16 FEB 2020
Japan filed a petition against South Korea with the World Trade Organization (WTO) on Friday over what it says is excessive aid to South Korea’s domestic shipbuilding industry.
Local media reports that Japan has asked South Korea to discuss the issue which it says is affecting international competition, and if the talks fail, Japan will seek to establish a dispute settlement panel.
Japan is citing the financial assistance provided to Daewoo Shipbuilding & Marine Engineering in 2015.
Japan filed a similar petition in November 2018, but the issue was not resolved in talks held in December 2018, and South Korea has seen a lack of subsequent action as a suspension of the complaint. South Korea’s Ministry of Trade, Industry and Energy believes the measures it took in 2015 are consistent with international practice.
The recent escalation could be the result of broader trade concerns. The two nations have been involved in a trade war as a result of South Korea’s expectations for compensation for forced labor and sexual slavery by Japan before and during World War II. Last year, the Supreme Court of South Korea ruled that 10 forced labor victims were able to claim compensation from Japanese companies.
In September, South Korea officially removed Japan from its list of trusted trade partners. Japan downgraded its trading relationship with South Korea in August by taking it off a list of nations for which exports of industrial and high-tech products are fast-tracked.
Bilateral talks were held in Geneva in October and November last year as part of a WTO Dispute Settlement procedure under which South Korea requested bilateral talks. The dispute remains unresolved.