RESTRICTEDWORLD TRADE
ORGANIZATIONG/SCM/Q2/KOR/20
25 June 1999
(99-2644)
Committee on Subsidies
and Countervailing MeasuresOriginal:  English
SUBSIDIES
Replies to Follow-Up Questions from the UNITED STATES1
Regarding the New and Full Notification of KOREA2
The following communication, dated 18 June 1999, has been received from the Permanent
Mission of Korea.
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Q1. Please refer to your response to our original question 4.B.  Concerning the programmes
listed in your response under replies 1, 7, 8 and 11, please explain whether receipt of the subsidy
under any of these programmes is contingent upon location in a certain geographic region ofKorea.
Reply
The programmes referred to in our replies 1, 7, 8, and 11 are not contingent on location in a
certain geographic region.  Enterprises relocating to any other regions of Korea except Seoul and its
vicinity and metropolitan cities are eligible for the subsidy programmes.
All the programmes except Tax Reduction for Forestry Income are aimed at reducing
pollution and relieving traffic congestion caused by the concentration of population and industrial
facilities in Seoul and its vicinity and metropolitan cities.  They are not intended to support specific
industries or regions.  The subsidies are provided to all eligible enterprises relocating to regions otherthan the above-mentioned areas according to objective criteria or conditions set by the law.
Therefore, they are not specific to any particular region.
Tax Reduction for Forestry Income is provided to forest owners in all regions including Seoul
and its vicinity and is not specific to a certain region.
Q2. Please refer to your response to our original question 4.B.  Concerning the programmes
listed in your responses under replies 2, 4, 5 and 6, please explain whether the subsidy under
any of these programmes is limited to a specific industry, or specific group of enterprises or
industries.
                                                     
1 G/SCM/Q2/KOR/19
2 G/SCM/N/38/KORG/SCM/Q2/KOR/20
Page 2
Reply
The programmes referred to in our replies 2, 4, 5 and 6 are not limited to a specific industry or
enterprise but provided for the entire fishing and forestry industry.
The fishing industry includes coastal, near-sea and deep-sea fishing and others and all fishing
businesses satisfying the objective and general criteria set by the Agreement on Subsidies and
Countervailing Measures are eligible for the subsidies.
Support for Improving Business Management of Fishing Cooperatives is to provide indirect
support, according to objective criteria, for Fish ing Cooperative Associations that are subject to
limitations in seeking profits due to their status as public corporations given by the law and havingincurred losses as a result of the declaration of EEZ and other changes in circumstances.  But the
subsidy is not limited to a certain industry.
Support for Replacement of Old Fishing Vessels and Tax Exemption for Fishing Boats
Weighing less than 20 Tons are provided for financially disadvantaged fishermen doing coastalfishing to support the replacement of fishing vessels of more than 16 years weighing less than 10 tons
as set out in the relevant provisions, and the acquisition of small-sized vessels of less than 20 tons
according to objective criteria.  These subsidies are not limited to a certain industry or enterprise.
Coastal fishing in Korea is small in size and financially disadvantaged.  It has not yet been
developed to a stage of an industry or even an enterprise and in most cases it is a small family
business for the purpose of making a living.  Coastal fishing alone cannot generate enough income
and therefore various additional income sources such as farming, service jobs and seasonal
employment have been commonly pursued to increase fishermen's income.
Small fishing vessels owned by fishermen are used not only for fishing activities but for
transportation of agricultural products, essential goods and people as well.
Support for Forest Managers and Developers, Support for Reforestation and Forest Tending,
Support for Private Forest Road Construction, Support for Forestry Successors, Support for Forestry
Mechanization and Support for Wood Production and Processing are to protect and preserve the
natural environment.  These subsidies are provided for forest owners across the country according toobjective criteria to support forestry industry in general and are not limited to a specific industry, or
specific group of enterprises or industries.
Q3. In your responses to our original question under 4.B, you state that programmes were
not notified because they were not limited to a specific industry, and in other instances you statethat programmes are not limited to specific enterprises.  Could you please clarify your
interpretation of the ASCM with respect to the criteria for finding a programme specific.
Reply
Specificity is said to exist when a subsidy is limited to a certain enterprise or industry.  With
respect to subsidies for fishing and forestry industries, objective and general criteria concerning
eligibility, subsidy amount, etc. are established by the granting authority according to Article 2.1(b) of
the SCM Agreement and subsidies are automatically pr ovided to enterprises or industries that satisfy
the criteria and requirements.  Therefore, the subsidies referred to in your question 4.B are not specificto a certain industry or enterprise.
Furthermore, unlike most developed countries that provide subsidies for enterprises running a
large-scale business, subsidies of Korea related to fishing and forestry industries are to supportG/SCM/Q2/KOR/20
Page 3
individuals who fish for a living, not for export or large-scale business, therefore creating no trade
effects.
In particular, the business size of most forest owners is small (2.2 ha. per person) and the
majority of them have financial difficulties.  The number of forest owners in Korea is 2.1 million but91 per cent of them own less than 5 ha. and those ow ning less than 0.5 ha. account for 51 per cent.  In
addition, forest owners are avoiding making further investments because circumstances for forestry
are unfavourable and the profitability is low.  Therefore, support for the forestry industry is required
to promote environmental protection through forest tending and development.
Some argue that subsidies provided across the fishing and the forestry industries are specific.
However, according to the UN industry classification scheme, fishing and forestry industries areseparate industries independent of agricultural or manufacturing industry and subsidies that benefit an
entire industry should not be considered to be specific.  In this context, Korea classified as specific the
Subsidy for Plywood and Boards Assistance Programme and Forest Products Utilization Assistance
Programme among the subsidies for the forestry industry because they are limited to wood processing
businesses.
With respect to fishing subsidies, Support for Development of Deep-Sea Fishing, Support for
Fish Processing Development and Support for Developing Aquaculture Fishery are classified and
notified to WTO as specific because they are limited to certain businesses.
But the subsidies referred to in the questions  from the US are provided across the fishing or
the forestry industry and are thus classified as non-specific.
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