Brussels, 30 September 2002
EU to take Korea to the WTO over unfair shipbuilding practices
Today EU Trade Commissioner Pascal Lamy has informed the Council of the EU that the negotiations with Korea to find an amicable solution to the longstanding Korean unfair shipbuilding practices have failed. The European Commission will now trigger the twin-track strategy approved by the Council on 27 June 2002: launch a WTO panel and authorise temporary and limited state aid for EU shipbuilders. EU Trade Commissioner Pascal Lamy said: "we have negotiated in good faith to find an amicable solution to this problem with Korea but this has not proved to be possible. The Korean delegation has indicated that there is no support in the Korean industry for any of the proposals discussed with the EU. Korea has left us with no option that to go to the WTO".
On 27 June 2002 the Council of the EU approved the twin-track strategy proposed by the European Commission to counter unfair Kerean practices in the shipbuilding sector. The EU set a deadline ct the 30 September 2002 to resolve the dispute amicably, failing which it would immediately launch procedures for a Panel against Korea in WTO and activate a temporary defensive mechanism (TDM) for European shipbuilding. The European Commission held negotiation rounds with Kofea in August and September, which were interrupted on 27 September 2002 when Korea rejected the proposals tabled by the EU.
The Commission will now launch a WTO panel against Korea's unfair trade practices in the shipbuilding sector by means of a publication of a notice in the Official Journal of the European Communities in the coming days. This publication will trigger the temporary and limited authorisation of State aid. The principal provisions of the TDM are the following:
- Maximum aid intensity of 6% of contract value;
- Scope covering container ships and product and chemical tankers;
- Entry into effect of the possibility to grant aid to Liquefied Natural Gas (LNG) tankers on the basis of a new Commission investigation under the Trade Barriers Regulation (TBR) covering the full year 2002, confirming that Community yards building this type of ship suffer material injury and serious prejudice, caused directly by unfair Korean practices; TBR questionnaires will be addressed to the industry in early December 2002.
- Expiry of the Regulation: 31 March 2004 to take account of the time necessary for a WTO panel to reach its conclusions, i.e. 18 months from the end of September.
For more information:
IP/01/630, MEMO/01/167, IP/01/656, IP/01/1078, SPEECH/02/22, IP/02/642 and IP/02/1389