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October 1, 2002

EU takes Korea case to WTO
EU Trade Commissioner Pascal Lamy has informed the Council of the EU that negotiations with Korea to find an amicable solution to the long-standing dispute with Korea on unfair shipbuilding practices have failed.

The European Commission will now trigger the twin-track strategy approved by the Council on June 27, 2002. It will launch a WTO panel and authorise temporary and limited state aid for EU shipbuilders.

"We have negotiated in good faith to find an amicable solution to this problem with Korea," said Lamy, "but this has not proved to be possible. The Korean delegation has indicated that there is no support in the Korean industry for any of the proposals discussed with the EU. Korea has left us with no option that to go to the WTO".

The Commission will now launch a WTO Panel against Korea's unfair trade practices in the shipbuilding sector by means of a publication of a notice in the Official Journal of the European Communities in the coming days. This publication will trigger the temporary and limited authorisation of State aid. The principal provisions of the TDM are the following:

    1. Maximum aid intensity of 6% of contract value;
    2. scope covering container ships and product and chemical tankers
    3. Entry into effect of the possibility to grant aid to Liquefied Natural Gas (LNG) tankers on the basis of a new Commission investigation under the Trade Barriers Regulation (TBR) covering the full year 2002, confirming that Community yards building this type of ship suffer material injury and serious prejudice, caused directly by unfair Korean practices; TBR questionnaires will be addressed to the industry in early December 2002.
    4. Expiry of the Regulation: 31 March 2004 to take account of the time necessary for a WTO panel to reach its conclusions, i.e. 18 months from the end of September.

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