WTO rules in favor of S. Korean shipbuilders

WTO rules in favor of S. Korean shipbuilders

Agence France-Presse, Seoul

The World Trade Organization (WTO) has cleared South Korean
shipbuilders of charges that they received illegal subsidies,
wrapping up a five-year dispute with European rivals, officials
said on Thursday.

A WTO panel issued an interim report Wednesday, rejecting
accusations by the European Union that the government-led
restructuring of South Korean shipbuilders constituted a state
subsidy, the foreign ministry said.

The panel's final report will come out next month, it said.

"The tentative ruling will help us shake off criticism that
our shipbuilding industry has grown with state subsidies," a
ministry official said.

The dispute erupted in 1999 when European shipbuilders argued
that unfair subsidies allowed South Korea to build vessels below
cost and helped the country's shipbuilders dominate the global
market.

South Korea argued that its industry was simply more
competitive.

The country's shipbuilding industry underwent widespread
restructuring when the country was hit by the Asian financail
crisis in late 1997, with several shipyards bailed out with loans
from goverment-controlled banks.

After years of unsuccessful negotiations, the global body set
up a panel in July last year. The row also prompted European
countries to subsidize their own shipyards.

South Korean shipyards welcomed the WTO's decision saying it
would help them to maintain their global leadership.

"We welcome the WTO panel's tentative ruling," an official at
the Korea Shipbuilders Association said, adding South Korea would
receive record orders this year.

South Korean shipbuilders won 43.5 percent of the global
shipbuilding market in 2003, followed by Japan with 28.6 percent,
China 12.6 percent and Europe on 8.7 percent.

Despite the rising cost of materials, South Korean shipyards
have received record orders so far this year thanks to a rise in
demand for high-end liquefied natural gas (LNG) carriers.

In the nine months to September, South Korean shipbuilders
secured orders to build 34 LNG carriers, compared with 12 for all
of last year.

The private Hyundai Research Institute predicted that the 2005
output of South Korea's shipbuilding industry would rise 15.7
percent from this year.