Japan has filed a petition against South Korea with the World Trade Organization, in which it accuses Seoul of providing excessive aid to the domestic shipbuilding industry. Last week, Japan called South Korea to talk regarding the matter based on WTO rules. However, if the negotiation fail, Japan will seek to establish a dispute settlement panel.
Two years ago, Japan had filed again a similar petition, claiming that financial assistance worth ¥1.2 trillion that the South Korean government provided to a major domestic shipbuilder undermines fair competition and breaches WTO rules.
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According to local media, the dispute settlement procedures based on WTO rules failed, and Tokyo concluded that Seoul does not intent to take corrective steps.
In 2015, Seoul extended financial assistance worth ¥1.2 trillion to Daewoo Shipbuilding & Marine Engineering Co., Ltd one of the biggest South Korean ship-building firms.
More specifically, Japan believes that South Korea’s help towards Daewoo Shipbuilding & Marine Engineering, violates WTO rules and has negatively distorted the market mechanism.
On the other hand, in September last year, South Korea had filed a petition with the WTO over Japan’s export controls. However, two months later it suspended the dispute settlement procedures in exchange for a resumption of policy dialogue between the two countries.
