoke of earlier, and, with the skill, tenacity and efforts of their men and women, firstly resist and then gradually build reasonably modern and prosperous societies.
We were aware of the problems of the Canary Islands when we negotiated the accession of our country to the European Community and the successive Treaties, up until Amsterdam, and the constant concern to always take that special situation into account was reflected in the special Protocol 2 of the Act of Accession of Spain and Portugal, back in 1985, in Council Regulation (EEC) 1911/91, which approved the said Protocol, and in section 2 of article 299 of the EC Treaty, which describes the outermost regions of the Union, with special mention of the Canary Islands and lays down the very flexibility in the application of general rules in certain vulnerable cases which we are discussing today.
It was precisely Protocol 2, which I referred to earlier, which, applying traditional formulas to the new rules, established the so-called "APIM" (Tax on Production and Exports), a modest duty applied to certain products entering the Canary Islands, many of which originate from the Spanish Peninsular and others from other States.
At the moment there is a process under way which will lead to the negotiation between the Spanish Government and the Commission, with a view to amending the said Regulation (EEC) 1911/91, which specifically regulates the APIM in question. The concern which this amendment has caused in the Canary Islands - and which we are recognising here - has increased as a result of a certain lack of confidence in the ability of the government of my country to appreciate the true nature and gravity of this problem and in its desire to tackle that problem in the said negotiation with the Commission.
In reality there are only three alternatives. The first is the complete removal of the APIM, which would have very negative effects for the many small and medium-sized businesses on the islands which, although they make little profit from their production, survive thanks to the fact that similar products arriving from outside are taxed, and it is therefore still viable to continue producing them in the Canaries.
The second alternative is less harsh but ultimately just as harmful. It would consist of eliminating the APIM gradually until it disappears completely after a few years, perhaps maintaining them partially for a few products.
The third solution is the one which Professor Medina proposes and which we understand that the Canary Islands requires and wants, the one which this Parliament will probably vote for in a few moments. Based on the legal considerations of the EC Treaty, we argue that the APIM be kept as it is for now, and that it be consolidated within the obligatory reform of Regulation (EEC) 1911/91. We hope that this Parliament is up to the job and does not disappoint our fellow citizens ...
(The President cut the speaker off)

Sánchez García
Mr President, Commissioner, for five centuries of European history, the Canary Islands have always enjoyed special consideration in terms of shaping their presence in the Spanish and European worlds.
In fact, when the Kingdom of Spain acceded to the European Community in 1985 the door was left open for an amendment of the status of the European model for the Canary Islands. In 1991, when Regulation 1911/91 was approved, we experienced Community adaptation with regard to the application of the provisions of Community Law in the islands.
At that point a transitional period of ten years was set so that the integration of the economy of the Canary Islands into the Community would not be traumatic for some local production sectors and, de facto, amongst other things, a tax on production and imports, the APIM, was established with a view to protecting the integration of small basic Canary Island industries into the Community Customs Area.
The said tax, which protected local industry in relation to imported goods, would be gradually dismantled between 1995 and the end of 2000. Curiously, this removal of the APIM has not had the desired effect amongst the sensitive industries in the Canary Islands and therefore the Spanish authorities, the Canarian authorities and the economic operators affected have requested that the Community authorities amend Regulation 1911/91 in order to stop the removal of the APIM until June 2000, which the European Commission appreciates.
Nevertheless, some of us, as Members from the Canary Islands, as well as considering it reasonable to extend the validity of this tax in accordance with the Commission' s proposal, have requested by means of amendments that it affect the most sensitive products, all the sensitive products produced in the Canary Islands.
We also request that this customs approach be applied to a new tax with a structure similar to the old APIM, with the aim of incorporating it into a package of specific measures of a fiscal nature which the Council, on the proposal of the Commission, must implement next year - as Mr Ripoll y Martínez de Bedoya and Mr Medina Ortega have just said - by means of the proposed permanent statute for the outermost regions - which include the Canary Islands - in implementation of article 299.2, which provides for differentiated treatment, as you know, with regard to the application of the provisions of the Treaty.
This very week the Autonomous Parliament of the Canary Islands, during a political debate on this issue, unanimously approved an agreement which includes fiscal measures and asks Europe to provide for the establishment of a tax similar to the APIM.
Congratulations to Mr Medina Ortega on his report and on his receptiveness to the amendments presented.

Liikanen
I would like firstly to congratulate Mr Medina Ortega on his report on the proposal for a regulation concerning the Canary Islands.
Following its examination of the APIM/Arbitrio on production and imports in the Archipelago, the Commission concluded that even if the majority of economic sectors could adapt to the requirements of the single market, the disappearance of the APIM on 31 December 2000 could irremediably affect certain product sectors. This point has already been made in this House.
The Commission, in collaboration with the Spanish and the Canarian authorities, has identified the most sensitive products in a number of sectors. For these products the Commission considers it necessary to suspend the dismantling of the tax for a transitional period which will not go beyond 30 June 2000.
I note with satisfaction that Mr Medina Ortega's report largely supports the approach proposed by the Commission. However, he considers it regrettable that the measure proposed is reserved to a limited number of products and that it does not refer to the legal basis provided by Article 299(2) of the Treaty. I can assure you that the Commission understands this position perfectly.
I would like nevertheless to draw your attention to the fact that this constitutes a time-limited adaptation of the current rules. It must therefore be distinguished from any measure which could be taken on the basis of the new Article 299(2) of the Treaty.
This proposal stipulates that the Commission, in collaboration with the Spanish authorities will examine before the disappearance of the APIM the effects of this tax on the sectors concerned. The Commission will submit, if necessary, a proposal to the Council based on Article 299(2) on the measures which would be necessary in order not to compromise the existence of certain particularly fragile local activities. The products included in the annex to this proposal are the result of work by the Spanish and the Canarian authorities and the Commission. Consequently, any amendment to the list of the products must, on the one hand, be justified economically and, on the other hand, be subject to a study by the Commission services in order to check the consistency of the measures with its other policies. The Commission has not yet received such justification which would enable it to study an amendment to the Regulation's annex. It is not therefore in a position to accept those amendments concerning the extension of the list of the products. However, I can assure both you, Mr President, and the rapporteur that in future negotiations on a proposal concerning the Canary Islands on the basis of Article 299(2) of the Treaty that the Commission will take account of your comments on the matter and the comments of Parliament during the debate.
I wish to thank you for your support for this proposal and I will undertake to draw the attention of the Commissioner responsible to this whole debate.

President
The debate is closed.
We shall now proceed to the vote.
(Parliament approved the draft legislative resolution)

Shipbuilding
President
The next item is the statement by the Commission on the shipbuilding industry.

Liikanen
The Council Regulation of 29 June 1998 stipulates that: "The Commission shall present to the Council a regular report on the market situation and appraise whether European yards are affected by anti-competitive practices. If it is established that the industry is being caused injury by anti-competitive practice of any kind, the Commission shall, where appropriate, propose to the Council measures to address the problem. The first report shall be presented to the Council no later than 31 September 1999" .
In line with this requirement the Commission prepared its first report which concludes that the shipbuilding industry in the global market is facing serious over-capacity problems. The situation continues to deteriorate as capacities continue to grow, competition is becoming stronger and prices fall.
The report examines in detail nine contracts awarded to Korean shipyards and finds that none is concluded at prices covering full costs and that injury is caused to EU yards. The report suggests that action should be taken by Member States and the IMF World Bank fora in order to verify whether the conditions and assumptions under which the IMF-led rescue package was given to Korea are fully respected in the case of shipyards. The industry, Member States and the Commission should collect all the necessary information that could form a basis for the preparation and lodging of a trade barrier regulation complaint and assess the appropriateness of resorting to a WTO action, the Commission should continue its market monitoring efforts in cooperation with the industry and, finally, all parties concerned should make an effort to establish a level playing field for the sector.
The Industry Council discussed the Commission's report at its meeting of 9 November 1999 and issued a Council conclusion on the situation in world shipbuilding. It shares the Commission's view on the critical situation of the shipbuilding sector worldwide and calls for continuing action to address the situation.
Following the Council meeting, bilateral discussions have been held with the Korean Government at the level of the Korean Deputy Minister for Trade Affairs and the corresponding officials in the Directorate-General for enterprise and the Directorate-General for trade. A bilateral meeting of the Korean and the EU industry and administration is under preparation for mid-December 1999. The intention is to organise a meeting on shipbuilding in the context of the OECD.
The Commission will continue its own monitoring efforts with the help of the industry and will collate and evaluate all the information and evidence collected, in line with the Council's conclusion. If necessary, further meetings will take place. The Commission will present its findings to the Industry Council and to the European Parliament in the spring of next year. My colleagues, Mr Lamy and Mr Solbes Mira are cooperating closely with me on this issue.
On the basis of this report the appropriate action will have to be decided.

Langenhagen
- (DE) Mr President, Mr Liikanen, please listen to the case I am about to make. The Council of Ministers for Industry met on 9 November and I made the following comments in this regard at home. Europe has finally found strong words but deeds must now follow. We are now giving a clear signal to South Korea to abandon unfair methods of competition in shipbuilding. We will not accept domestic, i.e. European, shipbuilding being driven out of the market by unfair practices after it has been painstakingly modernised.
In Germany alone, 21,000 jobs are threatened in shipbuilding along with 125,000 more in the supply sector. The irony of the situation lies, above all, in the fact that the hidden subsidies were facilitated by credits from the International Monetary Fund to surmount the financial crisis in the Far East.
Mr Liikanen, following the interesting report from the Commission of 13 October, the shipyard action day, Europe, through the Council of Ministers for Industry, has given Korea a yellow card. Any continuation of Korean dumping practices must be punished with a sending off.
The European shipbuilding industry finds itself in a serious crisis, one that has not just come about today. An urgent decision must now be taken as to whether to support shipbuilding in Europe and in so doing support the preservation of the entire maritime industry or to leave this hi-tech branch of industry to others. There can only be one answer to this: a clear declaration of our belief in European shipyards. Anyone who has been closely involved with shipbuilding knows that what we are dealing with here today is high technology, a branch of industry which is very much part of the future. Europe cannot, and must not, give it up.
There are also critics, however. Firstly, there are those who consider shipbuilding to still be an antiquated heavy industry, whose artificial preservation in Europe would come at too high a price, although a glance at, or visit to, one of the highly productive and efficient European shipyards tells a different story. I would be very pleased to arrange visits along these lines because I can tell you that it would be worth it.
Secondly, shipbuilding is sometimes classified as a hi-tech industry, but then it is implied that shipbuilders are over-dramatising their situation somewhat. It is said that they are just after financial benefits at a national and EU level, as happens in other branches of industry.
Thirdly, Who gets the money? The shipowners or the shipyards? The image of the shipyard has, on the whole, changed dramatically. The number of people employed in coastal regions or monopolistic ports that are already depressed has declined dramatically as a result of structural change. New technologies, fields of work and areas of management in particular as well as new tasks have overtaken the nostalgic Kon-Tiki and the warship. Road to sea transport projects to relieve the traditional road networks require all types of ship, including just in time feeders and modern container ships, rapid ferry-boats and high-speed yachts, multi-purpose ships for the fishing industry and the coast guard service, large and small cruise ships and so on.
Europe' s maritime know-how in traditional roles and new market segments is a reliable, sustainable and natural resource and thus constitutes an added value for Europe. Europe' s medium-sized shipyards, in particular, have developed a high level of inventiveness in this field, but research and development, not just production and acquisition require money, and this is where aid comes in.
Anyone who knows me knows that I fight furiously against subsidies of all kinds, for distortions of competition follow hard on their heels, as a rule. It is not for nothing that I am, in addition, a member of the Committee on Budgetary Control. It is clear that if Korea continues to act in this way, it will undercut itself and will slide into financial ruin, with only itself to blame.
Secondly, the Korean economy is part of the global market. We are on the verge of new WTO negotiations.
Thirdly, Korea needs support to lift itself out of national bankruptcy. The IMF payments are making a clear statement.
Fourthly, Europe needs Korea. Just look at the order books and the volume of investment, in spite of the worldwide overcapacity which has been mentioned. This means that until a trade policy is developed by both Korea and Europe by means of bilateral negotiations and/or multilateral negotiations within the scope of the OECD, IMF and the WTO, as mentioned already by Mr Liikanen, enabling fair competition, we need various measures which are valid for a determined period until the present critical situation has been overcome. In my opinion, direct but contract-related support could be part of this, temporarily. This is the only instrument that has a direct effect, is transparent and, furthermore, strengthens competition. Returning to so-called European individual solutions, on the other hand, can mean that competition inside Europe, in addition, is distorted yet further, as in the past. We therefore need a strategy of different approaches. We would like to assist the Commission and the Council of Industrial Ministers in this approach with all our strength and energy.

Caudron
Commissioner Liikanen, for many years, firstly as a member of the "economic" committee and now as a member of the "industry" committee, I have been dealing with issues involving the shipbuilding industry.
More particularly, over the last three years, I have, on several occasions, expressed concern to the Commission about distortions of competition at world level, made worse by the fact that Europe has always set itself strict standards which our competitors prefer to ignore. What is more, in many cases the only response I received from the Commissioners and their departments was a blunt refusal to acknowledge the problem.
The Commission seems now to have become aware of the situation, and I am delighted to see this because, while one may regret the thousands upon thousands of jobs in Europe which have been lost in the meantime, as we say in French, "better late than never" . Today there no longer seems to be any point in going back over past problems and that is why, this morning, I shall ask you some specific questions about the future which are not just concerned with Korea.
The first question concerns the United States. I have learnt that an American shipyard, one which has not built any vessels for more than forty years, has received the order for two passenger boats intended to serve the islands of Hawaii, since American law reserves the construction of boats serving internal routes for American shipyards. What do you plan to do about this? What does the European Union plan to do in order to open up the American market to European products in this field?
This is my second question. If my information is accurate, a proportion of the wages of workers involved in the construction of these passenger boats is paid by the United States Navy, on the grounds of the preservation of shipbuilding capacity. What do you plan to do, Commissioner, on the matter of this American aid which does not seem to be compatible with the regulations in force in this field?
My third question is to do with Korea. Since 1997, the Korean Gas Company has been restricting tender competitions for the construction of methane carriers to Korean shipyards only, again constituting, in my opinion, an infringement of the international regulations on the opening up of public procurement. I ask you once again, Commissioner, what do you plan to do in order to open up the Korean market and fight against these decisions which do not appear to me to be legal?
My fourth question relates to the matter you referred to in your preliminary speech. We have learnt or, to be more precise, we have received confirmation that the European Commission had in hand the first part of the report on the market situation drawn up in application of the Council Regulation which you mentioned. This report indicates an anti-competitive practice by Korean shipbuilders, of between 13% and 14% of Korean costs of production. As you mentioned, the question arises as to who pays the differences observed by the Commission between Korean costs of production and sale prices? The answer seems obvious. It is the Korean banking system, supported moreover by the IMF and the Korean State. Until now, in spite of a number of reminders in this field, since it is not a new matter, the European Union and the Commission have taken no effective action to put an end to these indirect subsidies in Korea. What tangible action do you plan to take today in order to act rapidly?
I shall conclude, Commissioner, by telling you that it is true that the European shipbuilding industry still receives aid. Not a lot, but some. In any case, it is scheduled that aid for orders will come to an end in December next year and I do not think we can reconcile ourselves to a laissez-faire policy.
That is why I am asking you, Commissioner, to at last draw up a trade policy worthy of the name. That is why I am suggesting that you do not carry on saying, or having people say, that we do not have the instruments which would enable us to defend European jobs better in this sector. That is why it is no longer possible to let constraints be placed on Europe which are not placed on our industrial competitors elsewhere in the world, in the shipbuilding sector as in many others.
That is why, finally, it is time to quite simply have done with the laissez-faire attitude which characterised the Brittan era. Are Europe and the new Commission prepared to do so today? Permit me, Commissioner Liikanen, to ask you the question once again.

McKenna
Mr President, there has been a lot of criticism here this morning about the fact that contracts have been awarded to Korean companies and the damage that this has done to the European industries. However, as in many other areas, the reason that contracts have been awarded to countries like Korea is surely because of the conditions that apply: for example workers in such countries get very low wages, working conditions and safety measures are very poor and unsatisfactory, because the health and safety of workers is not a priority. Like in many industrial sectors, businesses are relocating to countries where they can exploit workers to their own advantage.
This is something that has to be addressed when we talk about, having a level playing field for the sector in Europe; in fact what we need is a level playing field internationally for workers. We have to protect workers' rights. We cannot exploit workers in some countries while protecting their rights in Europe. Someone mentioned the EU imposing stringent measures in this sector in Europe. But what should we do? Lift those stringent measures? They were applied for a reason. There were reasons for imposing such stringent measures in the first place.
When it comes to shipbuilding itself, I also think that we need to look at what kind of shipbuilding takes place. For example, as regards shipbuilding for the fishing sector, we have an over-capacity of fishing vessels within the European Union, so what kind of vessels should be built? I think that emphasis should be put on the building of coastguard or marine protection vessels to control and monitor the common fisheries policy. The vessels being built must support local industry and local coastal fishing. Safety must be given priority. When it comes to the building of vessels, we must ensure that the most advanced technology is used to ensure that they are as environmentally-friendly as possible.
A lot of vessels are used for transporting live animals. First of all, the export of live animals is unacceptable. In fact, it is completely wrong, especially when they are going to be slaughtered. The kind of conditions they have to endure in large vessels are not acceptable, so if new vessels are being built we should ensure that the best standards possible are complied with and that measures are taken to ensure that, where live animals must be transported by sea in large vessels, all measures are taken to optimise conditions for them.
Another issue that has to be looked at in the building of new vessels is the whole issue of waste and waste facilities - and not just the waste derived from the operating vessels but also the waste produced during the trip, because marine pollution is a very important issue and a lot of marine pollution is caused by ships.
To come back to the issue of dumping vessels discarded within the European Union on other countries, we have to be very careful that we are not dumping unsafe and ecologically unsound vessels on countries at cheap prices. This is unacceptable - it is just shifting our problem to other parts of the world, and the marine environment has no borders so anything that happens in one area eventually comes back to roost here. The whole issue of unfair competition which people are criticising is caused by the fact that the industry itself is exploiting workers in certain parts of the world. This has to stop.

Figueiredo
Mr President, the European Union' s shipbuilding and ship repair industry is facing serious problems, as has been mentioned here, which shows that the recipes provided a few years ago are not giving the promised results. The liberalisation of the industry and the policy of privatisation that has been pursued in various countries have not resolved the existing problems. In the last two years, the situation has grown worse as a result of constant anti-competitive practices - as has already been mentioned here - particularly on the part of South Korea.
Employers' organisations and employees' organisations have both drawn attention to the serious consequences of this situation. On 5 November, a day of action was held across Europe in which many dockyard workers in Portugal took part. From Viana do Castelo to Margueira and Mitrena, via dockyards in the areas of Oporto, Aveiro and Figueira da Foz the workers are demanding a policy of upgrading the shipbuilding industry, of protecting jobs that are stable, worthwhile and that offer proper wages and a policy of promoting the exploitation of existing potential.
In order to understand the current situation, we must remember that the 1994 international agreement on the elimination of aid for shipbuilding in the context of the liberalisation of the industry is not being fulfilled. This agreement should have come into force in 1996, but did not do so because it was not ratified by some countries, notably the United States, which was one of its main proponents but which, in the end, chose to continue supporting its own shipbuilding industry, as has also already been said here.
Contrary to what the European Council said in 1998, when it drew up the new rules on aid for shipbuilding, conditions of international competition did not, in the end, improve. Support for the industry has ceased in the European Union but it has continued and even increased in other countries, amongst which South Korea stands out. We know that this country has been concluding contracts at prices that are below the real costs of production, by benefiting from international subsidies via the International Monetary Fund, after the Asian crisis, which is destroying the order books of countries in the European Union, as the industry' s employers' organisations have stated.
The recent position of the Council on 9 November, despite being too little, too late, naturally shows that the fight put up by the shipbuilding industry is having an effect. It is therefore crucial that the Council and the Member States thoroughly examine the measures that are necessary to protect this very important sector of industry in the European Union. It is important to promote a policy which will stimulate shipbuilding and ship repair and, as is vital in the case of Portugal, to combine this with renewing merchant navy and fishing fleets and, at the same time, to promote the improvement of the living and working conditions of those involved.
It is also vital that the Commission makes this problem and its resolution a priority, that it recognises the need to review long-held positions and that it provides the European Parliament with full information on the damage that the European shipping industry has suffered.

Souchet
Mr President, Commissioner, the question of shipbuilding must, quite obviously, be tackled comprehensively, taking one area of production at a time.
The Member States have acknowledged expertise in the field of military shipbuilding. This is a field in which the Commission obviously does not have to intervene, but in which intergovernmental cooperation should be stepped up, so that Member States can safeguard and increase their expertise and independence, at acceptable cost. It would be very dangerous to allow disinvestment in this field and one can only regret the recent problems afflicting in particular the Horizon frigate programme and the abrupt withdrawal of some partners, which upset the overall balance of the programme.
As regards the construction of passenger and merchant vessels, both highly competitive, labour-intensive sectors, here too the Member States' remarkable expertise and outstanding capabilities must be protected and developed and not allowed to go outside Europe. As regards heavy manufacturing units affected by significant technological developments, Member States must be able to implement a policy fostering the technological conversion of their shipyards, so that the latter can become active in market sectors which allow them to exploit their know-how. The closure of any shipyard represents an irreparable loss of expertise for the Member States and for the European Union. The Union must not, therefore, on the basis of ill-advised notions of free competition, prevent states from promoting the conversion of manufacturing units with a view to preserving both know-how and jobs. In this respect, the example of the shipyards on France' s Atlantic coast, whose brilliant recovery following a period of crisis has been particularly spectacular, and the role the French State played in this process, should be pondered.
We must be very careful to ensure that the forthcoming WTO negotiations make it possible to put an end to the unacceptable dumping practised by a number of countries and do not endanger a sector in which world competition is intense, since it is highly labour-intensive, difficult to automate, and therefore prey to strong pressure in favour of relocation to countries where labour costs are far lower than those we have in the European Union.
Finally, Mr President, I wish to mention the subject of the construction of fishing boats. This sector, which may, in the overall scheme of things, seem a rather marginal one, does however play a crucial role in the balance of the economic and social fabric of our coastal regions. The European Community plays an essential role in this field. This sector is, in fact, almost totally dependent on the common fisheries policy. But for two years now the European Commission has frozen Community aid for the construction of new vessels and, by the same token, that of Member States, until the objectives for the destruction of boats outlined in the multiannual guidance programmes have been reached.
This deadlock, which has serious consequences, was compounded by a refusal to take the sale of boats to third countries into consideration in calculating the reduction in capacity of the European fleet. In considering only the boats destroyed, the Commission is thus behind a considerable loss of earnings to the detriment of fishermen and ship-owners. What is more, the Commission is today proposing to prohibit any renewal in the sectors which are not advancing as quickly as others and is making it compulsory to find and destroy any capacity which exceeds by more than 30% the renewed boat capacity in the sectors which are up to date with the MAGP objectives.
This situation and these proposals entail a worrying ageing of the European fishing fleet, discourage young people from investing their energies in it, cause a significant loss of sales for the specialist shipyard sector, making some of them dangerously vulnerable, and entail a clear risk for our seafarers as far as safety is concerned.
We hope that the Council will be able to make the Commission see reason and carry through the proposals which the European Parliament made at the time after close consultation with Member States, in the report by our fellow Member, Mr Arias Cañete. Whenever a shipyard disappears, particularly valuable know-how built up over time, linked with the seafaring history of a region, disappears along with it. Everything must be done to prevent this.
The Commission must also show consistency. After urging the construction of netters, on the grounds of the selectivity of the drift net, the Commission then, under pressure from some lobbies and some Member States, without scientific basis and in a discriminatory fashion, prohibited the use of this same drift net in some seas only. It recommended experimenting with alternative gear, but did not envisage a specific financial chapter or a specific kilowatt package enabling boats to be built in line with the new regulations which it had issued. Now, it has been confirmed, after analysing the results of the first experiments, that existing netters cannot be adapted to comply with the new conditions, and new boats will have to be built.
I would therefore be grateful to you, Commissioner Liikanen, if you would point out to your colleague, Mr Fischler, that shipowners are having trouble understanding this logic, or rather this absence of logic. The Commission shall obviously have to make the necessary arrangements to enable the construction of ships required by the changes in regulations which it has decided on.
In conclusion, Mr President, Commissioner, if the European Commission really wishes to make a contribution to the expansion of the shipbuilding sector in Europe, it is enough for it to clearly defend the principle of fair trade at the WTO talks, to leave Member States the freedom to intervene directly in this strategic sector in order to convert shipyards, by means of technological modifications, for activity in profitable market sectors, to promote cooperation between businesses in order to contribute towards improving the overall efficiency of each type of shipyard and, finally, in the context of the common fisheries policy, to take the necessary decisions to enable the controlled renewal of our fishing fleet, the continuation of the expertise of our shipyards and the vitality, Mr President, of our coastal regions which are dependent on fishing.

Blokland
Mr President, the shipbuilding industry within the EU Member States has been undergoing an overhaul for many years now. This has coincided with a subsidy race at world-market level. Taxpayers and shipyards in various Member States are at the receiving end of this, whilst shipowners who can purchase ships at far below their cost price come out on top. I think that the Commission, the Council and the ladies and gentlemen here present will all agree that this situation must be brought to an end as soon as possible. Opinions on how this should be done vary.
Consequently, this debate should not be restricted to the practice of unfair competition, something that the South Koreans are guilty of. Everyone within the shipbuilding industry knows that there is no level playing field within the European Union either. The Council is therefore right in deciding, for the time being, not to make any changes to the agreement to end the generic support to the shipbuilding industry as of 1 January 2001. This request is mainly expressed by the Member States that have been paying out most of the support per order for years now. As far as tangible support is concerned, this amounts to 3.5 times the amount given by the least generous government. Subsidy policy is always bad policy because it sustains bad management and often even rewards it.
A far better alternative would be a well-thought out industrial policy for the shipbuilding industry aimed at innovative production methods, which are intensive in terms of the knowledge involved and which enhance efficiency.
The current shipbuilding directive contains various obscure support schemes in respect of research and development, environment, innovation and regional support policy, which result in the "good" shipyards being punished and the "bad" ones rewarded. Any government should do the opposite in fact.
The OECD agreement, which provides for abolishing order support, in particular, is not a panacea. South Korea and also the EU Member States are clever enough to keep supporting their maritime industries in a non-transparent manner.
The European Commission should lodge a complaint with the WTO against South Korea without delay and at the same time continue the inquiry into the orders placed with South Korean shipyards. If ships are sold at approximately 20% below cost price, then this is a sure case of dumping. Pressure must be exerted at the same time.
The Daewoo shipyard, which has been bankrupt for some time, but is still launching ships, should be dismantled and not resold. I would also ask the Commissioner to institute an inquiry into the actual subsidy level per order within the European Union. The transitional regulation to abolish generic order subsidies should also be reconsidered. Countries that make an unlimited budget available for this create a run on subsidies. The consequence will be that excellent ship yards - these are often the most efficient ones - will go under in the course of 2001-2002 and it will be much harder to compete with Japan, South-East Asia and the United States with the least efficient ship yards which will then be left in the European Union. A possible delay in the discontinuation of generic order subsidies can be considered if the transitional period is abolished. I would appreciate it if Commissioner Liikanen were to take this into serious consideration.
Could the Commissioner ask the IMF to investigate where the subsidies to South Korea eventually ended up?
Finally, I would like to reiterate what I said on 31 March 1998. The strategic significance of the European shipbuilding industry is evident. We want to be able to continue to build our own ships, even if we are forced to help the sector out due to external circumstances. But let us not make a mess of it within the European Union by having all sorts of obscure regulations and by blowing taxpayers' money in the process. I am sure that that would not do the sector any good whatsoever. The end goal should still be the same: the abolition of all kinds of government subsidies so that each shipyard gets the price it deserves.

Kauppi
Mr President, Commissioner, it is altogether excellent that the Industry Council at its meeting last week unanimously approved a list of measures to eliminate the situation of unhealthy competition caused by Korea. Hopefully these measures will work, as South Korea' s operations really weaken the prospects for success of European shipyards in the face of already intense competition from elsewhere. As the Finnish Minister for Trade and Industry clearly stated at the meeting, the EU, however, must not give as good as it gets when it comes to South Korea; in other words, it must not return to the idea that it is not prepared to give up its shipyards. To borrow the Minister' s words, continuing such support would be tantamount to the EU shooting itself in the foot. This is precisely what the South Koreans must be hoping for.
For a long time now the Commission has aimed to give up shipyard aid in its present form, and this aim should absolutely be maintained. The idea is to replace shipyard aid with newly designed investment and environmental aid schemes and grant more aid to research and innovation, which is what Mrs Langenhagen so eloquently spoke about. With the new schemes the Commission aspires to support a more environment-friendly, safer European fleet, as was decided in 1997 in connection with the guidelines for state aid for maritime transport. I gladly welcome this policy, as long as it is also implemented in practice.
I would especially like to remind the Commissioner that the Union promised Finland, when we were negotiating membership, that it would take account of our remoteness and climate when deciding its aims for navigation policy for the whole continent. In July 1999, the Finnish Ministry of Transport and Communications notified the Commission of the interest subsidy programme for vessel acquisitions, set up to promote the purchase and basic repair of safe and environment-friendly cargo ships which can sail easily through icy waters, these being essential in Northern Europe. There is broad national consensus on the issue in the Finnish Parliament, as shown by the fact that, exceptionally, on its own initiative, the parliament increased powers to solicit acquisitions in the 1999 budget. As a former Minister of Finance, Commissioner Liikanen will understand the significance of this. Now, however, it would appear that officials in the Commission' s Directorate-General for competition have a firm intention to interpret the programme in question as aid to shipyards, although the programme does not affect the competitive position of shipyards, as a ship receiving aid can be ordered from any country whatsoever. This is also what was stated in the Commission' s letter of 4 August 1999 by officials in Directorate-General VII when they pointed out that the aid had no connection with shipyards in the EU.
I would also like to take the opportunity of asking the Commissioner how the Commission intends to ensure environmentally friendly developments and greater safety in maritime transport in Northern Europe, if it does not allow the implementation of the action framework it created itself. Although we have clearly decided to abandon shipyard aid, the recent events in South Korea cannot be allowed to lead to a situation where the Union starts to confuse the old-fashioned shipyard aid with the action based on the 1997 guidelines, which did not relate to competition policy but were purely in line with sustainable development and the 'safety of the seas' doctrine. Finally I would ask you, Commissioner Liikanen, how it is possible for a Member State to create a policy on navigation if it cannot trust in the directions given by the Commission? How has the Commission in its recent exchange of letters with the Finnish Government taken account of the protocol on navigational policy in our negotiations for membership?

Medina Ortega
Mr President, I find this debate very depressing because we seem to be covering the same old ground, discussing an issue we have dealt with many times before in this Parliament.
I find it depressing because I was born in a small port town where, at the time, there was a boatyard on practically every corner. They were wooden boats. There was a profession, that of boat-builder, which was a proud profession. I realise that progress is inevitable and that it is not possible for such a profession to be maintained today, but the situation is alarming. The fact that Europe will end up with no shipbuilding industry is worrying. It was we Europeans who opened up the world through navigation: the Scandinavians in the North, the Portuguese and Spanish towards America, Africa and Asia, the Dutch, the Danish, the English and the French have sailed all the oceans in ships built on our lands and in our shipyards.
At the moment we live in a globalised economy, which means that rationalisation is needed and that is why a series of restructurings has been undertaken. However, I believe we are reaching a limit. Specifically, the disappearance of all types of aid on 31 December 2000 is going to cause a problem. Although I agree with some of the previous speakers, such as Mrs Kauppi, that it is not good to maintain a subsidy system, in the long run this situation clearly harms the sector itself. Furthermore, we have been abolishing subsidies in the shipbuilding sector, yet it has continued to fall apart.
At the moment the shipbuilding sector is in tatters. Wherever you go there is a closed shipyard and thousands of people who have lost their jobs. For example, since 1984, Astilleros Españoles (Spanish Shipyards) has undergone three restructurings. Last Wednesday there were worker demonstrations in Spain, in all the shipbuilding cities - Bilbao, Cádiz, Puerto Real, Seville and Asturias - accompanied by a considerable degree of violence, because we are threatening the lives and security of many millions of homes.
There is another problem. In this globalised economy, it is good that subsidies should disappear, but not when there are some countries which still have them. This also raises another question - as some speakers such as Mrs McKenna have said: Is it a good thing that some countries such as Korea maintain this policy? I believe that if we look at the figures properly, it is clear that if ships are sold at less than they cost to make, the country is losing out. Therefore, that policy harms that country and its workers. Let us remember that a few years ago the Korean workers took to the streets to ask for equal status. The general theme of globalisation - as the Commissioner knows - is being discussed at the moment or will be discussed in the World Trade Organisation. I think that this is one of the questions which should concern us.
The European shipbuilding industry is threatened from all sides. Some of the speakers - Mrs McKenna herself I believe - have referred to the crisis in the fishing industry. It appears that the ideal is the destruction of the Community fishing fleet. For transport - including oil-tanker traffic - there are flags of convenience. But even the few ships which sail under the European flag have to be manufactured outside Europe, because it appears we are not capable of withstanding distorted competition.
Therefore, on behalf of the Spaniards who at the moment are enormously worried about this issue, I hope that the Commission will communicate our concern to the Council, our disagreement with the latest resolutions of the Council of Ministers for Industry - which seems prepared to adopt a meekly laissez faire approach and abandon the little which remains of the European shipbuilding sector - and our hope that either measures will be taken to prevent the unfair competition which is occurring or, if not, that steps will be taken to restore Community aid to compensate for the cases of inequality, incompetence and bad practice which are occurring today in all shipbuilding centres.

González Álvarez
Mr President, to follow on from Mr Medina Ortega, I would like to remind you that the Commission and the Council almost always propose employment plans to the governments. They propose that we fight unemployment and say that we must put an end to unemployment in Europe.
Commissioner, employment plans are not much use if, on the one hand, jobs are constantly being lost in many of our sectors and, specifically, in the sector which we are talking about today, the shipbuilding sector, which involves 300,000 jobs in Europe and around 45,000 in Spain. This seems to us to be an impossible equation. If you remove the subsidies to our sector, if the Korean sector continues to be subsidised, if working conditions in Europe are to be as they should be, that is very advanced, and in Korea they are terrible, the equation is impossible. It is going to be impossible to maintain this sector. And I do not want this to happen in the future.
In Spain there are seven regions with a shipbuilding sector. Commissioner, I come from a small region of a million inhabitants. In recent years, as a result of European policies and the policies of successive governments, we have lost 6,000 direct jobs in the steel industry, 6,000 direct jobs in mining, 10,000 small agricultural businesses, we have lost jobs in the arms industry and we have lost jobs in the shipbuilding industry.
When measures are introduced in the European Union - and I know that what I am going to say is out of fashion with many of my colleagues - much account is taken of the laws of the market and of competitiveness. The human factor is never, or almost never, taken into account. And the human factor is fundamental in the European Union. I am afraid to say, Commissioner, that if we continue to lose jobs in the fundamental sectors of our industry, our institutions will no longer have any credibility. If the aid stops in December, if aid is maintained in Korea, if in Spain furthermore it is proposed that 18,000 million pesetas of aid, which was granted to the shipbuilding sector, be returned, we are destroying the sector. Let us not fool ourselves, let us not use rhetoric. I am very sorry to say this, Commissioner, but if we do not adopt urgent and energetic measures, this sector, as well as other industrial sectors in the European Union, is going to go to ruin, to put it politely.

Varela Suanzes-Carpegna
Mr President, Commissioner, I think we must first congratulate and thank the Commission for the fact that we are today holding this debate on the serious situation of the European shipbuilding industry.
After the Council of Ministers for Industry, on 9 November, and the Commission' s report to Parliament on the situation of the world market in the shipbuilding industry, today we have heard this Commission statement to Parliament, which indicates that there is generalised concern within all the European institutions.
But I agree with Mr Medina Ortega that this should not be a "remake" , because the concern and the measures announced, while significant, do not seem to us to be sufficient at this particular moment. Although this Parliament totally supports these measures, we ask above all for more urgency, more efficiency and more thoroughness. Free trade, but also fair trade, because everybody knows about the unfair practices in Korea, which make it impossible for our shipyards to be competitive, as has already been pointed out.
The European Union, Commissioner, with all the political, economic, financial and commercial means at its disposal, must ensure that international rules are obeyed and put an end once and for all to Korean dumping, because the European sector can be viable in an environment of fair competition. Commissioner, we must also take advantage of the current unity in the European sector - I am referring to employers and unions - which has been shown in recent times and in recent days, to relaunch the European shipbuilding sector. We have to look for and find a European solution.
Please allow me, Commissioner, to say that I believe that the future of the shipyards in Europe is a political question which requires brave, clear and unequivocal decisions on the part of the Commission of course, but also on all our parts, especially after the conclusions of the latest Council of Ministers for Industry.
The aid which we have talked about today is also an instrument which the Commission must clarify, especially if it is a future strategy erga omnes. Parliament and European industry must know this as soon as possible, since we believe - and after this debate I believe it too - that while the world markets are not stabilised, transitional protective measures are still necessary. And we ask for these measures - and I insist - urgently, since many of our shipyards run the serious risk of disappearing, despite being technically and economically viable.
Finally, since I am also from a peripheral region, I would like to mention the enormous impact on regional development which the shipbuilding industry has, since that industry is based in many of these regions, many of them also included in Objective 1 of the European Regional Policy, with very significant shipyards which generate much direct and indirect employment, a social equilibrium which the countries undergoing cohesion need so much, which demands European solidarity. On their behalf I ask, in the case of the shipbuilding industry, for special consideration within the European Union' s regional and competition policy.
I will conclude, Commissioner. I believe that Parliament' s message today is one of support for energetic action by the Commission in this field. Thank you for your statement and for the efforts which the Commission has been making, but do not be afraid to apply measures energetically and urgently, as we have asked you today in the European Parliament.

Seppänen
Mr President, the problem we are discussing is a product of globalisation. The South Koreans have, in six years, trebled their shipbuilding capacity. They have not done it with their own money, but with loans. American loans were pressed on them, and the American banks did this in order that they might receive back the largest possible profits. Later the South Koreans left these loans, which had been pressed upon them, unpaid. The debts, however, were guaranteed, so that the International Monetary Fund sent South Korea money to pay off the American banks. In other words, the IMF has itself contributed to the current situation.
The South Koreans were also advised to devalue their currency, as it was a way for them to free themselves from this economic crisis that we have caused them. They have devalued their currency by many tens of per cent and, as a consequence, their prices have become more competitive. They did not have to cut wages to reduce their price competitiveness; they only did what we advised them to do, which was to devalue their currency. South Korea is thus operating in a world that we have made for them.
All those politicians who are now complaining about the problems South Korea has caused us are wrong if they claim that globalisation is irreversible and that we can do nothing about it. Globalisation is something which politicians can do nothing about if they do not want to. If pay in South Korea has gone down from six euros an hour to four euros an hour, it is not the South Koreans who are to blame. We are to blame, because we caused the economic crisis in South Korea. Now that crisis is simply spreading from South Korea to our shipyards. I hope that politicians will show more credibility in this matter and look into the basic causes of the problem, and not just those effects which have been spoken of a good deal here. We have wanted to ease the effects of the problem, but that will not happen if we do not do anything about its causes.

Cunha
Mr President, in a debate which is as specific and as objective as this one on European shipbuilding, it is not easy to avoid repetition. As a matter of fact it is impossible to avoid it, but we are talking about an extremely sensitive political issue and that is why it is important that the Commission and the Council know that there is a broad consensus in Parliament on this matter and great concern to find a solution to the problem.
As Mrs Langenhagen said, the crisis in Europe' s shipbuilding industry has not appeared overnight, but has been with us for more than 25 years. In fact, as the official statistics available to us show, in the last 20 years this industry has lost four-fifths of the jobs that it had in Europe, which is in fact a huge proportion. And it is becoming particularly tragic because this massive loss of jobs - in an industry that once employed half a million people - is generally taking place on the periphery of Europe, as you can tell from the nationalities of almost all of the Members who have been speaking here. And it is on the periphery of Europe that, as we all know, there are the fewest opportunities for employment.
But now, in the current state of play, the situation is becoming particularly unsustainable. Korea is not the whole problem. As several Members have pointed out, the Korean problem has occurred as a result of a combination of situations and factors, some within our control and others outside it: there was the Asian crisis, hyper-devaluation by more than 30% of the national currency - the won - and there was the concomitant support from the IMF which led to this unique - I would call it bizarre - situation in which Korea finds itself, not to mention the unfair way it has competed with us in recent times.
But we must not forget that this is also the case with the United States. The United States, whose propaganda image is as the champion of free trade, of the free market, only takes this position because of what it can gain from it: on the audio-visual industry, on the food industry, on anything that is of interest to them. But when it comes to other industries, such as this one, they are highly protectionist. We would do well to keep this in mind!
This Council position must be followed up. It is indeed important for the Council to take a political stand, but it must be followed up. I think that it is crucial that the European Union exerts considerable pressure in order to have Korea make a voluntary production agreement in addition to everything that has already been discussed in terms of rules designed to prevent this kind of distortion to competition.
For one thing is essential: it is not just the jobs that Europe could still lose in this industry that are under threat. The problem is that the shipbuilding industry, covering all the kinds of ships that we have discussed today, is an industry of strategic importance for Europe. And so, of course, it is undergoing a structural change: the type of ship is going to change certainly, but in an industry of such strategic importance, Europe cannot remain in foreign hands in terms of the building and the supply of these ships.
Mr President, ladies and gentlemen, on the eve of the opening of a new trade round in which everyone will be talking about free and fair trade, what is happening in the shipbuilding industry is really quite ironic. And that is why I think that we in the European Union must be prepared to remember this industry in Seattle, because there is no reason why this industry should remain outside the GATT rules. If this does not happen, if this is globalisation, then there is nothing more to say.

Liikanen
Mr President, I want to thank you for the very wide-ranging and serious discussion here today.
As has been mentioned, the whole issue of shipbuilding has a deep impact on public opinion. We are getting closer to the opening of the world trade negotiations in Seattle and we urgently need the support of the public to be able to go forward with globalisation. But if our public thinks that there are rules for some but not for the others, this has a devastating effect for these negotiations. There have been discussions on this matter in the Commission which for that reason alone we take very seriously. We need free trade but we need fair trade, as has been said here.
I will reply to those points which are directly my responsibility. There have been others and I will forward those questions to my colleagues.
Mr Caudron asked what has happened so far. After the Industry Council I invited the Korean Ambassador to the Commission on Wednesday, presented the conclusions of the Council and explained to him our concern about shipbuilding. We consider it extremely important to have a strong shipbuilding industry in Europe. We will not accept aggressive measures which would lead to its destruction. We also informed the Korean side that it is important that their government supports meetings of the industries. In the shipbuilding context and OECD, the intention is to organise a meeting now between both industries to analyse the situation and to draw the necessary conclusions. Industry needs to meet but we need public support from both sides for the conclusions reached at this meeting in December. Here I am working closely with my colleague, Pascal Lamy.
Secondly, on the issue of IMF and the World Bank, I was in contact this week with the President of the Industry Council and he has promised to take the issue up in the Presidency so that ECOFIN, which is meeting in November, can discuss the IMF and World Bank role in the area. The Finance Ministers in the member countries are, as it were, the counterpart of the IMF and World Bank and it is very important that all the member countries are urged to consider the issue of the possible negative impact of the IMF and World Bank support on the shipbuilding market. They need to inquire carefully whether support to shipbuilding and shipbuilders has distorted the situation in the world market.
After these issues have been discussed, on the one hand by the Finance Ministers, ECOFIN, IMF and the World Bank and, on the other hand, by OECD, we must assess the situation and take any necessary further actions.
As far as the American shipbuilding issues are concerned, the Jones Act is the famous American legislation. It requires orders in United States yards for internal navigation. So under this particular legislation the vessel must be built in the USA. This Jones Act has been exempted under GATT. The only possibility is that the Commission and member countries take the issue up in the WTO context. This has been discussed earlier but was resisted very strongly by the Americans.
The only possibility is that the Commission and member countries take up this issue in a WTO context. It was discussed earlier but resisted very strongly by the Americans.
On the question of shipyards which partly work for the in defence industry, that area has been exempted. This issue can be raised if competitors can show that this particular arrangement has caused injury to their shipbuilding market. I will analyse the questions which Mr Caudron put and come back to them later.
I will transmit the other question to my colleagues and I will keep you properly informed about events in the area. There are many countries which are seriously concerned. As Mrs Langenhagen said, we should not only consider the people who are working directly in the shipyards; there is also a huge skilled population working for shipyards in other industries. The negative impact of this distorted market situation is very serious. I and my colleagues will follow that very closely.

President
Thank you very much, Commissioner Liikanen.
The debate is closed.

Adjournment of the session
President
I declare the session of the European Parliament adjourned.
(The sitting was closed at 11.20 a.m.)

