Public procurement EP hearing 20 th of April 2016, Jing Shen, SEA

Public procurement EP hearing 20 th of April 2016, Jing Shen, SEA

Public procurement EP hearing 20th of April 2016,
Jing Shen, SEA Europe Trade Expert
Speaking note
Title Panel 1: Increasing access to respective public procurement markets.
1. Introduction SEA Europe: 91 bn Euro turnover, 500,000 high profile jobs and 400,000
indirect jobs.
We are shipbuilders, marine equipment manufacturers. We are not ship owners or
operators
2. SEA Europe has been very active since the beginning of the TTIP process. We have
sent a trade delegation to Washington DC to speak to various US stakeholders.
3. We face several maritime restrictions which have effectively prevented our vessels
from entering the US domestic market.
The two main restrictions are the Jones Act and Public Procurement.
4. Explain the essence of the Jones Act! (Slide)
Any transportation of goods and people between two US places/points must be
carried by vessels that are US built, US owned, US crewed and US flagged.

What concerns our industry is the US built requirement.
5. Even if we manage to relax the Jones Act within TTIP we will always have problems
with public procurement restrictions.
6. Slide with examples of European Specialised Vessels which cannot be exported to
the US because of US Public Procurement restrictions.
The examples are: Icebreakers, Ocean research vessels, dredgers, buoy tender
vessels and multi-mission vessels. These vessels are typically government owned in
the US and therefore are governed by the US public procurement rules which
require all US government purchased vessels must be US built unless the US
President gives an exemption to a specific case.

This is certainly a problem for Europe. But it is also a problem for the US, because the US
needs our vessels!

Give the example of Ice-Breakers.(price-difference/delivery-time/European technology)
1
The current US icebreaker fleet consists only two 40 years old heavy icebreakers. Only one
of them is still in operation while the other one is being cannibalised to keep the active one
alive. In order to keep up with the Russian fleet and fulfil anticipated mission needs in the
arctic, the US needs to upgrade their icebreaker fleet. The reported demand in the US is
three heavy heavy and three medium icebreakers. But the problem is that in the US to build
an icebreaker in a US shipyard it would cost 1 billion USD with a 10-year’s delivery time. On
top of that the US yard will need to buy or obtain license for technology and designs from
Europe. Even if the US government can solve the budget problem and a US yard can get the
designs, they will never be able to complete the new vessel before the only one active heavy
icebreaker goes beyond its useful life.
How can they solve this problem? The solution is right here, in Europe. In Europe we have
the technology and experience of building icebreakers. Our price is in general one third of
the US price. Our delivery time is much shorter.
But it is a pity that the US cannot buy icebreakers from Europe because of its public
procurement restrictions.
7. US public procurement restrictions have also brought negative impact on European
marine equipment manufacturers. It is mainly due to the Buy-American Act! This
Act imposes a 60% local content requirement which means that European produced
major marine equipment that is of higher value cannot be exported to the US.
Example: European dredging equipment is too big of value to export to the US!
8. Slide on Statistics




As a result of all this protective legislation, US commercial shipbuilding almost vanished!
The only reason that the European shipbuilding industry survived is because we believe in
free trade and we keep on innovating and keep on finding niche markets.
We also face unfair competition from the other part of the world , especially the Far East!
There are illegal government support practices and throat-cutting pricing behaviour. We
want to do business and compete in a healthy and fair market with a level playing field!
To Conclude:
If the US opens up its public procurement market in the maritime field for Europe, we, the
European shipbuilding industry can build and deliver all the ships that the Americans need!
*****
2