Japan has filed a petition against South Korea with the World Trade Organization accusing Seoul of providing excessive aid to the domestic shipbuilding industry, informed sources said Saturday.
On Friday, Japan asked South Korea to hold bilateral talks on the matter based on WTO rules, the sources said. If the talks fail, Japan will next seek to establish a dispute settlement panel.
Japan filed a similar petition in November 2018 claiming that financial assistance worth ¥1.2 trillion that the South Korean government provided to a major domestic shipbuilder undermines fair competition and violates WTO rules.
But then bilateral dispute settlement procedures based on WTO rules fell apart, and Tokyo concluded that Seoul has no plan to take corrective steps.
In 2015, Seoul extended financial assistance worth ¥1.2 trillion to Daewoo Shipbuilding & Marine Engineering Co., Ltd one of the biggest South Korean ship-building firms.
Tokyo has claimed Seoul’s measures to support the firm, including the financial assistance, violate WTO rules and have distorted the market mechanism.
Relations between Japan and South Korea have already been strained due to disputes over wartime labor and Tokyo’s strict controls on exports to South Korea.
In September last year, South Korea filed a petition with the WTO over Japan’s export controls. In November, however, Seoul suspended the dispute settlement procedures in exchange for a resumption of policy dialogue between the two countries.