The European Union could
take South Korea to the World Trade Organization
(WTO) over its shipbuilding practices after talks last week failed, EU officials said. The EU has repeatedly accused South Korea of unfair price undercutting in shipbuilding and has urged the government to take action.
But, in last week's talks, "the Korean side was unable to offer a proposal which would alleviate EU concerns," the European Commission said in a statement. The Commission, the EU's executive body, will report to EU governments soon to propose alternative ways forward "including a possible action in the WTO", it said.
For the EU to take South Korea to the Geneva-based WTO, it would first have to receive a complaint from the European shipbuilding industry, a Commission spokesman said, adding it was likely that the industry would file such a complaint.
In the first instance, the EU could demand consultations with Korea in the WTO and, if that failed, could ask for the formation of a dispute settlement panel to arbitrate the row.
However, there was another possible solution, he said, without elaborating. EU Trade Commissioner Pascal Lamy would be able to discuss the dispute with a South Korean minister when he visits Thailand later this week for an EU meeting with southeast Asian countries, the spokesman said.
The EU and South Korea began talks last December on shipbuilding after the Commission accused South Korea of using International Monetary Fund aid received after the 1997 Asian financial crisis and other subsidies to undercut European shipbuilders. South Korea denied
They hammered out an agreement in April aimed at stabilizing the world shipbuilding market, which the EU says suffers from overcapacity and steadily falling prices.
The agreement contained a pledge not to subsidize shipbuilding and commitments to financial transparency and commercial pricing.
The pact also allowed for consultations to discuss any problems that arose and the EU quickly invoked this clause.