European Communities — Aid for Commercial Vessels

Consultations

Complaint by Korea.

On 13 February 2004, Korea requested consultations with the European Communities concerning certain measures by the EC and its member States in favour of their shipbuilding industry which, according to Korea, are inconsistent with their WTO obligations.

Korea had already submitted its request for consultations on the same issue, and in view of some of the claims contained therein Korea put forth its request for the establishment of a panel (see WT/DS301).

Korea, through this new request for consultations, intends to proceed with consultations with the EC regarding some measures which were already the subject of its previous request along with additional measures recently adopted by the EC. The measures listed are, inter alia:

• EC Regulation 1177/2002 (“TDM Regulations”) (currently proposed to be extended until 31 March 2005), EC Regulation 1540/98 and the EC member States’ implementing provisions;
• The provision by the EC and the member States of subsidies in support of commercial vessels built in the EC, in various forms including operational aid granted on a contractual basis in forms such as grants, export credits, guarantees or tax breaks;
• The provisions of the Framework on State Aid to Shipbuilding (Document No 2003/C 317/06) as well as the EC member States’ implementing provisions and any individual granting of aid, including the decision by Spain in application of the Framework to some of its own financing schemes;
• The extension of financing and guarantees for the building of commercial vessels subject to a minimum domestic content in Finland, France, Germany, Italy, and The Netherlands;
• The guarantee by Germany of all obligations of the Kreditanstalt für Wiederaufbau (“Kfw”);
• The provision in Germany of public fallback guarantees with respect to credits granted for the financing of ships build in German yards in the five coastal Länder.

Korea considers that these EC and its member States’ measures are in breach of their WTO obligations, inter alia, Articles 1, 2, 3.1(a) and (b), 5(a), (b) and (c), 6.3(a), (b) and (c), 6.4 and 6.5 of the Agreement on Subsidies and Countervailing Measures (“SCM Agreement”). Korea also considers that the above-described measures nullify or impair benefits accruing to Korea under the WTO Agreements, within the meaning of Articles XXIII:1(a) and (b) of GATT 1994.