The World Trade Organisation (WTO) largely rejected a South Korean challenge against European Union subsidies to shipbuilders, but also admonished the EU in a long-running dispute between the two sides.
The WTO rejected Seoul's claims that state aid for yards in Europe breached three separate accords on global commerce, which are overseen by the 148-nation organisation.
In its report, however, the WTO said the EU was wrong to act unilaterally in retaliation for what Brussels judged to be unfair South Korean subsidies. Both sides painted Friday's ruling as a win.
"The Koreans made four claims, out of which three were dismissed by the panel, so to that extent we welcome the decision," said Fabian Delcros, a EU diplomat at the WTO.
But a South Korean diplomat noted that the WTO had chastised Brussels and said Seoul was far from disappointed. The EU gave a green light for state aid to shipyards in Denmark, France, Germany, the Netherlands and Spain in 2003, later extending it until March 31 this year.
Brussels said it had used its ?Temporary Defence Mechanism? allowing its member states to give state aid to protect shipbuilders from what it claimed were underhand South Korean ship export subsidies.
The WTO upheld South Korea's allegation that the EU was wrong to allow aid for shipbuilders without waiting for the trade body to rule on Brussels' complaint against Seoul. "The only claim that they won in our mind doesn't have any practical impact, because the state aid is no longer in use," Delcros said.
The EU had accused South Korea, the world's largest shipbuilder, of driving European rivals out of the market. South Korea denied the EU claim, saying its industry was simply more competitive owing to lower production costs, a cheaper currency and efficiency gains thanks to restructuring after the Asian financial crisis of 1997.
Last month, however, the WTO upheld part of the EU complaint, giving Seoul 90 days to stop the Export-Import Bank of Korea (EXIM) from offering pre-shipment loans and advance payment refund guarantees to South Korean shipyards. South Korean authorities at the time noted that the decision had ?no impact? on the country's shipbuilding industry as the subsidies no longer exist. They also highlighted that the WTO had actually ruled in Seoul's favor by rejecting the EU charge that European shipbuilders had suffered ?serious prejudice? from corporate restructuring loans to three South Korean companies.
