SEOUL The European Union and South Korea will hold talks this week on shipbuilding ahead of a possible showdown at the World Trade Organization, officials said Sunday.

The three-day meeting will begin today at the Ministry of Commerce, Industry and Energy, AFP quoted the ministry as saying.

The EU has threatened to take WTO action against South Korean shipyards unless an accord is reached by June 30.

Officials here insist South Korea has not violated WTO rules.

But European shipbuilders have accused South Korea of giving unfair subsidies to Daewoo Shipbuilding and Marine Engineering Co. by bailing it out with a debt rescheduling program.

Creditor banks seized managerial control of the country's second largest shipyard after the Daewoo Group collapsed in August 1999.

South Korean officials have said the bailout was only part of nationwide efforts to restructure many ailing industries.

South Korea took more than 40 percent of global orders for new shipping last year, helped by the weakness of its currency which made its industry more competitive.