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Thursday, November 15, 2018  (Comments: 1)

Japan has filed a formal “request for consultations” with the World Trade Organisation over its concern that measures the Republic of Korea has taken to financially support its shipbuilders are inconsistent with rules under the WTO’s Agreement on Subsidies and Countervailing Measures (SCM) and the General Agreement on Tariffs and Trade (1994).

According to the consultation request posted on the WTO website on the 13th November, Japan alleges Korea has developed and implemented a range of measures designed to provide financial support to its shipbuilders.

These measures include providing direct financing to Korean shipbuilders that Japan feels enables “their continued market presence and prolonged periods of otherwise unsustainable low pricing”. The measures in question relate to the development, production, marketing, and/or sale or purchase of commercial vessels, including vessels designed to carry crude oil, liquefied natural gas (LNG), and shipping containers.

Japan is also concerned about guarantees and other insurance for financing related to commercial vessel orders placed with Korean shipbuilders.

Subsidies and support for the development of eco-ships that comply with environmental regulations have also come under attack. In 2017, the Korean Ministry of Oceans and Fisheries, announced a plan to implement a system to provide cash payments to cover 10- 20% of the price of a new ship that meets certain environmental requirements if the purchaser is replacing older incompliant tonnage.

Japan argues the measures Korea is putting in place contravenes its obligations under various provisions of the SCM Agreement and are inconsistent with Article III:4 of the GATT 1994.

The complaint, which can be read in full at here, sets out the existence and nature of subsidies, as well as the “injury caused to the domestic industry, and/or serious prejudice caused to the interest of Japan”.

Reader Comments (1)

Somewhere the government is giving direct subsidies; and some where indirect, i.e. give loan from government backed financial organizations that is never intended to pay back. e.g. Vijay Malya and others. Direct subsidy looks better to receive orders from all over the world that creates new employments. (I am not sure how matured is my view; WTO knows better).

By Anup Kumar Roy on Tuesday, November 27, 2018

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