The row between the European Union and Korea on shipbuilding prices is headed for the World Trade Organization (WTO).
The European Commission says that Intensive discussions held at the end of last week between the Commission and Korean experts, failed to achieve an effective solution to the problem of unfair price undercutting by Korean shipbuilders, raised by the EU.
The Korean side was unable to offer a proposal which would alleviate EU concerns.
The Commission says it will report to the European Council in the coming days and propose alternative ways forward, including a possible action in the WTO under the Trade Barrier Regulation (TBR).
The discussions focused on the possibility for Korea Exim Bank to introduce a review mechanism of shipbuilding export contracts in order to monitor whether the prices offered by the Korean yards respect the "Normal Value", according to the definition of the WTO Antidumping Agreement.
The Korean side did not agree to the basic principle that prices should cover all the costs and that the application of the antidumping agreement would lead to a significant increase in prices whose result would be verified on the market in a short period of time.
In mid-September, Commission antidumping experts paid exceptional on-the-spot visits to two large Korean yards to determine whether prices of particular contracts included all relevant costs. Unfortunately, citing reasons of commercial confidentiality, one company was not prepared to give specific information per ship or per contract and to reveal its real costs. Thus, it was not possible, for the Commission to draw any clearcut conclusions on the alleged unfair Korean pricing practices.
As a result, the European Commission considers that a transparency commitment negotiated with the Koreans has not been fully implemented. More importantly, the main goal of the bilateral agreement, the stabilization of the market through the improvement in the level of ship prices, cannot be reached, due to the Korean's refusal to introduce an effective mechanism that would have helped to achieve it.