Brussels, 27/09/2002 (Agence Europe) - Despite the "very lengthy negotiations", that intensified in Brussels this week, the "last chance" talks between the Union and South Korea failed, the Commission announced on Friday ahead of the 30 September deadline on which the Fifteen have to decide to launch multilateral arbitration and trigger the temporary and targeted support mechanism for the European industry (see EUROPE of 19 September and 22 august).
"Negotiations have failed. The Koreans informed us this morning that they were not prepared to accept one or other of the proposals on the table", "insisting on the reservations of their industry vis-à-vis this type of agreement", said Commissioner Pascal Lamy's spokesperson at the end of the last session, which was prolonged over three days, from Tuesday to Friday, instead of the two initially scheduled. "The constructive approach taken by the European team", led by the Director General for trade, Mogens Peter Carl ran up against "manifest inflexibility" by the Korean delegation led by the Deputy Minister of trade, Industry and Energy, Kim Chil-du, is what is being said in substance.
"We must go to the Council on Monday t inform it of this deadlock, and the next stage will be at the WTO. That is the subject of the report that Commissioner Lamy will make to the General Affairs and Competitiveness Council", the spokesperson added. The Commission will then give itself a few days to publish the decision in the light of the debate in Council, then ten days to await any comments, and it is at the end of October that it will ask the World Trade Organisation to initiate the consultative stage - necessary prior stage - of the dispute settlement procedure (request that may be rejected once but not twice, if the Koreans oppose it). At the same time the Union will deploy the second aspect of its strategy designed to counteract Korean subsidies, by triggering an internal support mechanism, which Member States finally accepted in July (by a majority) following the long-term division on the two sides on the value of this aid.
According to the Commission, the failure of any attempt at an amiable settlement with Seoul is due, not to questions of detail on some kinds of boats but on a "fundamental difference in the sense that Europeans think that the price has to reflect the production costs, whereas the Koreans think that the price depends on market forces for which it is a leader". "We cannot sell our boats for less than they cost without damaging competition", insists Brussels, arguing that the market forces to which the Koreans refer are, "inspired by their behaviour based on dumping". Despite this, the Europeans defence is based on the fact that they have not suggested that the Koreans increase their prices suddenly and dramatically, but neither have they come up with any figures. The "economic solutions" proposed to the Koreans take into account their situation and are a part of market reality, trade practices and an attempt to find a balance, explained the spokesman.