Temporary defensive measures

The EU is to authorise temporary and limited state aid for EU shipbuilders after negotiations with Korea to find an amicable solution to Korean unfair shipbuilding practices failed.

EU Trade Commissioner Pascal Lamy has informed the Council of the EU that the negotiations with Korea to find an amicable solution to Korean unfair shipbuilding practices have failed.

The European Commission now plans to fight back, taking a twin-track strategy approved by the Council on June 27 2000. First, it plans to take the issue to the World Trade Organisation (WTO), and secondly, it will 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 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 than to go to the WTO’, said Lamy.

On 27 June 2002, the Council of the EU approved the twin-track strategy proposed by the European Commission to counter unfair Korean practices in the shipbuilding sector. The EU set a deadline of September 30 2002 to resolve the dispute amicably, failing which it would immediately launch procedures for a Panel against Korea in the WTO and activate a temporary defensive mechanism (TDM) for European shipbuilding.

The European Commission held negotiation rounds with Korea in August and September, which were interrupted on September 27 2002 when Korea rejected the proposals tabled by the EU.

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