18. 7. 98 Official Journal of the European Communities L 202/1 (Acts whose publication is obligatory) COUNCIL REGULATION (EC) No 1540/98 of 29 June 1998 establishing new rules on aid to shipbuilding THE COUNCIL OF THE EUROPEAN UNION, Having regard to the Treaty establishing the European Community, and in particular Articles 92(3)(e), 94 and 113 thereof, Having regard to the proposal from the Commission ('), Having regard to the opinion of the European Parliament (?), Having regard to the opinion of the Economic and Social Committee (%), Whereas the agreement respecting normal competitive conditions in the commercial shipbuilding and repair industry concluded between the European Community and certain third countries within the framework of the Organisation  for ~ Economic  Cooperation  and Development (OECD) (hereinafter referred to as ‘the OECD Agreement)) () has still not entered into force because the United States of America has failed to ratify it; whereas, therefore, Council Regulation (EC) No 3094/95 of 22 December 1995 on aid to shipbuilding (°) has not yet entered into force; Whereas, in accordance with Article 10 of Regulation (EC) No 3094/95, the relevant rules of Council Directive 90/684/EEC on aid to shipbuilding (°) will continue to apply, in the absence of entry into force of the OECD Agreement, until 31 December 1998 at the latest; Whereas a satisfactory balance between supply and demand in world shipbuilding has still not been fully ) O] C 114, 15. 4. 1998, p. 14. ) O] C 138, 4. 5. 1998. J C 129, 27. 4. 1998, p. 19. J C 375, 30. 12. 1994, p. 3. J L 332, 31. 12. 1995, p. 1. Regulation as last amended by Regulation (EC) No 2600/97 (O] L 351, 23. 12. 1997, p. 18). % OJ L 380, 31. 12. 1990, p. 27. ( ( () () 0) ( 5 established, so that prices remain depressed; whereas the competitive pressures on Community shipbuilders are expected to grow further as overall ship demand after the year 2000 is predicted to fall and available world shipbuilding capacity is expected to continue to rise; Whereas, although Community yards have made progress in improving competitiveness, the rate at which they are improving productivity needs to be increased in order to close the gap with their international competitors, particularly in Japan and Korea; Whereas a competitive shipbuilding industry is important to the Community and contributes to its economic and social development by providing a substantial market for a range of industries and by maintaining employment in a number of regions, many of which are already suffering a high rate of unemployment; Whereas a complete abolition of aid to the sector is not yet possible in view of the difficult market situation and the need to encourage yards to make the necessary changes to improve competitiveness; whereas, a tight and selective aid policy should be continued in order to support these efforts and to ensure fair and uniform conditions for intra-Community competition; whereas such a policy constitutes the most appropriate approach in terms of ensuring the maintenance of a sufficient level of activity in European shipyards and, thereby, the survival of an efficient and competitive European shipbuilding industry; Whereas the Community’s aid policy for the shipbuilding sector has remained essentially unchanged since 1987; whereas that policy has generally achieved its objectives but requires adaptations so that it is better able to address the future challenges facing the industry; Whereas, in particular, operating aid is not the most cost-effective way of encouraging the European shipbuilding industry to improve its competitiveness; whereas, accordingly, operating aid should be phased out