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GENEVA (Kyodo) The World Trade Organization decided Monday to create a dispute settlement panel for an ongoing row between Japan and South Korea over nori trade.

It will be the first time the WTO’s Dispute Settlement Body has set up a panel on a trade row involving Japan based on a request by Seoul, according to WTO officials.

South Korea filed a complaint in December with the WTO regarding Japan’s nori trade policy, claiming the import quota on the product violates WTO trade rules.

Talks between the two nations on concluding a free-trade agreement by the end of this year have stalled, and the latest development in the nori issue doesn’t make things easier for negotiators.

Furthermore, it threatens to become a new source of contention between Japan and South Korea at a time when bilateral relations have soured.

Seoul has protested an ordinance passed last week in Shimane Prefecture that designates a commemorative day for Takeshima, two South Korea-controlled islets in the Sea of Japan claimed by Japan.

Tokyo has designated South Korea as the sole exporter of the edible seaweed to Japan since the two countries normalized diplomatic ties in 1965.

It has maintained its import quota system to protect domestic producers. While Japanese producers ship about 10 billion sheets of nori annually, the import quota for South Korea was set at 240 million sheets last year. One sheet measures 19 cm × 21 cm.

But after the system was criticized by China as being inconsistent with WTO rules, Japan decided in October to allow China to export its nori to Japan starting in fiscal 2005, which begins April 1, while maintaining the current quota system.

Chinese nori is about half the price of domestic and South Korean nori. South Korea, which fears that its slice of the Japanese market will be ravaged by the Chinese, accused Japan of not responding to its calls for an increase in its quota and brought the matter to the WTO.

Japanese government officials say Japan’s quota system does not violate WTO rules. In an effort to defuse the row, Tokyo decided last month to raise the nori import quota for South Korea to 400 million sheets, which Seoul has rejected.

Under the WTO’s dispute settlement mechanism, should either party disagree with the findings of the dispute settlement panel, it can bring its case to an appellate body. The decision reached by this second panel is binding.

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