Japan has formally requested WTO dispute consultations with South Korea regarding alleged subsidies provided by the S. Korean government to its shipbuilding industry. Japan’s request was circulated to WTO members on 10 February.
Specifically, Japan claims the challenged measures, which include funds, loans, guarantees, insurance and other financing, are inconsistent with the WTO’s Agreement on Subsidies and Countervailing Measures (SCM Agreement) and the General Agreement on Tariffs and Trade (GATT) 1994.
The request is the second filed by Japan regarding support measures for Korea’s shipbuilders. Japan initiated its first WTO complaint in November 2018.
What is more, last week, Japan complained to the World Trade Organization, accusing Seoul of providing excessive aid to the domestic shipbuilding industry. As a result, Japan had called South Korea to talk regarding the matter based on WTO rules.
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.