Shipbuilding Disputes
The EU will join the WTO settlement process on the dispute between South Korea and Japan regarding the former’s support for its shipbuilding industry as an interested third party.
The EU is planning to join Japan’s WTO litigation regarding the South Korean government’s support for its shipbuilding industry.
The EU lost a similar suit in the past and is now forming a united front against South Korea with Japan.
According to the South Korean government and the WTO, the EU notified the South Korean and Japanese governments and the WTO Dispute Settlement Body on November 20 that it would join the two government’s WTO dispute settlement process regarding the issue as an interested third party.
On Nov. 6, Japan made a request for bilateral consultations as the first stage of the litigation, claiming that the South Korean government supported the shipbuilding industry in violation of the WTO Agreement on Subsidies and Countervailing Measures to cause severe damage to the shipbuilding industry of Japan. According to the WTO dispute settlement process, the South Korean and Japanese governments have to discuss the issue for up to 60 days.
The EU said that it has a significant interest in the issue, claiming that the South Korean government’s measures called into question by the Japanese government substantially affect the prices and trade of its major export items like ships, ship engines and marine equipment. Participation in the consultations means that the third party is deeply interested in the dispute, and the EU is likely to take part in the litigation as a third party if South Korea and Japan fail to reach an agreement and a dispute settlement panel is established.
The EU filed a similar WTO suit with regard to the restructuring of the South Korean shipbuilding industry in and after 1997. In October 2002, the EU sued South Korea, claiming that creditors’ support for the restructuring constituted government subsidies. The WTO rejected most of its arguments in March 2005.