The shipbuilding industry is experiencing a significant downturn in orders and faces long-lasting excess capacity. Excess capacity is accompanied by major difficulties for shipbuilding companies, and contributes to weak financial conditions. In this persistent situation of low shipbuilding activity, the magnitude of government support measures appears to be significant.
On 29 November 2018 the Secretariat of the OECD Council Working Party on Shipbuilding invited representatives of OECD and partner economies as well as interested stakeholders to a workshop on “Factors which are impacting costs and distorting the shipbuilding market”.
The workshop contributed to a better understanding of factors impacting costs and leading to distortions in the global ship market. It allowed participants to discuss how the industry as well as policymakers can address market distortions.
The first session dealt with factors potentially distorting ship supply and demand. The second session was about possible policy responses to address market distortions. The third session discussed the development of cost factors and their potential impact on newbuilding ship prices. Finally, the fourth session dealt with possible policy remedies against injurious pricing in the shipbuilding sector.
Welcome and introduction
Chair: H.E. Mr. Per Egil SELVAAG, Ambassador, Permanent Delegation of Norway to the OECD and Chair of the WP6.
Introduction by Ambassador SELVAAG on workshop objectives and main issues for discussion.
Session 1: Factors potentially distorting ship supply & demand
This session aimed to present the market situation as a common background for this workshop and understanding the impact of government support measures on ship supply and demand.
1.1 Presentation by Mr. Alex GRAY, Director of Product Management, IHS Markit on recent market developments in the shipbuilding and shipping industries.
1.2 Presentation by Mr. Jehan SAUVAGE, Trade Policy Analyst, Trade and Agriculture Directorate, OECD on measuring distortions in international markets.
1.3 Presentation by Ms. Karin GOURDON, Economist/Policy Analyst, OECD on the impact of government interventions on the ship market.
1.4 Presentation by Dr. Paul STOTT, Senior Lecturer in Marine Production and Shipping Market Analysis, Newcastle University on factors impacting ship supply & demand in boom and recession.
1.5 Presentation by Ms. Karin GOURDON, Economist/Policy Analysts, OECD on local content requirements impacting the shipbuilding industry.
Session 2: Possible policy remedies against market distorting factors
Given the specific characteristics of the shipbuilding industry, the WP6 has been exploring international rules specific to the shipbuilding industry for a long time in order to address factors that distort normal competitive conditions. This session aimed to better understand how to regulate market distortions.
2.1 Presentation by Mr. Reinhard LÜKEN, Managing Director, German Shipbuilding and Ocean Industries Association, Sea Europe, on a viewpoint from the industry on the rationale for developing a comprehensive discipline on measures impacting the shipbuilding industry.
2.2 Presentation by Mr. Jorge CASTRO, Rules Division, World Trade Organization on the WTO framework to regulate subsidies and other distortions related to local content requirements, intellectual property rights or government procurement.
2.3 Presentation by Mr. Mark WU, Harvard Law School (by video conference) on possible policy remedies against market distorting factors.
2.4 Presentation by Mr. Laurent DANIEL and Hiroki TAKAGI, Economists/Policy Analysts, OECD, on the main findings of the past approach to address market-distorting policies.
Session 3: Developments of cost factors and their potential impacts on newbuilding ship prices
Market distorting policies have an impact on newbuilding ship prices. To better understand this impact, it is necessary to study the links between the development of cost factors and newbuilding prices.
3.1 Presentation by Ms. Liz SHUKER, Barry Rogliano Salles (BRS) Broker on price determination.
3.2 Presentation by Ms. Karin GOURDON, Economist/Policy Analysts, OECD, on the OECD report on global value chains in shipbuilding with a special focus on input costs.
3.3 Presentation by Dr. Paul STOTT, Senior Lecturer in Marine Production and Shipping Market Analysis, Newcastle University on proposal for a factor for tracking newbuilding input costs.
3.4 Presentation by Mr. Anders BOENAES, Senior Vice President, A.P. Møller-Mærsk A/S on a customer perspective – how conditions in the shipbuilding market affect container liner shipping.
Session 4: Injurious pricing and possible policy remedies
This session aimed to discuss how injurious pricing can be identified and explored possible policy remedies against injurious pricing in the shipbuilding sector
4.1 Presentation by Mr. Jorge CASTRO, Rules Division, World Trade Organization on the WTO framework to regulate dumping.
4.2 Presentation by Mr. Laurent DANIEL and Hiroki TAKAGI, Economists/Policy Analysts, OECD, on the identification of injurious pricing and presentation of some possible information sharing mechanisms.
4.3 Presentation by Dr. Alessio TEI, Lecturer in Maritime, Newcastle University on distortions on shipbuilding markets: tackling pricing issues.
More about OECD work on shipbuilding