EU opens probe into S. Korea shipbuilding

EU opens probe into S. Korea shipbuilding

BRUSSELS (AFP): The European Commission said Monday it was
opening an investigation into alleged unfair practices, including
subsidies, within the South Korean shipbuilding industry.

The opening of the inquiry under the EU Trade Barriers
Regulation follows a detailed examination of a complaint lodged
October 24 by the Committee of European Union Shipbuilders
Association, it said.

"We have looked carefully at the complaint of our industry and
believe there are clear grounds for us to launch this
investigation. We are treating the concerns of EU shipbuilders
with the utmost seriousness," EU External Trade Commissioner
Pascal Lamy said.

"If necessary, we will take this all the way to the World
Trade Organization," he said in a statement.

The commission said last week it intended to use this inquiry
as leverage for talks on a negotiated settlement with Seoul --
but that if this fails by May 1, 2001 it will file a WTO
complaint.

In the inquiry, the commission will look at whether the South
Korean practices breach Seoul's international obligations under
WTO rules on subsidies and countervailing duties.

The specific practices alleged are export guarantees, export
financing, debt forgiveness, debt-for-equity swaps, interest
relief and special tax concessions, the commission said.

Brussels will submit its final investigation report to member
states by April 2001.

Diplomats said a meeting on Tuesday of EU industry ministers
would debate the issue, but will only take note of the
commission's effort because of divisions between member states on
the approach.

"The major issue is the continuation of operating aid where
some member states want an explicit reference to that. But they
will not succeed," one diplomat said.

"This time it could be a bit more heated than before. What is
being said is that there have been negotiations for two years but
what is the point," he said.

The commission last week decided against extending operating
aid of up to nine percent for EU shipbuilders after its scheduled
end on December 31, but said there could be a selective scheme if
the South Korean talks fail.

Member states are split on operating aid. Britain, Finland and
Sweden oppose such aid, while Germany, Spain, Greece, Italy and
Portugal are seeking an explicit pledge in its favor, diplomats
said.

In the absence of a commission proposal and a majority of
member states opposing its extension, member states are likely to
say little more than they take note of commission efforts, they
said.