South Korea will explain to Japan that its subsidies for shipbuilders comply with international trade rules.

The Ministry of Trade, Industry and Energy said on Wednesday that Japan asked South Korea on Tuesday to launch bilateral talks over what it sees as Seoul’s unfair shipping subsidies as part of a dispute settlement procedure of the World Trade Organization(WTO). 

The ministry said that Japan claimed Seoul's massive assistance to the South Korean shipbuilding industry, including Daewoo Shipbuilding and Marine Engineering, enabled Korean shipbuilders to sharply cut prices and win orders, causing serious losses to the Japanese shipbuilding industry. 

The ministry plans to re-examine the issues in terms of commerce law along with related ministries and explain the subsidies are not in violation of international trade rules during consultation with Japan. 

Under the WTO regulations, a country requested for talks should initiate discussions with the requesting party within 30 days. If the two sides fail to reach a settlement for 60 days, the case will be brought to a WTO dispute settlement panel.