Probe urged into Korea shipyard aid

South Korea's shipbuilding industry is the world's biggest

Brussels is to call for a probe by trade watchdogs into South Korea's shipbuilding industry, over allegations of unfair subsidy.

The European Commission on Tuesday said it had "no option" but to call for a World Trade Organisation (WTO) inquiry, after the collapse of talks over shipyard funding.

Brussels and Seoul officials spent four days attempting to resolve differences over the rise of South Korea's shipbuilding industry into the world's biggest.

While the EU claims South Korea unfairly subsidies its shipbuilders, Seoul says greater efficiencies are behind its yards' success.

A commission statement on Friday said: "The Korean delegation today rejected all the proposals discussed between both parties.

"Given the inflexibility shown by the Korean delegation, the negotiations are now considered to have failed, and the EU has no option but to go to the WTO."

Aid abolished

The EU complaint stems from a practice in South Korea of allowing state-owned banks to bail out troubled shipyards.

In Europe, such support would most likely breach EU subsidy rules, with shipyard aid abolished two years ago.

The call for a WTO probe will be further discussed at a meeting on Monday of EU foreign ministers.