South Korea ready to fight EU over shipping subsidies
South Korea ready to fight EU over shipping subsidies
SEOUL (AFP): South Korea is ready to cross swords with the European Commission if it takes World Trade Organization action against alleged shipbuilding subsidies, officials said Wednesday.
"If the European Commission takes action at the WTO, we would actively defend our position as we believe we have a strong case," warned a foreign ministry official.
"South Korean shipyards share the view that the European Union is picking a quarrel with them in order to justify the resumption of its own subsidies to the European shipbuilding industry," he said.
The European Commission said Tuesday it would appeal to the WTO over alleged state subsidies to South Korean shipyards unless an accord is reached by June 30.
Concurrently, the commission said in a statement, the European Union will adjust its own subsidies to its shipbuilders who claim to be suffering at the hands of the Korean subsidies.
An investigation carried out under the Trade Barriers Regulation "has established that substantial subsidies have been granted to Korean shipyards through both export and domestic programs which contravene the WTO's 1994 Subsidies Agreement," the commission said.
EU Trade Commissioner Pascal Lamy said: "Following the results of our investigation, which confirm the suspicions of the EU industry, we will recommend to the Council that the EU should pursue this matter through the WTO by June 30."
EU industry ministers are to meet next week to take a final decision on a WTO panel.
"Although we have not closed the door to an amicable solution with the Korean authorities, the clock is now ticking," said Lamy.
Officials here insist South Korea sticks to OECD guidelines for export financing for the shipbuilding industry and therefore, it does not contravene WTO rules.
The EU has accused South Korea of giving unjust subsidies to Daewoo Shipbuilding and Marine Engineering Co. by bailing it out with a debt rescheduling program.
Creditor banks seized managerial control of the country's second largest shipyard after the Daewoo Group collapsed in August 1999. The shipyard made a dramatic turnaround after it shed its heavy industries division in October last year.
South Korean officials have said the rescue package, given by creditors, was only part of nationwide efforts to restructure many ailing industries here.
"Taking productivity into account, the average wage in shipbuilding industry here is one fourth of that of Germany. South Korean shipyards also profit from cheaper steel and the weak won," the foreign official said.
South Korea took more than 40 percent of global orders for new shipping last year. Seoul claims that was due to the weakness of its national currency, which made its industry more competitive.
South Korean and EU negotiators have been engaged in two years of tough but fruitless negotiations on shipbuilding.