Japan asked South Korea on Tuesday to launch bilateral talks over what it sees as Seoul's unfair subsidies for shipbuilders, but a government source said the dispute will most likely go to the World Trade Organization.
Tokyo believes that massive assistance provided to the South Korean shipbuilding industry by government-affiliated financial institutions goes against international trade rules, but Seoul has resisted reviewing its subsidy program, claiming the institutions provide the assistance at their own discretion.
If the bilateral talks break down, the case will be brought to a WTO dispute settlement panel. It generally takes nearly two years for such a dispute to be settled under the WTO framework.