Korea examines counterclaim for EU subsidy

The Ministry of Foreign Affairs and Trade revealed October 21 that it was studying whether to file a suit against the EU to the WTO for providing shipbuilding subsidies. The EU has filed a suit against Korea to the WTO already.

An officer at MOFAT said that they have been watching closely whether the EU's provision to its shipbuilding companies violate the WTO agreement or not. If necessary, Korea will also go to the WTO over the matter.

Against the EU's suit, the Korean government claims that that support from the Korean government does not constitute an illegal subsidy according to the WTO convention and does not cause severe damage to EU shipbuilding companies.

In the event the subsidies are prohibited, the parties must arrange a panel through mutual negotiation within 30 days and file reports within 90 days. For manageable subsidies, the parities must negotiate within 60 days and file reports within 120 days.

The EU lodged the complaint against the Korean government over unfair subsidies during the Korean shipbuilding industry restructuring in 1999. Though both sides continued negotiating until September 2002, no agreement was reached and the EU board of directors decided to sue the Korean government at the WTO September 30.