European Union governments have agreed to scrap an exemption from anti-cartel rules for shipping on routes to and from the EU, a move that could lead to a 10 per cent drop in the shipping costs of Irish exporters.

Freight shipping has been organised in the form of cartels, called liner conferences, since the 1870s, the European Commission said. The repeal will come into effect in October 2008.

The current block exemption allows carriers to fix prices and regulate capacity jointly.

The Commission, which carried out a three-year investigation into the sector and proposed an end to the exemption last December, said it would issue guidelines on how competition rules would be applied to maritime transport before the end of the two-year transitional period.

"The European shipping industry will benefit from the more competitive market that will result from the repeal of the block exemption and the EU economy as a whole stands to benefit from lower transport prices and more competitive exports," EU internal market commissioner Charlie McCreevy said.

The Irish Exporters Association (IEA) welcomed the move, which it said could result in a reduction of 10 per cent in the shipping rates charged on transAtlantic and transPacific routes.

IEA chief executive John Whelan also noted that it could see the fuel surcharges imposed by shipping lines in recent months reduced by as much as half in some cases. "It puts the transportation cost issue back in the hands of exporters," he said.

Irish Continental Group (ICG) said the move should have no implication for its business.