October 22, 2002

EU starts formal WTO proceeding against Korea
The European Union has taken the first formal steps of bringing a World Trade Organization proceeding on its charges of unfair shipbuilding practices by South Korea.

The European Commission has now requested the WTO to set up formal consultations under its Dispute Settlement mechanism over the unfair Korean shipbuilding practices. This decision has been taken further to the failure to reach an amicable solution to the long-standing dispute by the EU's deadline of Sept. 30, 2002.

EU Trade Commissioner Pascal Lamy said: "The lack of progress in our bilateral discussions so far has left us with no option but to take Korea to the WTO. I now call on Korea to swiftly settle this matter within the WTO consultations."

In these consultations, the European Commission "will convey to Korea its view that the granting of subsidies to its shipbuilders has caused a damage to the EU shipbuilding industry and is therefore in violation of WTO Agreement on Subsidies. If these consultations fail to solve the dispute within 60 days from the request, the way ahead would be to request a WTO panel.

Subsidies for EU yards on way

In a decision published in the Official Journal of the European Communities on Oct. 19, 2002 (OJ L 281/15) the Commission announced the initiation of dispute settlement procedures against Korea under the relevant WTO provisions. The European Commission has now officially notified the WTO of its request for consultations with Korea under Article 4 of the WTO Dispute Settlement Understanding. A notice allowing temporary and limited authorization of state aid to EU shipbuilders will be published in the Official Journal before the end of this week

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