Japan has repeated demands for the South Korean government to end subsidies to its shipbuilding industry, in the first round of bilateral talks under the World Trade Organization (WTO)’s dispute resolution process.
The Japanese Ministry of Foreign Affairs and Ministry of Land, Infrastructure, Transport and Tourism announced that officials from the two countries had met in Seoul.
“At the meeting, Japan called for the early removal of subsidies, as well as asking South Korea to provide details of the measures it has undertaken,” the statement said.
Japan said the South Koreans have not responded to a call made last October for the removal of subsidies, which led to Tokyo filing its WTO complaint in November.
It claims that South Korea’s subsidies and refund guarantees have not been made on a commercial basis and have led to domestic shipyards taking loss-making orders that distort the market. They further allege that the subsidies have allowed the survival of unprofitable yards and contributed to the oversupply of production capacity.
The complaint focuses on loans and refund guarantees provided by the state-backed Export-Import Bank of South Korea and Korea Development Bank to yards including DSME and STX Offshore & Shipbuilding. Both banks are major shareholders in the two shipbuilders.
Japan has also taken issue with government-backed orders at South Korean yards, including planned contracts for up to 140 bulkers and 60 containerships intended for the domestic industry.
South Korea is contesting the Japanese complaint.
