Much has changed since the US proposed the elimination of the shipbuilding subsidies by industrialised nations in 1989. Then it was the only country in the OECD to have abolished its domestic aid to the industry.
Eight years later, the US is the onl;y country not to have signed the OECD Shipbuilding Agreement which was formalised after five years of negotiation. Moroever, in lieu of a permemant end to the industry aid, the US revived one controversial programme in 1994, the Title XI Ship Loan Guarantee Programme.
Last year, the House of Representatives approved the OECD pact, but only with a series of provisions that came to be known as Bateman Amendment, after Herbert Bate-man, a Republican congressman.
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The Bateman Amendment extended loan guarantees for 3 years, allowed the US to take action necessary to protect national security interests, and required US trade representatives to take action against dumping.
While the amendment was hailed as a judicious compromise by many builders, it was not in accord with the original international agreement. For his part, John Breaux, a Democrat senator, in April introduced a Senate bill on behalf of the Clinton administration. It is an attempt o incorporate parts of the Hopuse bill with the Bateman Amendment without breaking the OECD agreement.
The Breaux bill was met with strong oppositio from not only the American
shipbuilder's Association which represents 6 of the largest US shipbuilding companies, but also from Trent Lott, a Republican from Mississippi and Senate majority leader. Lott has extensive maritime ties, including a stint as chairman of the Senate merchant marine sub-committee. Unitl recently, he refused to support any bill that did not carry the provisions of the Batemam amendment verbatim. Perhaps realising the impossibility of winning a subsidies war, Lott offered Breaux and his supporters an olive branch.
The two senators came to a critical understanding that opened the door for final approval of the OECD agreement. In a rarew joint appearance on the House floor, they outlined amendments extending loan guarantees for 3 years, protecting the Jones Act, which requires ships transporting cargo between 2 US ports to be US built., as well as pushing the US trade representative to seek adherents to the agreement by non-OECD countries.
Lott and Breaux are now working with Bateman to ensure a Senate and House compromise and to avoid a renegotiation of either the Senate or the OECD agreements. Few peaople want to risk another long international negotiation.
The OECD is willing to work around the Senate bill, including delayed entry by the US as well aas permitting other partners to extend their domestic aid programmes.
Indeed, US foot-dragging has already led to actions by Germany, Greece and Spain to extend and expand aid to their respective domestic ship-building activities.Fears of the US military ship-building and domestic security as a result of more foreign competition have driven the figth for conotinued aid. Yet some shipbuilders argue that their productivity has actually improved as a direct result of their original end to ship-building subsidies by the Reagan administration.
While some shipbuilders will suffer as a result of the OECD agreement, not even the staunchest opponenet to the agreement, Cynthia Brown, president of the American Shipbuilding Association, will come out in favout of subsidies.
"The ASA has always been against subsidies.
We want to support the world shipbuilding prcatises but this agreement doesnot do it. It doesnot end foreign government subsidies or dumping."
nFinancial Times
"We want to give our trade representatives a backbone." For Brown this means a renegotiation of the original OECD agreement. For the other players giving a backbone to trade representatives may mean admitting the possibility of domestic difficulties resul;ting from free trade agreeement.