EU PREPARES TO FIGHT KOREAN SHIPBUILDING PRACTICES

EU PREPARES TO FIGHT KOREAN SHIPBUILDING PRACTICES    The European Union has approved a plan to counter “unfair” South Korean shipbuilding practices if negotiations with the South Korean government break down.
   The EU’s deadline to resolve the dispute is the end of September. If nothing is done, the EU said it would “immediately” initiate procedures for a World Trade Organization panel to review the matter and would “activate a temporary defensive mechanism” for Europe’s shipbuilding industry.
   “Korea now knows that if we fail to resolve this dispute in the few weeks between now and the end of September, we will take them to the WTO and provide the opportunity for our industry to benefit from temporary support for the period during which the case is heard,” said Pascal Lamy, the EU’s trade commissioner. “This time Korea knows it is for real.”
   “European shipyards are suffering as the world shipbuilding market faces serious difficulties, while Korea continues to price ships below costs,” said Erkki Liikanen, the EU’s enterprise commissioner.
   The main provisions of the temporary defensive mechanism include:
   * Maximum aid of 6 percent of the contract value.
   * Inclusion of containerships, product and chemical tankers, and liquified natural gas (LNG) tankers.
   * Authorization of aid after WTO procedure is started against Korea.
   * Entry into the possibility to grant aid to LNG carriers based on a new European Commission investigation under the Trade Barriers Regulation, confirming that the EU shipyards that build this type of ships “suffer material injury and serious prejudice, caused directly by unfair Korean practices.”
   * A deadline of March 31, 2004, for the WTO panel to reach its conclusions.