RESTRICTEDWORLD TRADE
ORGANIZATIONG/SCM/Q2/KOR/22
3 April 2002
(02-1688)
Committee on Subsidies
and Countervailing MeasuresOriginal:  English
SUBSIDIES
Reply of KOREA to
Questions from the EUROPEAN COMMUNITIES 1
The following communication, dated 2 April 2002, has been received from the Permanent
Mission of Korea.
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VI. AGRICULTURE
A. FOOD GRAIN MANAGEMENT PROGRAMME
Q1. Duration:  Is the programme of unlimited duration?  If not, what is the end-date?
Reply
There is no fixed end-date for this programme.
B. LIVESTOCK SUPPORT PROGRAMME
1. Hanwoo-raising stabilization programme
Q2. Form of the subsidy:  Please indicate the form of the subsidy
Reply
Non-Exempt (from reduction commitment under the WTO Agreement on Agriculture) direct
payments to producers, which are dependent on price gap.
Q3. Recipient and criteria:  What is the basis for the level of the threshold upon which the
subsidy is paid?
Reply
The basis for setting a standard price for stabilization is as follows:
- Yr. 1999 : operating costs(100%) and family labour (50%)
- Yr. 2000 : operating costs(100%) and family labour (100%)
                                                     
1 G/SCM/Q2/KOR/21G/SCM/Q2/KOR/22
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2. Support for pork production
Q4. Recipient and criteria:  What is the number of pigs a breeding farm has to supply in order
to be eligible?
Reply
In order to be eligible, a pig-breeding farm has to supply more than 800 heads of pigs per
year.
C. MARKETING IMPROVEMENT PROGRAMME FOR AGRICULTURE AND LIVESTOCK PRODUCTS
Q5. Form of the subsidy:  Please explain in more detail what falls under "financial
assistance"
Reply
30 per cent of costs (transportation cost, packaging cost, and collection cost) is reimbursed to
exporting enterprises in cash.
III. FISHERY
D. SUPPORT FOR AQUACULTURE FISHERY DEVELOPMENT
Q6. Policy objective and/or purpose of the subsidy:  Please specify the fishery products
involved
Reply
- Shellfish : abalone, scallop, baby clams, oyster, ark shell, top shells
- Fish : flat fish, sea-bream, sea bass, plaice, yellow tail, true bass
Q7. Background and authority for the subsidy:  What articles of the law are relevant?
Reply
(a) Authority: Ministry of Maritime Affairs and Fisheries
(b) Applied article of the Act: Paragraph 2 of Article 4 and Article 6 of Special Account Act for
Infrastructure Improvement of Rural Areas
- Article 4 of Special Account Act for Infrastructure Improvement of Rural Areas:
Revenue and expenditures for Infrastructure Improvement of Rural Areas
- Paragraph 2 of Article 4 of Special Account Act for Infrastructure Improvement of
Rural Areas:  Fund transferred from General Account in accordance with Article 6
- Article 6 of Special Account Act for Infrastructure Improvement of Rural Areas:
Fund transferred from General Account
Q8. Recipient and criteria/Amount of subsid y:  Please give more information about
the subsidy in form of grants, including eligibility criteria and amount grantedG/SCM/Q2/KOR/22
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Reply
(a) Eligibility criteria
Grant
- Criteria:  District Fishery Cooperative Association or fisher's association intending to
increase income by building aquaculture facilities on the fishing ground for village.
Loan
- Criteria:  Aquaculture fishermen
- Due to limited government budget, the number of applicants may vary.(b) Amount granted
Please refer to Korea's notification document G/SCM/N/71/KOR.
E. L
OCAL TAX REDUCTION FOR BUILDING AND ACQUISITION OF DEEP -SEA FISHING VESSELS
Q9. Policy objective/Recipient:  Please explain in more detail what falls under "international
line vessels".  What are the conditions for sh ips being registered as "international ship"?
Reply
- The international line vessels are commercial ships that cruise between domestic and overseas
harbours, or between overseas harbours.  They are registered as international line vessels.
- The following ships are eligible for being registered as “international line vessels” or
“international ships”.
• “Korean ships” as defined under Article 2 of the Vessel Act (ships owned by Korean nationals,
including natural and legal persons)
• Foreign ships leased by the persons below under the condition of registration in Korea ;
(i) Those who have received a licence to operate international passenger transporting
business
(ii) Those who have registered for the international cargo transporting business
• Ships weighing more than 500 tons and less than 20 years in age
V. MANUFACTURING INDUSTRY
A. SUPPORT FOR FOREIGN INVESTED ENTERPRISES
Q10. Recipient and term:  Please specify what falls under "service sector supporting other
industries" and give a definition of "advanced technology".G/SCM/Q2/KOR/22
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Reply
According to Article 116-2 of the Presidential Order for the Restriction of Special Taxation
Act:
"Service sector supporting other industries" refers to a high value-added service sector that
supports development of other industries including the manufacturing industry.  It includes engineering
services, environment-improving services, e-commerce-related services, etc.
"Advanced technology" refers to a technology that is underdeveloped or not developed in
Korea.
Q11. Recipient and term: Please give a descript ion of foreign investment zones, free trade
zones and industrial parks, and explain the differences.  Please also explain which companies
can settle in these areas and indicate the location of these zones and parks.
Reply
(a) Foreign Investment Zones (FIZs)
The area selected by an individual foreign investor can be designated as an FIZ.  The
businesses for which FIZ is designated are expected to be manufacturing sector, advancedtechnology-promoting sector, service sectors suppor ting other industries or tourism sector.  Large
foreign-invested enterprises that have invested over US$50 million, or those with foreign investment
ratio of 50 per cent or more and employing 1,000 employees or more are eligible.  At present, there
are 7 FIZs all over the country.
(b) Industrial parks for foreign-invested enterprises
Industrial parks for foreign-invested enterprises are designated within the existing industrial
parks in order to attract foreign investors by supplying them with factory sites at low prices and
reducing rental fees.  Manufacturing and advanced technology-promoting sectors are mainly expected
to operate in those parks.  There are 4 industrial parks for foreign-invested enterprises.
(c) Free Trade Zones (FTZs)
A free trade zone refers to a zone which has been designated in order to promote trade by
assuring no tariffs to parts or intermediary goods, thereby inducing foreign investment and facilitating
international trade.  The major types of business operation in these zones are manufacturing, logisticsand trade sectors.  Currently three FTZs are operated around a harbour or industrial parks. (Masan,
Iksan and Gunsan)
C. R
ESERVE FOR FARM MACHINERY PRODUCTION
Q12. Background and authority of the subsidy:  Please specify the relevant articles of the
farm mechanization promotion law
Reply
The Farm Mechanization Promotion Act Article 4 (Financial Assistance)
(i) The central or a local governme nt may support all or parts of f unds necessary for buying farming
machines or installing the related facilities.G/SCM/Q2/KOR/22
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(ii) The central or a local government may provide all or parts of funds to develop, produce and
manage after-sale service of farming machines to producers of farming machines.
VI. RESEARCH AND DEVELOPMENT
C. SUPPORT FOR R&D OF ENVIRONMENTAL TECHNOLOGY DEVELOPMENT PROJECTS
Q13. Policy objective and/or purpose of the subsidy:  Can you explain in more detail what
kind of projects can be supported by this programme.  Is eligibility limited to certain sectors?  If
yes, please indicate them.
Reply
Eligible projects include development of th e combined environment management technology,
ecology preservation or restoration technology, pollution prevention technology, and technology on
global environment and climate change.
There is no eligibility limitation by sector. However the recipient organizations need to be designated
by the Presidential Decree, under the following categories.
- Research institutions established by the state or public organizations- Research institutions designated by the Specific Research Institutions Promotion Act
- Research institutions funded by the government- Universities
- Corporate R&D centers designated by the Specific Research Institutions Promotion
Act and Presidential Decree
- Environmental R&D center- Environmental business operator
D. S
CIENCE AND TECHNOLOGY PROMOTION FUND
Q14. Policy objective and/or purpose of the subsidy:  Please explain in more detail what kind
of projects can be supported by this programme.  Is eligibility limited to certain sectors?  If yes,
please indicate them.
Reply
This programme supports activities such as:  science and technology promoting activities
including science research, academic activities, international cooperation, R&D activities of private
companies, and science-culture promoting activities.  There is no limit in eligibility, i.e, all kinds of
activities that promote R&D in the fields of science and technology can be supported.
Q15. Recipient and criteria:  Please explain how it is determined which programmes are in
the "national interest"G/SCM/Q2/KOR/22
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Reply
There is no clear-cut definition for “national interest" in the related Act.  Determination of
eligibility is based on the anticipated results of the programme in terms of the publication of theses
and patents registered, contribution to building research man power, technology spill-over, possibilityof commercialization and productivity increases, etc.
Q16. Recipient and criteria : How is "high technology industry" defined?  Please explain
what falls under "pre-competitive R&D activities"
Reply
“High technology" generally refers to a new technology achieved by further developing and
improving existing technology.
“Pre-competitive activities” generally refers to follow-up R&D activities to the government-support
national R&D programmes, not directly promoting business activities, or R&D activities to develop andimprove private sector-held technologies.
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