New twist in Korea-EU WTO dispute

The long drawn-out dispute between South Korea and the EU has taken an interesting twist with Korea filing a counter complaint with the World Trade Organization (WTO), claiming that subsidies provided by the European Union (EU) member nations to their shipyards amount to unfair trade practices banned under WTO rules. The Korean ambassador to Geneva has urged WTO to make arrangements for bilateral consultations on the issue between the two parties. Last October, EU filed a similar complaint with WTO over what it sees as unfair practices conducted by Korean shipbuilders.

The Korean Ministry of Foreign Affairs & Trade said in a statement, “The EU member states, which brought the case of Korean shipbuilding finance to WTO, are providing their own shipbuilders with management subsidy, structural adjustment subsidy and temporary subsidy. Under the so-called temporary defensive mechanism (TDM), up to 6% of contract value is provided in subsidy to EU shipbuilders when they face competition from Korean shipbuilders.” The ministry went on to say that this system runs counter to the principle of most-favoured-nation treatment under the WTO rules and that the Korean government intends to question this unfairness through dispute settlement procedures at WTO.