Korean shipbuilders hit back over ‘harsh words’

Date: 19/04/01

By Laurence Frost

SOUTH Korean shipbuilders have hit back at the European Commission over "harsh words" attributed to officials that they claim could undermine the impartiality of an EU investigation into alleged unfair subsidies.

The row comes as Korean industries handed the Commission a detailed rebuttal of accusations that government bailouts had enabled them to slash prices and corner the market while running up huge debts.

The EU executive will decide next week on whether to file a complaint against Korea at the World Trade Organisation (WTO).

"There are some people in the Commission who are leaking their views to the press before the publication of the report," said Lee Song Deuk, a director of the Korea Shipbuilders' Association (KSA) in Seoul. "This is bound to influence the case handlers - it's wrong."

EU officials were quoted as saying that WTO action seemed likely on the basis of preliminary findings by investigators.

KSA has also reacted angrily to leaked details of an upcoming Commission report highlighting concerns that Korea could win contracts for the expected renewal of Greece's ageing ferry fleet - a prospect described as "disastrous" by an unnamed Commission official.

In a letter this week to European Voice, Lee states: "I regret that harsh words are frequently used to criticise the Korean yards when their overall market share gain has been only 5% against a European loss of market share of 21%."

His remarks are likely to deepen the row over Korean state support for restructuring, as EU officials begin studying the industry's point-by-point rebuttal of the main accusation that debt relief administered by state-controlled banks had amounted to an unfair subsidy targeted at the shipbuilding sector.

The 120-page study argues that the restructuring packages following the 1997 financial crisis were offered to companies from all sectors that satisfied transparent criteria. It says that privately owned banks were also involved in the loans, which were offered on commercial terms.

European yards have steadily lost out to Japan since the 1970s, the document says, and now have a market share within their 12-20% range of fluctuations since the 1980s.

One official rejected the report's suggestion that European shipbuilders were no longer in direct competition with Korean yards, having moved out of the market for tankers and large container ships well before the restructuring.

"There are a lot of shipyards which are still competing with the Koreans," said the official. "The fact that Japanese builders are complaining too indicates that there's a problem."

South Korean shipbuilders have hit back at the European Commission over 'harsh words' attributed to officials that they claim could undermine the impartiality of an EU investigation into alleged unfair subsidies.