EU to watch closely S. Korean shipbuilding practices

BRUSSELS, April 18 Kyodo

The European Union said Tuesday it is keeping a close eye on South Korean shipbuilding pricing practices, warning it may file a complaint to the World Trade Organization if Korean shipyards continue to sell ships at unfair prices.

EU Trade Commissioner Pascal Lamy told the European Parliament that an agreement reached last week between the EU and South Korea on shipbuilding was an ”improvement achievement.”

The accord, however, does not prevent the EU from going to the WTO if there no improvement in the Korean pricing practice, he said.

”We haven’t given up on that idea,” Lamy told the European Parliament committee on industry, external trade, research and energy.

Touching on South Korea’s move to stop releasing monthly statistics on new shipbuilding orders, Lamy said the EU will ”follow that very carefully” over the next few weeks.

Following months of negotiations, the EU and South Korea agreed last week to promote fair and competitive market conditions in the shipbuilding industry.

The EU alleges that South Korea misused international financial aid to subsidize ailing shipyards and unfairly selling ships in the world market at low prices.

The EU and South Korea agreed they would hold consultations on the request of either party on any general or specific matter relating to shipbuilding.

The South Korean government also committed itself for the first time to implement concrete measures, which will help raise prices to commercially viable levels, according to the European Commission, the executive body of the 15-member EU.

The agreement focus on non-subsidization, banking, financial transparency with regard to international accounting standards and commercial pricing practices, the commission said.

The EU warned last November it may take South Korea to the WTO for continuing to sell ships at low prices, causing damage to the European shipping industry.

It also accused Seoul of using financial aid given by the International Monetary Fund to unfairly subsidize its bankrupt shipyards.

South Korea has rejected the accusations.

A senior European Commission official said last week the EU will be able to tell within a few months whether South Korea was fully implementing the agreement with the EU.

The European Commission says worldwide shipbuilding industry is facing a crisis of downward spiraling price, blaming the situation largely on excess capacities in South Korea.

It says South Korean shipyards sell their products at prices of about 20%, or in some cases 30%, below the normal European level, and with large subsidies.

The EU share of the world shipbuilding market dropped from 25% in 1998 to 17% in 1999. In January this year, the situation worsened with South Korea taking 72% of the world’s new orders compared with 7% for the EU, according to the commission.

Japan, a leading shipping country, is also losing its market share, a senior European Commission official said.

COPYRIGHT 2000 Kyodo News International, Inc.

COPYRIGHT 2000 Gale Group

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