September 5, 2003

Korea files WTO complaint on EU shipbuilding subsidies
South Korea's Ministry of Foreign Affairs and Trade (MOFAT) says that on September 3, 2003, the Government of Korea filed a formal complaint with the World Trade Organization (WTO) over the operating and provisional subsidies granted by the European Union (EU) to its shipbuilding industry. As the first step in the proceeding, the Korean government sent a consultation request dated September 3 to the EU.

The EU previously filed a complaint to the WTO against Korea on October 21, 2002, regarding Korea¡¯s financial programs and restructuring measures for certain domestic shipyards, notes MOFAT. Subsequently, Korea and the EU held consultations on three separate occasions from November 2002 to May 2003 until the selection of panelists on July 21, 2003. Panel procedures are currently in progress.

MOFAT saays that the Korean government plans to prove through the WTO dispute settlement process the unfairness and unlawfulness of the EU's provision of operating aid, restructuring aid, and provisional subsidies for the European shipbuilding industries. Especially with respect to provisional subsidies, the Korean government conceives that the provision of such subsidies is inconsistent with the Most Favored Nation (MFN) principle under the WTO agreements due to the anticompetitive nature of the subsidies.

According to the WTO agreements, following a request for consultations, the countries in dispute will hold consultations for a period of 60 days. Afterwards, if no agreement is reached, the complaining country may request the composition of a panel. In general, it takes 6-9 months for the panel to issue a final report from the date of the panel selection. In this case, however, due to the urgent nature of the case, the panel's final report will be made available within 5 months from the setting-up of a panel.

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