- After the coming into force of the "Agreed Minutes" with Korea on 22 June 2000, a first round of consultations was held in Korea on 18 and 19 July 2000. The Korean Government was well prepared to answer the Commission's questions and showed a constructive attitude. The documents provided(shipyard accounts, accounts of financial institutions, legal decisions affecting the shipbuilding sector) are currently being studied by the Commission. A key element appears to be that Korean yards have been able to shed or restructure their debts, a development which eases their current financial burden and allows them to maintain very low offer price levels. The Government has played an important role in this development, but details are difficult to establish. In addition and in line with its commitments on transparency, laid down in the "Agreed Minutes", the Korean Government was able to convince two Korean yards (Hyundai and Daewoo) to allow a visit of Commission anti-dumping experts in order to look closer into two newbuilding orders selected by the Commission and by industry. The visit took place in late September but results were inconclusive. Whereas Hyundai did not fully co-operate in the investigation, claiming business confidentiality, Daewoo showed a constructive attitude. The Commission has expressed its dissatisfaction about this lack of transparency to the Korean Government.

- A second round of consultations under the "Agreed Minutes" took place on 28 and 29 September in Brussels, focussing, among others, on the issue of pricing. The Korean side indicated that the authorities would establish a price screening mechanism in Korea. If individual prices were found to be too low, financing for the shipbuilding projects in question would be denied. The Korean Government explained that they would ask Government-controlled banks to compare offer price and "international price" to assess the economic viability of shipbuilding projects. The Commission made clear that this approach was a nonsense in that it would basically mean a comparison between Korean price levels as Korea is the price leader internationally. Such a concept would not be acceptable to the EU. Instead, comparison would have to be made between offer price and "normal value" as defined by WTO and accepted by Korea within the "Agreed Minutes". Only through this approach, could price levels recover and a level playing field could be brought back. Moreover, improvements in the market concerning prices would have to materialise quickly. The Korean Government declared that such a bottom-up cost analysis per project was impossible, not least due to a lack of human resources in the KEXIM Bank. As the Commission did not see any further room for manoeuvre, the talks ended without result. Following an encounter of the Trade Commissioner with the Korean Trade Minister, the Commission again sent a delegation to Korea for meetings on 19 and 20 October 2000 in order to clarify a new Korean proposal, but neither the Korean Government nor representatives from the major Korean yards offered a suitable approach. On 27 October, the Korean Government informed the Commission that the efforts undertaken by the Government to convince shipyards to accept the EU approach failed. No solution has been offered to resolve the bilateral dispute.

- As a result of this failure the EU industry has now officially filed a complaint under the Trade Barrier Regulation. A TBR complaint takes up to 45 days to examine and 5 to 7 months for investigations under the regulation, with another 18 to 24 months for a WTO panel to come to a ruling (if the complaint is accepted by the WTO). Japan and the US shipbuilders have indicated that they may support a complaint to the WTO. In the case of the most positive outcome, i.e. a WTO ruling allowing countermeasures, discussions would have to follow on the question to which products countermeasures should be applied as ships are not subject to any tariff. This gives a long timeframe.

- Concerning the contacts with the IMF, in a letter of 27 July 2000 to the Commission the IMF gave a positive assessment of the situation in Korea, in line with the self-assessment by the Korean Government. The IMF restates that it has no insight into sectoral activities. It admits that, in the case of Halla yard, "there was no alternative but to accept orders for minimum prices which covered labour and other operating costs of its shipyard facilities. This was deemed necessary to keep the company in operation as Halla's customers were otherwise reluctant to honour existing contracts with a company under court receivership". The IMF does not give an opinion on this non-market behaviour. The Commission has sent a reply to this letter, reiterating its concerns and recalling that shipbuilding is a key exporting industry of Korea and the continued acquisition of loss-making orders endangers the recovery of the Korean economy as a whole. The Commission insists that the accumulated losses of Korean shipyards should be neither directly nor indirectly cleared by the Korean Government and market principles should be fully applied.

- The OECD agreement on normal competitive conditions in world shipbuilding has currently no chance to come into force as it stands as the USA sees no possibility to ratify the agreement. Two proposals have been made by Japan and Korea, respectively: Japan would propose bringing the agreement into force taking into account the US reservations; Korea which always opposed such a move now appears to be willing to bring the agreement into force without the USA. Discussions in the OECD Working Party 6, which has accorded the matter high priority, have resumed and will be continued in the next working session on 18-20 December 2000. While the Commission would welcome a solution to the current problems on OECD level, there are doubts that the agreement in its current form will be able to solve the actual problems.