On 28 and 29 July 2000 the European Commission and Korea held a second round of consultations on shipbuilding, in Brussels. The discussions in the framework of the 'EU/Korea Agreed Minutes', which aim at promoting fair and competitive conditions in the world shipbuilding and at stabilising the market, failed to reach a positive conclusion. The Commission will report to the Council in the coming days and propose alternative ways forward, including a possible action in the WTO under the Trade Barrier Regulation (TBR).
Intensive discussions held at the end of last week between the Commission and Korean experts, failed to achieve an effective solution to the problem of unfair price undercutting by Korean shipbuilders, raised by the EU. The Korean side was unable to offer a proposal which would alleviate EU concerns.
The discussions focussed on the possibility for Korea Exim Bank to introduce a review mechanism of shipbuilding export contracts in order to monitor whether the prices offered by the Korean yards respect the "Normal Value", according to the definition of the WTO Antidumping Agreement.
The Korean side did not agree to the basic principle that prices should cover all the costs and that its application would lead to a significant increase in prices whose result would be verified on the market in a short period of time.
In mid-September, Commission antidumping experts paid exceptional on-the-spot visits to two large Korean yards with the view to determining whether prices of particular contracts included all relevant costs. Unfortunately, citing reasons of commercial confidentiality, one company was not prepared to give specific information per ship or per contract and to reveal its real costs. Thus, it was not possible, for the Commission to draw any clearcut conclusions on the alleged unfair Korean pricing practices.
As a result, the European Commission considers that the transparency commitment contained in the "Agreed Minutes" has not been fully implemented by the Korean side. More importantly, the main goal of the bilateral agreement, the stabilisation of the market through the improvement in the level of ship prices, cannot be reached, due to the Korean's refusal to introduce an effective mechanism that would have helped to achieve it. Consequently, the Commission will now provide report to the Council on the failure of the negotiations and propose alternative solutions, including the possibility of a trade action under the WTO.