Japan has filed a new petition with the World Trade Organization (WTO) against South Korea concerning alleged aid provided by the Korean government to the country’s shipbuilding industry.
In late January 2020, Japan asked Korea to hold bilateral talks on the matter under the WTO rules, Nippon.com reported citing sources.
If the consultations are unsuccessful, Japan plans to establish a dispute settlement panel.
The move would likely delay the merger between South Korean shipbuilding giant Hyundai Heavy Industries (HHI) and its smaller rival Daewoo Shipbuilding and Marine Engineering (DSME). In 2019, HHI commenced processes in several countries to obtain regulatory approvals for its DSME acquisition. The shipbuilder will also need to get approval from Japan Fair Trade Commission (JFTC), a Tokyo-based government agency regulating economic competition.
Back in November 2018, Japan requested WTO dispute consultations with South Korea due to Korean subsidies to local shipbuilders. Japan claimed that the challenged measures, which include funds, loans, guarantees, insurance and other financing, were inconsistent with the WTO’s rules.
Although Japan said that the aid distorted the market and hindered the resolution of oversupply issues in the industry, Korea rejected allegations that the financial support was in breach of international trade rules.
World Maritime News Staff