WORLD TRADE G/SCM/N/25/KOR
23July1997
ORGANIZATION(97-3105)
Original: English Committee onSubsidies
andCountervailing Measures
SUBSIDIES
Updating Notifications Pursuant toArticle XVI.1 oftheGATT 1994 andArticle 25
oftheAgreement onSubsidies andCountervailing Measures
KOREA
Thefollowingcommunication,dated10July1997,hasbeenreceivedfromthePermanentMission
oftheKorea.
_________________G/SCM/N/25/KOR
Page2
TABLE OFCONTENTS
Page
I. Agriculture
I-A Foodgrain Management Programme ...........................3
I-B Livestock Support Programme ...............................6
I-C Sericulture Development Programme ...........................9
I-D Government Purchase ofRapeseed ............................10
I-E Marketing Improvement Programme forFruit andFlowers .............11
II. Forestry
II-A Plywood andBoard Assistance Programme .......................13
II-B Forest Products Utilization Assistance Programme ..................14
III. Fishery
III-A Support forDevelopment ofDeep-Sea Fishery .....................16
III-B Support forFishProducts Processing Development ..................18
III-C Fund forSupporting Fishing Activities .........................19
III-D Support forDeveloping Aquaculture Fishery ......................20
III-E Reduction inLocal Taxation onBuilding andAcquisition ofVessels
forDeep-Sea Fishery .....................................22
IV. CoalIndustry
IV-A Support Programme fortheCoalIndustry ........................23
V. Manufacturing Industry
V-A Reserves forExport Losses .................................25
V-B Reserves forOverseas Market Development ......................26
V-C TaxCredit forInvestment inFacilities ..........................27
V-D TaxReduction andExemption forForeign Invested Enterprises ..........29
V-E Reduction inCustoms Duty onParts ofAircraft ....................31
V-F Support Programme forMaintenance ofFarm Machinery ..............32
V-G Assistance Programme toPromote theSpread ofDomestically
Produced Mini-Computers .................................33
V-H Support Fund fortheStone Industry ...........................35
VI. Research andDevelopment
VI-A Assistance forResearch andDevelopment Activities byBasic Acton
Informatization Promotion .................................36
VI-B Environmental Engineering andTechnology Development Programme ......38
VI-C Promotion Fund forScience andTechnology ......................39G/SCM/N/25/KOR
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I. AGRICULTURE
I-A Foodgrain Management Programme
1. Titleofthesubsidy programme
Foodgrain Management Programme
2. Period covered bythenotification
1995-1996
3. Policy objective and/or purpose ofthesubsidy
Tomaintain abuffer stock ofstaple foodforfoodsecurity purposes.
4. Background andauthority forthesubsidy
Laws:
- Foodgrain Management Act
- Agro-Fisheries Marketing andPrice Stabilization Act
- Special ActforRural Development
Authority:
- Ministry ofAgriculture andForestry (MAF)
5. Form ofthesubsidy
Government purchase items: rice,barley, soyabean, redbean, green bean, corn
Financial Resource:
- rice,barley: Government budget (Foodgrain Management Special Account)
- soyabean, redbean, green bean: Fund forAgriculture &Fisheries product price
stabilization
- corn: Government budget (Special Account forStructural Development ofRural Areas)
6. Towhom andhowthesubsidy isprovided
(1) RiceandBarley
TheGovernment purchases riceandbarley fromfarmers according tothequantity and
price approved bytheNational Assembly.
(2) Soya beans andLegumes (Redbeans andGreen beans)
TheMAF setsthepurchasing priceandquantity every yearbefore theplanting ofsoya
beans andlegumes. Pursuant totheMAF guidelines, theAgriculture andFisheryG/SCM/N/25/KOR
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MarketingCorporation(AFMC)purchasessoyabeansandlegumesfromfarmersduring
theharvest seasons andreleases these items atmarket prices through public auctions.
(3) Corn
Pursuant totheguidelines determined bytheMAF forpurchasing price andquantity,
theNationalAgriculturalCooperativesFederation(NACF)purchasescornfromfarmers
during theharvest season andsellsthecommodity tofeeding andprocessing industries
atthemarket price. TheMAF compensates theNACF forthelosses incurred asa
result oftheabove transaction.
7. Amount ofthesubsidy (Expenditures ofquantity forfoodgrain purchases)
(Unit: W100million)
Item 1995 1996
Rice 13,692 12,894
Barley 643 643
Soya beans 50 24
Legumes
(Redbeans, Green beans)0.5 1
Corn 42 34
8. Duration ofthesubsidy
TheGovernment purchase system fortheabove items existed before thebeginning oftheUR
negotiations, anditisbeing planned tocontinue within theAMS commitment asagreed upon bythe
WTO.
AstheGovernment support expenditure forredbeans andgreen beans isminimal compared
totheirtotalvalue ofproduction, reduction commitments forthese items areexempted according to
thedeminimis principle.
9. Trade effect ofthesubsidy
There hasbeenadecline intheself-sufficiency ofKorea 'sgrain production from56%in1980
toacurrent 29.1% in1995. Theself-sufficiency ratesformajor foodgrains in1995 were93.6% for
rice,67%forbarley, 0.3% forwheat, 1.1% forcornand9.9% forbeans respectively.
Asstated above, themotivation forgovernment intervention inthegrain market ispublic
stockholding andtheaccumulation ofabuffer stock forfoodsecurity. Theeffects ofgovernment
purchases ontrade areconsidered tobeinsignificant when taken inthecontext ofadeclining self-
sufficiency rate.
TheAgreement onAgriculture willbeapplied tothissubsidy programme.G/SCM/N/25/KOR
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Table 1-Statistics offoodgrain production, consumption andtrade
Commodity Classification Unit 1995 1996
Production 1,000 M/T 4,695 5,323
Rice Imports " - 115
Exports " - -
Consumption " 5,557 5,225
Production " 142 148
Barley Imports " 8 26
Exports " - -
Consumption " 169 151
Production " 160 160
Soya beans Imports " 1,435 1,466
Exports " - -
Consumption " 1,558 1,618
Production " 19 19
Redbeans Imports " 22 17
Exports " - -
Consumption " 38 40
Production " 3 3
Green beans Imports " 2 8
Exports " - -
Consumption " 8 11
Production " 74 72
Corn Imports " 9,060 8,673
Exports " - -
Consumption " 8,066 8,996G/SCM/N/25/KOR
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I-B Livestock Support Programme
1. Support forKorean Native Cattle (Hanwoo) onKanghwa Island
1.1 Titleofthesubsidy programme
Support forKorean Native Cattle (Hanwoo) onKanghwa Island.
1.2 Period covered bythenotification
1995-1996
1.3 Policy objective and/or purpose ofthesubsidy
Toimprove thequality ofbeefproduced asaresult ofcrossbreeding theHanwoo andthe
Charolais onKanghwa Island.
1.4 Background andauthority forthesubsidy
Law: Livestock Act
Authority: TheMinistry ofAgriculture andForestry
1.5 Form ofthesubsidy
Grant
Financial Resource: Fund (Livestock Development Fund)
1.6 Towhom andhowthesubsidy isprovided
(1) Beneficiaries: Farms thatproduce crossbreed female calves between theHanwoo and
theCharolais cattle onKanghwa Island.
(2) Content ofthesubsidy: Agrant ofW100,000 pernewborn calfforfeedcosts.
(3) Authority incharge: Livestock Technology Research Institute ofRural Development
Administration
1.7 Amount ofthesubsidy
(Unit: W100million)
1995 1996
Amount ofsubsidy 0.18 -
1.8 Duration ofthesubsidy
1978-1995
Thesupport system hasbeenabolished since 1996.G/SCM/N/25/KOR
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1.9 Trade effect ofthesubsidy
Thisprogramme isexpected tocover apartofthecostofrearing crossbreed Hanwoo cattle
onKanghwa Island. However, thesupport programme isonlyimplemented inspecified areas. Its
overall effect ontrade istherefore presumed tobeinsignificant.
TheAgreement onAgriculture willbeapplied tothissubsidy programme.
Statistics ofbeefproduction, consumption andtrade
(Unit: 1,000 M/T)
Classification 1995 1996
Production 154.7 173.9
Imports 148.1 147.1
Exports - -
Consumption 301.2 322.9
2. Support forPigmeat Production
2.1 Titleofthesubsidy programme
Support forPigmeat Production
2.2 Period covered bythenotification
1995-1996
2.3 Policy objective and/or purpose ofthesubsidy
Toimprove thequality ofmeatproduced.
2.4 Background andauthority forthesubsidy
Law: Livestock Act
Authority: Ministry ofAgriculture andForestry
2.5 Form ofthesubsidy
Grant andloan.
Financial resource: Fund (Livestock Development Fund)G/SCM/N/25/KOR
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2.6 Towhom andhowthesubsidy isprovided
(1) Beneficiaries:
Pigbreeding farms thathave supply contracts withpigmeat quality improvement
complexes orlivestock cooperatives andmeatprocessing companies.
(2) Content ofthesubsidy:
-PigBreeding Farms: Grants topartially cover thefeedcosts ofpigmeat
production.
-Meat Processing Companies: One-year loans formarketing purposes ataninterest
rateof5%.
(3) Authority incharge: National Livestock Cooperatives Federation
2.7 Amount ofthesubsidy
(Unit: W100million)
Year 1995 1996
Grant
(Support forpigmeat quality improvement)77 76
Loan
(Support forstandard pigmeat purchase)100 156
2.8 Duration ofthesubsidy
1988-
2.9 Trade effect ofthesubsidy
Since theamount ofthesubsidy isonlyapartofthetotalvalue ofpigmeat production
(W1,400 billion in1995), itseffects ontrade arepresumed tobeinsignificant.
TheAgreement onAgriculture willbeapplied tothissubsidy programme.
Statistics ofpigmeat production, consumption andtrade
(Unit: 1,000 M/T)
Classification 1995 1996
Production 639.3 691.8
Imports 34.4 41.4
Exports 14.3 36.9
Consumption 661.7 696.9G/SCM/N/25/KOR
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I-C Sericulture Development Programme
1. Titleofthesubsidy programme
Sericulture Development Programme
2. Period covered bythenotification
1995-1996
3. Policy objective and/or purpose ofthesubsidy
Todevelop thesericulture industry.
4. Background andauthority forthesubsidy
Law: Sericulture Law
Authority: TheMinistry ofAgriculture andForestry,
Korea Sericultural Association (KSA)
5. Form ofthesubsidy
Grant
Financial Resource: Governmentdonation(FinancialInvestmentandLoanSpecialAccount).
6. Towhom andhowthesubsidy isprovided
TheGovernment provides grants tothesericulture development projects oftheKSA. The
KSAimplements suchprojects asinvestment insericulture, technical development, support forcocoon
purchasing, andpromotional services formarket expansion, etc.
7. Amount ofthesubsidy
(Unit: W100million)
1995 1996
Amount ofthesubsidy 15 10
8. Duration ofthesubsidy
1988-1996
TheSericulture Actwasrevised inearly 1997 andtheSericulture Development Programme
wasabolished in1997.
9. Trade effect ofthesubsidy
Theproduction ofcocoons hasbeendecreasing, andtheeffects ofthissubsidy ontrade are
therefore presumed tobeinsignificant.G/SCM/N/25/KOR
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TheAgreement onAgriculture willbeapplied tothisprogramme.
Statistics ofcocoon production, consumption andtrade
(Unit: M/T)
Classification 1995 1996
Production 84 5
Imports 685 389
Exports - -
Consumption 769 394
I-D Government Purchase ofRapeseed
1. Titleofthesubsidy programme
Government Purchase ofRapeseed
2. Period covered bythenotification
1995-1996
3. Policy objective and/or purpose ofthesubsidy
Toprovide income support forfarmers.
4. Background andauthority forthesubsidy
Law: Special ActforRural Development
Authority: TheMinistry ofAgriculture andForestry
5. Form ofthesubsidy
Financial support forthepurchase ofrapeseed.
Financial Resource: Government budget (Special Account forStructural Development of
Rural Areas).
6. Towhom andhowthesubsidy isprovided
TheNACF purchases rapeseed fromfarmers ataquantity andprice determined bytheMAF,
andsellsthecommodity toconsumers.
TheGovernment compensates theNACF forlosses incurred asaresult ofsuchtransactions.G/SCM/N/25/KOR
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7. Amount ofthesubsidy
(Unit: W100million)
1995 1996
Amount ofthesubsidy 20 11
8. Duration ofthesubsidy
1991-2004
9. Trade effect ofthesubsidy
Thissystem isdesigned tosupport theincomes ofrapeseed farmers onCheju Island. However,
boththecultivation areaandtheproduction quantity ofrapeseed havecontinuously decreased since
1992, duetoafreezing ofthepurchasing price atW828/kg.
TheAgreement onAgriculture willbeapplied tothisprogramme.
Statistics ofrapeseed production, consumption andtrade
(Unit: M/T)
Classification 1995 1996
Production 3,883 2,225
Imports 9,094 876
Exports - -
Consumption 12,977 3,101
System reorganization: TheGovernment purchase ofrapeseed wascarried outuntil1997and
thesupport forthepurchase ofrapeseed willbecarried outbytheprovincial government from1998.
I-E Marketing Improvement Programme forFruit andFlowers
1. Titleofthesubsidy programme
Marketing Improvement Programme forFruit andFlowers.
2. Period covered bythenotification
1995-1996
3. Policy objective and/or purpose ofthesubsidy
Toimprove thequality offruitandflowers.G/SCM/N/25/KOR
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4. Background andauthority forthesubsidy
Law: Special ActforRural Development
Authority: TheMinistry ofAgriculture andForestry
5. Form ofthesubsidy
Grant
Financial Resource: Government budget (Special Account forStructural Development of
Rural Areas).
6. Towhom andhowthesubsidy isprovided
TheAgriculture andFishery Marketing Corporation subsidizes partoftheprocessing costs
andpartoftheinternal and/or theinternational transportation costs offruitandflower exporters.
Authority incharge: Agriculture andFishery Marketing Corporation.
7. Amount ofthesubsidy
(Unit: W100million)
1995 1996
Amount ofthesubsidy 12 24
8. Duration ofthesubsidy
1995-
9. Trade effect ofthesubsidy
Thissubsidy hasaneffect ofimproving thequality offruitandflowers andreducing the
processing andtransport costs, butitseffect ontrade israther insignificant.
TheAgreement onAgriculture willbeapplied tothissubsidy programme.G/SCM/N/25/KOR
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Statistics offruitandflowers production, consumption andtrade
(Unit: 1,000 M/T)
Classification 1995 1996
Fruits (Apples andPears)
Production 894.3 870.7
Imports - -
Exports 8.1 9.6
Consumption 886.2 861.1
Flowers
Production 5,090 5,530
Imports 278 274
Exports 63 41
Consumption 5,305 5,763
II. FORESTRY
II-A Plywood &Board Assistance Programme
1. Titleofthesubsidy programme
Plywood &Board Assistance Programme
2. Period covered bythenotification
1995-1996
3. Policy objective and/or purpose ofthesubsidy
With aviewtoconserving theglobal forest environment, theGovernment assists anyperson
whowants toreplace outworn plywood production facilities withconiferous plywood facilities and
assists these wood-based board production efforts which canutilize waste wood materials.
4. Background andauthority forthesubsidy
Law: TheActofSpecial Accounts concerning Finance Investment andLoan
Authority: Forestry AdministrationG/SCM/N/25/KOR
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5. Form ofthesubsidy
Loan
6. Towhom andhowthesubsidy isprovided
o Qualification ofrecipient andchoice criteria
- Anyperson whowants toreplace outworn plywood production facilities with
coniferous plywood facilities.
- Anyperson whowants toestablish wood-based board facilities.
o Condition ofsupport
- Interest rate: 8%
- Theassistance covers notmore than70%ofthecosts ofrequirement.
o Period ofsupport: 10years (itwillberepaid for7years aftera3yeardeferment).
7. Amount ofthesubsidy
(Unit: Wmillion)
1995 1996
9,890 10,000
8. Duration ofthesubsidy
There isnolimitation onthisprogramme.
9. Trade effect ofthesubsidy
Itisextremely difficult toestimate thequantitative trade effect ofthissubsidy.
II-B Forest Products Utilization Assistance Programme
1. Titleofthesubsidy programme
Forest Products Utilization Assistance Programme
2. Period covered bythenotification
1995-1996G/SCM/N/25/KOR
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3. Policy objective and/or purpose ofthesubsidy
With aviewtoconserving theglobal forest environment, theGovernment assists anyperson
whowants toreplace outworn forest products manufacture facilities withnewfacilities.
4. Background andauthority forthesubsidy
Law: Special Accounts Management ActforRural Restructuring
Authority: Forestry Administration
5. Form ofthesubsidy
Loan
6. Towhom andhowthesubsidy isprovided
o Qualification ofrecipient andchoice criteria
- Anyperson whowants toreplace outworn forest products manufacture facilities
withnewequipment.
o Condition ofsupport
- Interest rates: 5-8%
- Theassistance covers notmore than70%ofthecosts ofrequirement.
o Period ofsupport: 10years (itwillberepaid for7years aftera3yeardeferment).
7. Amount ofthesubsidy
(Unit: Wmillion)
1995 1996
6,255 9,416
8. Duration ofthesubsidy
There isnolimitation onthisprogramme.
9. Trade effect ofthesubsidy
Itisextremely difficult toestimate thequantitative trade effect ofthissubsidy.G/SCM/N/25/KOR
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III. FISHERY
III-A Support forDevelopment ofDeep-Sea Fishery
1. Titleofthesubsidy
Support forDevelopment ofDeep-Sea Fishery
2. Period covered bythenotification
1995-1996
3. Policy objective and/or purpose ofthesubsidy
Toreduce thefinancial burden ofdeep-sea fishermen.
Tosupport thecosts necessary fortechnical cooperation withforeign countries.
4. Background andauthority forthesubsidy
Laws:
- Article 87oftheFisheries Act
- Operation Principle oftheSupport Fund forOverseas Resources Production
- Implementation Guide forFishery Cooperation Projects withCoastal Countries
- Operation Guide ofFinancial Fund oftheAntarctic Ocean Development
Authority: Ministry ofMaritime Affairs Fisheries
5. Form ofthesubsidy
Loan
6. Towhom andhowthesubsidy isprovided
Beneficiaries: Deep-sea fishermen
Content ofsupport: Providing loans fordeep-sea fishery andfishing equipment required
fortechnical cooperation withother countries.
Period oftheloan: -Support foroverseas resources production: 1year
-Support forfishery cooperation projects withcoastal countries:
5years (repayment within 1yearwitha4-year grace period).
-Support forAntarctic ocean development: 1yearG/SCM/N/25/KOR
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7. Amount ofthesubsidy
(a) Support foroverseas resources production
(Unit: W100million)
Year Amount oftheloan Estimate ofthesubsidy
1995 1,050 31.5
1996 1,560 46.8
Estimatesofthesubsidycanbecalculatedbyusingthedifferencebetweenanaveragecommercial
rate(11%) andtheloanrate(8%).
(b) Support forfishery cooperation projects withcoastal countries.
(Unit: W100million)
Year Amount oftheloan Estimate ofthesubsidy
1995 5.88 0.14
1996 - -
Thisloanhasstopped since 1996.
Estimates ofthesubsidy canbecalculated byusing thedifference between anaverage
commercial rate(11%) andtheloanrate(8.5%).
(c) Support forAntarctic ocean development
(Unit: W100million)
Year Amount oftheloan Estimate ofthesubsidy
1995 7.13 0.18
1996 6.60 0.17
Estimatesofthesubsidycanbecalculatedbyusingthedifferencebetweenanaveragecommercial
rate(11%) andtheloanrate(8.5%).
8. Duration ofthesubsidy
None.
9. Trade effect ofthesubsidy
Itisdifficult toestimate itstrade effect.G/SCM/N/25/KOR
Page18
III-B Support forFishProducts Processing Development
1. Titleofthesubsidy
Support forFishProducts Processing Development.
2. Period covered bythenotification
1995-1996
3. Policy objective and/or purpose ofthesubsidy
Todevelop newfishery foodproducts, toenlarge andtomodernize fishstorage andprocessing
facilities.
4. Background andauthority forthesubsidy
Laws:
- Article 5oftheLawontheSupport forAgriculture andFishProcessing Industry and
Controlling Quality.
- Article 15oftheSpecial ActforRural Development.
Authority: Ministry ofMaritime Affairs Fisheries.
5. Form ofthesubsidy
Loan
6. Towhom andhowthesubsidy isprovided
Beneficiaries: Companies engaged inconstructing facilities forhandling, storing and
processing fish.
Content ofsupport: Supporting thecostnecessary forfishprocessing facilities.
Period oftheloan: -Support foroperations offishprocessing: 1year
-Support forthestorage andprocessing facilities offishproducts:
10years (repayment within 7years witha3-year grace period).
7. Amount ofthesubsidy
(a) Support foroperations offishprocessing
(Unit: W100million)
Year Amount oftheloan Estimate ofthesubsidy
1995 111.8 3.35
1996 121.8 3.65
Estimatesofthesubsidycanbecalculatedbyusingthedifferencebetweenanaveragecommercial
rate(11%) andtheloanrate(8%).G/SCM/N/25/KOR
Page19
(b) Support forthestorage andprocessing facilities offishproducts
(Unit: W100million)
Year Amount oftheloan Estimate ofthesubsidy
1995 161 4
1996 160 4
Estimatesofthesubsidycanbecalculatedbyusingthedifferencebetweenanaveragecommercial
rate(11%) andtheloanrate(8.5%).
8. Duration ofthesubsidy
None.
9. Trade effect ofthesubsidy
Itisdifficult toestimate itstrade effect.
III-C Fund forSupporting Fishing Activities
1. Titleofthesubsidy
Fund forSupporting Fishing Activities
2. Period covered bythenotification
1995-1996
3. Policy objective and/or purpose ofthesubsidy
Tomaintain astable fishing operation andtoalleviate thefinancial burden offishermen.
4. Background andauthority forthesubsidy
Laws:
- Article 87oftheFisheries Act
- Operation Principle oftheFunds
Authority: Ministry ofMaritime Affairs Fisheries
5. Form ofthesubsidy
LoanG/SCM/N/25/KOR
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6. Towhom andhowthesubsidy isprovided
Beneficiaries: Coastal andoff-shore fishermen, inland anddeep-sea fisheries '
employers.
Content ofsupport: Providing loans for40-80% oftheamount necessary forthesupport
offishing activities according tothescaleofthefisherman 'sbusiness
activities.
Period oftheloan: 1year
7. Amount ofthesubsidy
(Unit: W100million)
Year Amount oftheloan Estimate ofthesubsidy
1995 7,496 242
1996 8,225 263
Estimatesofthesubsidycanbecalculatedbyusingthedifferencebetweenanaveragecommercial
rate(11%) andtheloanrate(5-6%).
8. Duration ofthesubsidy
None.
9. Trade effect ofthesubsidy
Itisdifficult toestimate thetrade effect.
III-D Support forDeveloping Aquaculture Fishery
1. Titleofthesubsidy
Support forDeveloping Aquaculture Fishery
2. Period covered bythenotification
1995-1996
3. Policy objective and/or purpose ofthesubsidy
Tosupply superior aquaculture products byimproving aquaculture facilities.
Toincrease thecommon benefits ofproducers andconsumers through direct salesmarkets.
4. Background andauthority forthesubsidy
Laws: TheSpecial Accounts Management ActforRural Construction
Authority: Ministry ofMaritime Affairs FisheriesG/SCM/N/25/KOR
Page21
5. Form ofthesubsidy
Grant andloan
6. Towhom andhowthesubsidy isprovided
Beneficiaries: Fishermen whoraiseandrearfish.
Content ofsupport: Providingloansforthepurchaseofaquaculturefacilitiesandequipment,
andfortheestablishment ofdistribution centres.
Period oftheloan: 8-10years.
7. Amount ofthesubsidy
(a) Support fordeveloping aquaculture farmandbasic facilities
(Unit: W100million)
Year Amount oftheloan1Estimate ofthesubsidy2
1995 135.20 63.22
1996 134.31 58.08
1These figures arecomposed offixed grants andloans.
2Estimates ofthesubsidy canbecalculated byusing thedifference between anaverage
commercial rate(11%) andtheloanrate(5%).
(b) Support forinland fishery development facilities andaquaculture equipment purchase
(Unit: W100million)
Year Amount oftheloan1Estimate ofthesubsidy2
1995 40.83 11.35
1996 54.53 10.65
1These figures arecomposed offixed grants andloans.
2Estimates ofthesubsidy canbecalculated using thedifference between anaverage commercial
rate(11%) andtheloanrate(5%).
(c) Support forinland fishdistribution facilities
(Unit: W100million)
Year Amount oftheloan1Estimate ofthesubsidy2
1995 7 0.49
1996 7 0.49
1These figures arecomposed offixed grants andloans.
2Estimates ofthesubsidy canbecalculated using thedifference between theaverage commercial
rate(11%) andtheloanrate(5%).G/SCM/N/25/KOR
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8. Duration ofthesubsidy
None.
9. Trade effect ofthesubsidy
Itisdifficult toestimate itstrade effect.
III-E Reduction inLocal Taxation onBuilding andAcquisition ofVessels forDeep-Sea Fishery
1. Titleofthesubsidy
Reduction inLocal Taxation onBuilding andAcquisition ofVessels forDeep-Sea Fishery.
2. Period covered bythenotification
1995-1996
3. Policy objective and/or purpose ofthesubsidy
Todecrease transportation costs andtolower prices ofimporting andexporting goods.
4. Background andauthority forthesubsidy
Law: Local TaxAct,section 289
Authority: Ministry ofHome Affairs
5. Form ofthesubsidy
Taxconcession.
6. Towhom andhowthesubsidy isprovided
Thesubsidy isprovided topersons whobuild orimport thefollowing ships:
(a) International linevessels runbymaritime transportation orshiplease corporations.
(b) Licensed ocean fishery vessels.
Thesubsidy isprovided inthefollowing manner:
(a) Built orimported ships: 50%reduction inacquisition tax
(b) Acquired ships: 50%reduction inproperty tax.
7. Amount ofthesubsidy
Total amount oftaxreduction in1995: W5,648 million
In1996: Notavailable.G/SCM/N/25/KOR
Page23
8. Duration ofthesubsidy
1995-1997
9. Trade effect ofthesubsidy
Notavailable.
IV. COAL INDUSTRY
IV-A Support Programme fortheCoalIndustry
1. Titleofthesubsidy
Support Programme fortheCoalIndustry.
2. Period covered bythenotification
1995-1996
3. Policy objective and/or purpose ofthesubsidy
Torestructure thecoalindustry, facilitate mechanization, andreduce coalproduction levels
inaccordance withdecreasing demand.
Tostabilize salesprices ofcoalandbriquettes, andsubsidize thedifference between salesprices
andproduction costs.
Tosupport localeconomies thathavebeenadversely affected bytherestructuring ofindustry.
Topromote pollution control incoalmines andbriquette plants.
4. Background andauthority forthesubsidy
Law: Article 26oftheCoalIndustry LawandArticle 22ofitsEnforcement Decree
Authority: Ministry ofTrade, Industry andEnergy
5. Form ofthesubsidy
Grants: Provided forstabilizing thesales price ofcoalbriquettes, mine closings,
economic development ofcoalmining areas, safety andproduction facilities,
etc.
Loans: Provided forthedevelopment ofcoalmining, facilities ofbriquette plants,
substitute business start-ups inareas affected bymine closings.
6. Towhom andhowthesubsidy isprovided
- Support forstabilizing salesprices ofcoalandbriquettes:G/SCM/N/25/KOR
Page24
Setmaximum salesprice levels, andmake upthedifference between salesprice and
production costtomine owners, mine employees andbriquette manufacturers.
- Support forcoalmine closings:
Provide grants forminers andworkers when mines areclosed.
- Support forthedevelopment ofcoalmining areas:
Provide grants forlocal governments andmine-owners toimprove theliving
environment andinfrastructure ofmining areas.
- Support forsafety andproduction facilities:
Provide grants forpollution control andcoalmining mechanization.
- Loans:
Provide loans tocoalmineowners todevelop coalmining, tobriquette manufacturers
tosupport improvement offacilities, andtosubstitute business enterprises inareas
where coalmines havebeenclosed.
- Support forstorage ofanthracite coal:
Purchase surplus anthracite coalduring the"Demand andSupply Coordination Period"
(1995-1999), andtosupport foritsstorage.
7. Amount andduration ofthesubsidy
(Unit: Wmillion)
1995 1996 Duration
Support forstabilizing price ofcoal
andbriquette3,670 3,497 notimelimit
Support forcoalmine closings 438 293 notimelimit
Support forsafety andproduction
facilities262 488 until1997
Support forstoring management of
anthracite coal169 142 notimelimit
Loans 311 470 notimelimit
Support forstoring management of
anthracite coal259 625 until1999
Others 885 245 -
Total 5,994 5,760
8. Trade effect ofthesubsidy
Duetodecreasing demand fordomestically mined anthracite coal, theGovernment has
implemented apolicy toreduce coalproduction andtoclose coalmines. Demand forsuchimported
energy resources asbituminous coal, however, isincreasing.
Inlightoftheabove, thissubsidy programme hasnoimpact oninternational trade.G/SCM/N/25/KOR
Page25
V. MANUFACTURING INDUSTRY
V-A Reserves forExport Losses
1. Titleofthesubsidy
Reserves forExport Losses.
2. Period covered bythenotification
1995-1996
3. Policy objective and/or purpose ofthesubsidy
Tocompensate forthelossofexport businesses.
4. Background andauthority forthesubsidy
Laws: - TaxExemption andReduction Control Law(Article 16)
- Enforcement Decree ofTax Exemption andReduction Control Law
(Articles 14,15,16and17)
- Enforcement Ordinance ofTaxExemption andReduction Control Law
(Articles 9and10)
Authority: Ministry ofFinance andEconomy
5. Form ofthesubsidy
Taxconcession
6. Towhom andhowthesubsidy isprovided
Inthecasewhere aresident oradomestic corporation, running abusiness earning foreign
currency (export business etc.), hassetaside reserves tocompensate foritslosses, thereserves shall
becounted asalosswhen calculating thetaxable income within acertain limit (thatofanamount
equivalent to1%ofitsforeign currency receipts or50%ofitsincome, whichever isless). Theamount
allocatedtosuchreserveswillbeaddedbacktotheresident's/corporation'sgainsinthree-yearinstalments
from theyearaftertheyearinwhich thereserves were counted asaloss. Inthecaseofexport
businesses, theamounts allocated tosuchreserves willbeadded backtotheresident 's/corporation 's
gains inthree-year instalments starting twoyears aftertheyearinwhich thereserves were counted
asaloss.G/SCM/N/25/KOR
Page26
7. Amount ofthesubsidy
(Unit: W100million)
Year Taxconcession1
1995 255
1996 386
1Taxconcessionisequivalenttotheinterestontheamountoftaxreducedbycountingthereserves
asalossforaninstalment period (four years).
8. Duration ofthesubsidy
3March 1973-31 December 1998.
9. Trade effect ofthesubsidy
Itisextremely difficult tomeasure thequantitative trade effect ofthissubsidy.
V-B Reserves forOverseas Market Development
1. Titleofthesubsidy programme
Reserves forOverseas Market Development.
2. Period covered bythenotification
1995-1996
3. Policy objective and/or purpose ofthesubsidy
Topromote theoverseas market development ofabusiness earning foreign currency.
4. Background andauthority forthesubsidy
Law: - TaxExemption andReduction Control Law(Article 17)
- Enforcement Decree ofTax Exemption andReduction Control Law
(Articles 14,15,16and17)
- Enforcement Ordinance ofTaxExemption andReduction Control Law
(Article 11)
Authority: TheMinistry ofFinance andEconomy
5. Form ofthesubsidy
Taxconcession.G/SCM/N/25/KOR
Page27
6. Towhom andhowthesubsidy isprovided
Inthecasewhere aresident oradomestic corporation, operating abusiness earning foreign
currency, hassetaside reserves foroverseas market development, thereserves shallbecounted as
alosswhen calculating thetaxable income within acertain limitequivalent to1%oftheforeign currency
receipts (theamount equivalent to2%oftheforeign currency receipts incaseofexport business using
itsowntrademark). Theamounts allocated tosuchreserves areadded backtothegains inthesame
manner asthereserves forexport losses.
7. Amount ofthesubsidy
(Unit: W100million)
Year Taxconcession1
1995 285
1996 478
1Taxconcessionisequivalenttotheinterestontheamountoftaxreducedbycountingthereserves
asalossforaninstalment period offouryears.
8. Duration ofthesubsidy
31July1969-31 December 1998.
9. Trade effect ofthesubsidy
Itisextremely difficult tomeasure thequantitative trade effect ofthissubsidy.
V-C TaxCredit forInvestment inFacilities
1. Titleofthesubsidy programme
TaxCredit forInvestment inFacilities
2. Period covered bythenotification
1995-1996
3. Policy objective and/or purpose ofthesubsidy
Toencourage investment infacilities forsmall andmedium enterprises orfordeveloping
technology andmanpower, etc.
4. Background andauthority forthesubsidy
Laws: - TaxExemption andReduction Control Law(Articles 5,10,37,45,88)
- Enforcement Decree ofTax Exemption andReduction Control Law
(Articles 4,5,10,34,43,85)G/SCM/N/25/KOR
Page28
- Enforcement Ordinance ofTaxExemption andReduction Control Law
(Articles 5and7)
Authority: TheMinistry ofFinance andEconomy
5. Form ofthesubsidy
Taxconcession.
6. Towhom andhowthesubsidy isprovided
(1) Taxcreditforinvestmentinfacilitiesforsmallandmediumenterprises(SMEs):ifSMEsacquire
business assets suchasmachinery andequipment, 5%oftheacquisition amount (3%forforeign-
made assets) isdeducted from income orcorporation taxofthatbusiness year.
(2) Taxcredit forinvestment infacilities fortechnology andmanpower: inthecasewhere aresident
oradomestic corporation invests capital infacilities which develop technology andmanpower
orrunanewbusiness bysuchnewtechnology, anamount equivalent to3-5% oftheinvestment
(10% inthecaseofinvestments using domestically produced materials) isdeducted fromthe
income orcorporation taxofthatbusiness year.
(3) Taxcredit forbusiness conversion andreorganization: when anenterprise designated asin
needofarationalization bythegovernment transfers superfluous installations andinvests in
thebusiness inwhich theenterprise intends toengage in,oralienates itsassociated enterprise
orsecondary business which belongs tothefirst-mentioned enterprise andinvests initsprimary
businesses, thefirst-mentioned enterprise mayhaveataxcredit for10%(3%forforeign-made
machinery orinstallation) oftheinvestment amount.
(4) Taxcredit forbusinesses moving toaprovincial area: when aresident oradomestic corporation
moves toaprovincial areaandacquires newplantfacilities, anamount equivalent to3%(5%
inthecaseofinvestments using domestically produced material) oftheinvestment inbusiness
assets isdeducted from theincome orcorporation taxofthatbusiness year.
(5) Taxcredit forinvestment inhousing foremployees: when aresident oradomestic corporation
constructs orpurchases newhouses (thegross areanotexceeding 85square metres) using
domestically produced materials forthepurpose ofleasing ittotheirhomeless employees, an
amount equivalent to10%ofitsacquisition value isdeducted fromtheincome orcorporation
taxofthatbusiness year.
Therateoftaxcreditforinvestmentinfacilitiesforincreasingproductivityandspecialequipment
wasmade auniform 5%forbothdomestic orforeign ones, andthespecial depreciation for
investment infacilities wasabolished withtherevision ofthelawon12December 1996.G/SCM/N/25/KOR
Page29
7. Amount ofthesubsidy
(Unit: W100million)
Year Taxconcession1
1995 1,206
1996 2,347
1Taxconcession isthereduction amount when therateoftaxcredits fordomestic goods (5-10%)
islowered totherateoftaxcredits applied toforeign ones(0-5%).
8. Duration ofthesubsidy
6-1): 31December 1990-31 December 1998
6-2): 30December 1971-31 December 1998
6-3): 23December 1985-31 December 1998
6-4): 22December 1976-31 December 1998
6-5): 23December 1985-31 December 1998
9. Trade effect ofthesubsidy
Itisextremely difficult tomeasure thequantitative trade effect ofthissubsidy.
V-D TaxReduction andExemption forForeign Invested Enterprises
1. Titleofthesubsidy programme
TaxReduction orExemption forForeign Invested Enterprises
2. Period covered bythenotification
1995-1996
3. Policy objective and/or purpose ofthesubsidy
Tofacilitate inward foreign direct investment.
4. Background andauthority forthesubsidy
Laws: - ActonForeign Direct Investment andForeign Capital Inducement
- TheEnforcement Decree ofActonForeign Direct Investment andForeign
Capital Inducement
- TheWorking Rules fortheImplementation ofActonForeign Direct Investment
andForeign Capital Inducement
- Regulations onForeign Direct Investment
Authority: TheMinistry ofFinance andEconomy, National TaxAdministration (the
Executive Body)G/SCM/N/25/KOR
Page30
5. Form ofthesubsidy
Taxconcession.
6. Towhom andhowthesubsidy isprovided
Aforeign direct investment inabusiness using advanced technology.
Aforeign direct investment inabusiness located intheFreeExport Zone.
7. Amount ofthesubsidy
o Businesses using advanced technology
- Corporation tax,income taxofforeign invested enterprises
. for5years from theyearwhen profit isfirstmade: exempted.
. 3years thereafter: 50%reduction.
- Corporation tax,income taxondividends offoreign invested enterprises
. for5years from theyearwhen profit isfirstmade: exempted.
. 3years thereafter: 50%reduction.
- Acquisition tax,property tax,aggregate landtaxwithrespect toland,buildings,
etc.,acquired orpossessed byforeign invested enterprises
. for5years from theyearwhen profit isfirstmade: exempted.
. 3years thereafter: 50%reduction.
- Customs duties, special excise tax,value added taxwithrespect tocapital goods
induced forthepurpose ofoperating abusiness offoreign invested enterprise
which issubject toataxreduction orexemption: exempted.
o Business located intheFreeExport Zone
- Corporation tax,income taxofforeign invested enterprises
. theyear when thebusiness firstopens, and3years thereafter:
exempted.
. 2years thereafter: 50%reduction.
- Corporation tax,income taxondividends offoreign invested enterprises
. theyear when thebusiness firstopens, and5years thereafter:
50%reduction.
- Acquisition tax,property tax,aggregate landtaxwithrespect toland,buildings,
etc.,acquired orpossessed byforeign invested enterprises
. for5years from thedateofbusiness opening: 50%reduction.
- Customs duties, special excise tax,value added taxwithrespect tocapital goods
induced forthepurpose ofoperating abusiness offoreign invested enterprises
which issubject toataxreduction orexemption: 50%reduction.G/SCM/N/25/KOR
Page31
8. Duration ofthesubsidy
There isnotimelimit.
Taxreduction orexemption regime regarding foreign direct investment wasfirstputintoplace
inJanuary 1960, andtheregime wasrevised on1April 1995.
9. Trade effect ofthesubsidy
Thepurpose ofthissubsidy istofacilitate inward FDI,anditishardtoestimate itstradeeffects.
V-E Reduction inCustoms Duty onParts ofAircraft
1. Titleofthesubsidy programme
Reduction inCustoms Duty onParts ofAircraft
2. Period covered bythenotification
1995-1996
3. Policy objective and/or purpose ofthesubsidy
Toencourage theimportation ofaircraft parts which arenotprovided domestically andto
facilitate industries available forcutting production costs.
4. Background andauthority forthesubsidy
Laws: - Customs Act(Article 28-4)
- Enforcement Decree ofCustoms Act(Article 16-2)
- Enforcement Ordinance oftheCustoms Act(Articles 14,14-2, 15)
Authority: TheMinistry ofFinance andEconomy
5. Form ofthesubsidy
Taxconcession.
6. Towhom andhowthesubsidy isprovided
Those whomanufacture orrepair aircraft according tothePromotion Actforthedevelopment
ofaircraft andspace industries.
7. Amount ofthesubsidy
(Unit: W100million)
1995 1996
Amount ofdutyreduction 52 20G/SCM/N/25/KOR
Page32
8. Duration ofthesubsidy
1975-1997
9. Trade effect ofthesubsidy
None.
V-F Support Programme forMaintenance ofFarm Machinery
1. Titleofthesubsidy programme
Support Programme forMaintenance ofFarm Machinery
2. Period covered bythenotification
1995-1996
3. Policy objective and/or purpose ofthesubsidy
DuetothecharacteristicsofricefarmingintheAsianMonsoonclimate,Koreanfarmers'demand
forfarm machinery isconcentrated inthericefarming season. TheGovernment support forthe
programme isintended tomeetthisdemand byencouraging theoff-season production offarmmachinery
andmaintaining themanufacturers 'stock.
4. Background andauthority forthesubsidy
Law: - TheFarm Mechanization Promotion Law
Authority: TheMinistry ofAgriculture andForestry
5. Form ofthesubsidy
Loan.
Financial Resource: Government budget (Special Account forStructural Development of
Rural Areas)
6. Towhom andhowthesubsidy isprovided
(1) Beneficiaries: Farm machinery manufacturers.
(2) Productcoverageofsupport:Farmtractors,powertillers,ricetransplanters,cultivators,
sprayers (forfertilizers, pesticides, etc.), planters, weeders, seeders andcombine
harvesters, etc.
(3) Contents ofsupport: Ashort-term loan tosupport themaintenance offarm
machinery stock.
(4) Conditions ofsupport: Aoneyearloanwithanannual interest rateof5%.G/SCM/N/25/KOR
Page33
7. Amount ofthesubsidy
(Unit: W100million)
Year 1995 1996
Total amount ofloan 300 450
8. Duration ofthesubsidy
1982-
9. Trade effect ofthesubsidy
Thissubsidy amount isverylittlecompared totheannual turnover ofthefarm machinery
industry, andtherefore, there ishardly anytrade effect ofthesubsidy.
Statistics ofproduction, consumption andtrade
Classification 1995 1996
Production (W100million) 12,474 11,170
Imports ($1,000) 194,093 220,754
Exports ($1,000) 22,219 22,208
1. Production isbased onthesalesprices.
2. Imports/Exports amount isbased oncustoms clearance.
V-G Assistance Programme topromote thespread ofDomestically Produced Mini-Computers
1. Titleofthesubsidy programme
Assistance Programme topromote thespread ofDomestic Mini-Computers byBasic Acton
Informatization promotion.
2. Period covered bythenotification
1995-1996
3. Policy objective and/or purpose ofthesubsidy
Topromote thewidespread useoftheKorean Mini-Computer.
4. Background andauthority forthesubsidy
Law: - Basic ActonInformatization Promotion
Authority: TheMinistry ofInformation andCommunicationG/SCM/N/25/KOR
Page34
5. Form ofthesubsidy
Loan (Source: Informatization Promotion Fund)
6. Towhom andhowthesubsidy isprovided
Beneficiaries: Public organizations, private firms, etc.,wishing tousethemini-computer.
Content ofsupport: Assistance forthelong-term loantopromote thewidespread useof
Korean mini-computers.
Conditions ofsupport: 6.5% ayear.
Duration ofsupport: Within 5years
How determined: ona"first come firstserved" basis within certain limited amounts.
Executive organ: KITI (Korea Informatics Telesis Inc.)
7. Amount ofthesubsidy
(Unit: W100million)
Year 1995 1996
Total amount offund 223 240
Estimates ofthesubsidy
(4.5%)*10 11
*Estimates ofthesubsidy canbecalculated byusing thedifference between anopenmarket
interest rate(11%) andthefundrate(6.5%).
8. Duration ofthesubsidy
Dateofcommencement: 1993
Thiswillbemaintained until1997.
After 1998, wewillreview theprogramme andwillassist allmini-computers, domestic or
foreign, without distinction.
9. Trade effect ofthesubsidy
Trade effect ofthisprogramme isverysmall because thebenefit oftherentisonly4.5% a
yearontheassumption thattheopenmarket interest rateis11%.
65mini-computers in1995and57mini-computers in1996wereassisted through thissubsidy
programme.G/SCM/N/25/KOR
Page35
V-H Support Fund fortheStone Industry
1. Titleofthesubsidy programme
Support Fund fortheStone Industry.
2. Period covered bythenotification
1995-1996
3. Policy objective and/or purpose ofthesubsidy
Toprevent thedestruction offorests andnatural ecosystems asaresult ofreckless quarrying
bypoorly equipped small-scale businesses.
4. Background andauthority forthesubsidy
Law: Article 6oftheLawConcerning theSpecial Account fortheEnergy and
Resources Industry
Authority: Ministry ofTrade, Industry andEnergy
5. Form ofthesubsidy
Loans atanannual interest rateof7.0% to8.5%.
6. Towhom andhowthesubsidy isprovided
Theloans areprovided toenterprises thatarelicensed andareregistered asstone fabricators.
Conditions ofsupport
Period ofloans Limit oftheamount Interest rate
Facility Fund Repayment in5years with
athree-year grace periodModernization,
prevention ofair
pollution: 100%.
Others: 90%Special account for
financial investment
andloan: 8.5%
Operating Fund Repayment in2years with
aone-year grace periodUpto80%ofthe
costSpecial account for
financial loan: 8.5%G/SCM/N/25/KOR
Page36
7. Amount ofthesubsidy
(Unit: W100million)
Year 1995 1996
Total amount offund 263 181
Estimate ofsubsidy (4.5%)* 11 8
*The subsidy canbeconsidered thedifference between theopen-market interest rateandthe
special loanrate.
8. Duration ofthesubsidy
Indefinite.
9. Trade effects ofthesubsidy
Itisdifficult toestimate precisely whateffect thisprogramme hasontrade. However, the
benefit thattheborrowers derive fromthisprogramme canbeconsidered asinsignificant incomparison
withthetotalannual amount ofloans going tostone fabricators. Approximate effects ofthisprogramme
ontotalstone exports in1995 andin1996 were 0.11% and0.085% respectively.
VI. RESEARCH AND DEVELOPMENT
VI-A Assistance forResearch andDevelopment Activities byBasic ActonInformatization Promotion
(Research andDevelopment Activities Supported bytheInformation andCommunication
Promoting Fund)
1. Titleofthesubsidy
Assistance forResearch andDevelopment Activities bytheBasic ActonInformatization
Promotion.
2. Period covered bythenotification
1995-1996
3. Policy objective and/or purpose ofthesubsidy
Assistance forresearch anddevelopment activities oninformation andcommunication.
4. Background andauthority forthesubsidy
Law: Basic ActonInformatization Promotion
Authority: Ministry ofInformation andCommunicationG/SCM/N/25/KOR
Page37
5. Form ofthesubsidy
Loan (source: Informatization Promotion Fund)
6. Towhom andhowthesubsidy isprovided
Object ofsupport: private firms etc.inthefieldofinformation andcommunication.
Content ofsupport: assistance forresearch anddevelopment activities oninformation and
communication:
- only"industrial research" and"pre-competitive development activities" can
beassisted;
- anyassistance on"commercial development activities" isnotallowed.
Conditions oftheloan: 6.5% ayear.
Benefit ofrent: 4.5% ayearderived from thedifference between theopenmarket interest
rate(11%) andthefundrent(6.5%).
Duration ofthesupport: within 5years (with a2-years 'grace period).
Benefit object/how determined:
- firms which desire todevelop techniques inthefield ofinformation and
telecommunications likeMulti-media etc;
- only"industrial research" and"pre-competitive development activities" can
beassisted.
Executive organ: IITA(Institute ofInformation Technology Assessment) attached totheETRI.
7. Amount ofthesubsidy
(Unit: W100million)
Year 1995 1996
Total amount offund 1,685 2,150
Benefit (4.5%) 76 97
8. Duration ofthesubsidy and/or anyother time-limits attached toit
Dateofcommencement: 1993.
Thissubsidy willbecontinued without anytimelimits.G/SCM/N/25/KOR
Page38
9. Trade effects ofthesubsidy
Thetrade effect isverysmall because thissubsidy assists "industrial research" and"pre-
competitive development activities" excluding "commercial development activities" bytheinterest rate
of6.5% ayear.
VI-B Environmental Engineering &Technology Development Programme
1. Titleofthesubsidy programme
Environmental Engineering &Technology Development Programme.
2. Period covered bythenotification
1995-1996
3. Policy objective and/or purpose ofthesubsidy
Tosolve environmental problems andtoenhance thelevelofenvironmental technology.
4. Background andauthority forthesubsidy
Law: ActrelatingtoEnvironmentalTechnologyDevelopmentandAssistance(Article4)
Authority: Ministry ofEnvironment
5. Form ofthesubsidy
Grant.
6. Towhom andhowthesubsidy isprovided
Thesubsidy willbeprovided touniversities, research institutions andprivate enterprises that
arecapable ofconducting theirownresearch.
7. Amount ofthesubsidy
(Unit: W100million)
Year 1995 1996
Amount ofthesubsidy 166 246
8. Duration ofthesubsidy
1992-2001
9. Trade effect ofthesubsidy
Notavailable.G/SCM/N/25/KOR
Page39
VI-C Promotion Fund forScience andTechnology
1. Titleofthesubsidy programme
Science andTechnology Promotion Fund
2. Period covered bythenotification
1995-1996
3. Policy objective and/or purpose ofthesubsidy
Thisprogramme istoassist corporates ofR&D institutes orindividuals tocarry outresearch
anddevelopment activities thatpromote nationally recognized important science andtechnology.
4. Background andauthority forthesubsidy
Laws:
- Science andTechnology Promotion Act
Section 14Science andTechnology Promotion Fund
- TheEnforcement Decree ofScience andTechnology Promotion Act
Section 21TheSource ofScience andTechnology Promotion Fund
Section 22Theobject which deserves subsidizing
Section 23Establishment andDivision oftheFund Account
Section 24Revenue andExpenditure ofContribution Account
Section 25Revenue andExpenditure ofContribution Account
Section 26Establishment andOperation oftheFunding Committee
Section 27Accounting Corporation oftheFund
Section 28TheEnforcement Regulation oftheFund
- TheEnforcement Regulation ofScience andTechnology Promotion Fund
Section 1General Rules
Section 2Operation andManagement oftheFund
Section 3TheOperation oftheContribution Account
Section 4TheOperation oftheLoan Account
Section 5Supplementary Rules
Authority: TheFund ismanaged bytheKTB, aprivate organization, entrusted bythe
Government.
5. Form ofthesubsidy
Loan.
6. Towhom andhowthesubsidy isprovided
(1) Beneficiaries: organization tocarry outresearch anddevelopment thatpromote
nationally recognized important science andtechnology.G/SCM/N/25/KOR
Page40
(2) Conditions ofsupport:
- Financing instrument: conventional loanofwhich theprincipal andaninterest
must berepaid;
- Lending period: 7years which isinclusive ofamaximum 3yeargrace period;
- Interest rateofsubsidies: 6-7% peryear.
- Limits onthesubsidy amount US$1 =W800):
W1billion perproject
W3billion percompany
80%ofthetotalamount required byacompany foraproject.
7. Amount ofthesubsidy
(Total amount orannual amount budgeted forthatsubsidy)
(Unit: W100million)
Year
Industry1995 1996 Total
Electric/Electronic 336 359 695
Mechanical/Metallic 499 455 954
Other 251 308 560
Total 1,087 1,123 2,209
8. Duration ofthesubsidy
1993
9. Trade effect ofthesubsidy
None.