Korean shipbuilders may raise the prices they charge for building vessels, hoping to appease protests by European Union shipbuilders that recent Korean bids for orders have been below cost, according to the Ministry of Commerce, Industry and Energy.
Shipbuilders based in the European Union said they would directly file a suit against Korean shipyards in EU courts to seek a remedy against the unfair trade practices, stepping up pressure on the Korean government to find ways to resolve the conflict. To make matters worse, Korean shipbuilders recently surpassed Japan in the total number of shipbuilding orders, amid accusations that the Korean government was subsidizing the nation's shipyards, allowing them to build vessels at such low prices. EU officials have said that Seoul was tapping into loans provided by the International Monetary Fund, in order to subsidize domestic shipbuilders.
An official at the commerce, industry and energy ministry said the EU commission plans to notify Korean officials of its intention to file a suit if domestic shipbuilders continue to win contracts at below market prices. In response, Korean shipyards are looking into a number of options, including a five to ten percent increase in prices to build cargo vessels and containers ships, the official said.
Earlier this year, officials from the EU executive commission and the Korean government agreed to hold an unlimited number of meetings to resolve the shipbuilding dispute. EU officials are reportedly considering import sanctions should Korean shipbuilders fail to raise construction prices.
In the agreement reached earlier this year, Seoul agreed to halt additional loans to shipyards, while downsizing the nation's shipbuilding industry by getting state-run financial institutions to enforce tougher capital adequacy standards on commercial lenders in Korea.