South Korean shipbuilders are to be cleared of subsidy claims made by the European Union. The dispute settlement body of the World Trade Organization (WTO) was reported to have made a tentative decision to dismiss the EU claims. According to reports, the WTO concluded that South Korea’s bailout to revive the troubled shipyards, including Daewoo, should not be categorized as a subsidy under WTO rules.
The EU took South Korea to the WTO in 2002, claiming that Korean shipbuilders received subsidies during restructuring at the peak of the currency crisis in late 1990s. In addition, the EU also complained that export financing and advance payment guarantees offered to Korean shipbuilders by the state-run Korean Export-Import Bank (KEXIM) should be categorized as subsidies. The WTO panel was reported to have concluded that KEXIM financing was not a matter of concern, but ruled some support involving companies such as Samho Shipyard should be considered subsidies. It is expected that a final report on the Korea-EU shipbuilding subsidy dispute case will be issued in less than a month. Barring any change from this tentative decision, Korea is expected to be exonerated from the subsidy charges. But if the EU challenges the ruling, it may take another two or three months to conclude the case, according to press reports.
The Korea Times