February 13, 2020 13:13
The Japanese government has filed a complaint with the World Trade Organization about the takeover of Daewoo Shipbuilding and Marine Engineering by Hyundai Heavy Industries.
The move is aimed at protecting Japan's own shipbuilding industry from the emergence of a global behemoth in Korea.
In a letter dated on Jan. 31, Japan requested WTO dispute consultations with Korea about alleged subsidies to its shipbuilding industry, according to the global body's website on Monday.
Japan accuses Korea of developing and implementing "a range of measures designed to provide financial support to its shipbuilders" in violation of WTO regulations on subsidies.
Tokyo is referring to the fact that state-owned Korea Development Bank signed a deal to sell 59.7 million worth of shares it owns in DSME to Hyundai Heavy in exchange for 9.12 million convertible shares and 6.1 million ordinary shares in Korea Shipbuilding and Offshore Engineering, Hyundai Heavy's holding company.
KDB is also required under the deal to provide W1 trillion in cash (US$1=W1,180).
According to Clarkson Research Services, Japan accounted for 28 percent of global shipbuilding orders until 2015, but that share fell to 13 percent last year. The Hyundai Heavy takeover of DSME will create the world's largest shipbuilder accounting for 21 percent of the global market, which poses a clear threat to Japan.
The deal faces other hurdles, including approval from antitrust authorities in Japan, China, the EU and Singapore as well as Korea. The deal could fall through if even one of those governments disapproves.
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