Seoul risks another WTO spat if it intervenes to save shipbuilders

Seoul risks another WTO spat if it intervenes to save shipbuilders

The government in South Korea is being urged to take a backseat when it comes to the restructuring of the nation’s largest shipyards or risk another spat at the World Trade Organization (WTO).

The European Union took Seoul to task at the WTO in 2002 over state subsidies in various industries including shipbuilding, in a case that rumbled on for much of the decade.

Now with all its leading yards entering restructuring (and tens of thousands of jobs on the line) speculation is growing that Seoul will intervene and thus draw out another lengthy case at the WTO.
Thus far, the government has left the restructuring to creditors, led by state-run Korea Development Bank (KDB), with just the odd comment from the sidelines.

“Talks with creditors and the shipbuilders should be first. It’s too early to talk about any government role,” employment and labour mMinister Lee Ki-kweon said last week.

Nevertheless, with the harshest measures set to be announced in the coming days, with upwards of 10,000 jobs on the line, Seoul is coming under some pressure on home soil to intervene, something it knows could cause it repercussions at the Geneva headquarters of the WTO down the line.

Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.

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