Korean shipbuilders are concerned that the intensified row regarding the shipbuilding industry with the European Union (EU) may negatively influence their business activities. Industry observers worry the intensifying bilateral trade dispute may put a damper on the prosperous shipbuilding sector at a time when it is anticipating success in winning large-scale orders from Europe through competitive prices.
Korean shipbuilders have been enjoying an unprecedented boom in winning massive shipbuilding orders until the first quarter of this year, thanks to toughening regulations on outdated ships by the majority of countries around the world to prevent disasters such as the oil tanker which sank off the coast of Spain last November. The incident sparked a hike in new shipbuilding orders. According to the Ministry of Commerce, Industry and Energy (MOCIE), shipbuilding orders shot up by 339.7 percent since last year to 4.03 million compensated gross tons (CGT) for the first three months of this year. The record order was valued at $5.36 billion.
In a bid to fend off growing trade dispute calls by the EU, the Korean government plans to file a counter suit with the WTO, citing that EU member countries provided subsidies for local shipbuilding industries. Seoul denies the charges, saying South Korean shipbuilders are more competitive than their European competitors because of lower costs and greater efficiency, and what the EU claims as governmental subsidies, are not really subsidies, but bailouts and debt-write offs made based entirely on the commercial judgments of creditors without any government mediation.
The international trade regulatory body plans to issue an interim report in mid-October and publish the final report in December.