G/SCM/N/284/KOR  
 
6 July 2015  
(15-3470)  Page: 1/25  
Committee on Subsidies and Countervailing Measures  Original: English  
 
 SUBSIDIES 
NEW AND FULL NOTIFICATION PURSUANT TO ARTICLE XVI:1  
OF THE GATT 1994 AND ARTICLE 25 OF THE AGREEMENT  
ON SUBSIDIES AND COUNTERVAILING MEASURES 
REPUBLIC OF KOREA 
The following communication, dated 29 June 2015, is being circulated at the request of the 
Republic of Korea 
 
_______________ 
 
 
The following notification is submitted for the pu rposes of transparency and without prejudice to 
the legal status and nature, including specificity, or effects of the notified programmes or 
measures under the ASCM and GATT 1994.  
 
 
 
  G/SCM/N/284/KOR 
 
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  TABLE OF CONTENTS 
I. AGRICULT URE ......................................................................................................... 3  
1.1   Foodgrain Mana gement Programme ............................................................................. 3  
1.2   Support For Marketing And Promotion Of  Agricultural And Li vestock Prod ucts ..................... 4  
1.3   Support For Livestock Products. ................................................................................... 5  
2   FORE STRY .................................................................................................................. . 6 
2.1   Board Assist ance Prog ramme ...................................................................................... 6  
2.2   Wood Utilization Assistance Pr ogramme ........................................................................ 7  
3   FISH ERIES ................................................................................................................. . 8 
3.1   Support For Fi shing Activities ...................................................................................... 8  
3.2   Support for Aquacult ure Fishery Development ............................................................... 9  
3.3   Support for Replacement and modernization of Old distant-Fishing Vessels and its 
Equipment ..................................................................................................................... . 10 
3.4   Support for Ve ssel Decommi ssioning ........................................................................... 11 
3.5   Support for Management of distant wate r fisheries ........................................................ 12 
4   COAL INDUSTRY ........................................................................................................ 12  
5   MANUFACTURIN G INDUST RY .................................................................................... 13  
5.1   Support for Foreig n Invested En terpri ses ..................................................................... 13 
5.2   Tariff Reductio n on Aircra ft Parts ................................................................................ 15 
5.3   Support for Farm Machinery Manu facturing .................................................................. 16 
6   ENVIRONMENT, RESEAR CH AND DEVE LOPMENT ....................................................... 17  
6.1   Environmental Improvement Loan Programme .............................................................. 17 
6.2   Support for R&D of Environmenta l Technology Develo pment Projects ............................... 18 
6.3   Project on the Emission Reduction for Diesel Vehicles in Operation ................................... 19 
6.4   Natural Gas Bus Supply Project .................................................................................. 20 
6.5   Support for Recycling Equipment and Technology Development ....................................... 21 
6.6   Support for Te lemetering Systems .............................................................................. 22 
6.7   Project on the Distri bution Of Low NOX Burn ers ............................................................ 23 
6.8   Loan Programme for R&D of  information and communication .......................................... 24 
 
 G/SCM/N/284/KOR 
 
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  I. AGRICULTURE  
1.1  Foodgrain Management Programme 1. Title of the subsidy programme 
 
Foodgrain Management Programme. 
 2. Period covered by the notification 
 2013-2014.  3. Policy objective and/or purpose of the subsidy 
 To maintain and manage adequate food stocks of basic agro products for food security.  
4. Background and authority for the subsidy 
 
Law: 
- Foodgrain Management Act (Article 4).  
- Agro-Fisheries Marketing and Price Stabilization Act (Article 13).  Authority: Ministry of Agriculture, Food and Rural Affairs. 
 
5. Form of the subsidy 
 
Grants and loans.  
 6. Recipients and terms 
 Grants: - Recipients: Farms that produce soybeans. - Content of subsidy: The government purchases a certain volume from the producing farms.  
 
Loans: - Recipients: Enterprises that purchase barley and soybeans.  
- Content of subsidy: The government provides the enterprises with loans so that they can 
purchase barley and soybeans from the producing farms.  
- Loan interest and duration: 3% and 12 months.  
 
7. Amount of the subsidy 
 
(Unit: million KRW) 
* The benefit of loan is estimated based on the di fference between the loan rate and the market rate. 
 
8. Duration of the subsidy 
 No fixed duration.   Item Type 2013 2014 
Barley Direct subsidy (a)  - - 
Loan 10,658 458 
Benefit of loan* (b) 97.0 3.8 
Total(a+b) 97.0 3.8 
Soybeans Direct subsidy (a) 34,214 39,270 
Loan 5,120 6,200 
Benefit of loan* (b) 46.6 51.5 
Total (a+b) 34,260.6 39,321.5 G/SCM/N/284/KOR 
 
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  9. Trade effects of the subsidy 
 
The government is implementing the foodgrain pu rchase system with a view to achieving food 
security of basic agro products. It is estimated that support for the purchase of foodgrain has a 
minimal effect on trade because of Korea’s low food self-sufficiency. 
 1.2  Support For Marketing And Promotion Of Agricultural And Livestock Products 
1. Title of the subsidy programme 
 
Support for Marketing and Promotion of Agricultural and Livestock Products.  
2. Period covered by the notification 
 
2013-2014. 
 
3. Policy objective and/or purpose of the subsidy 
 
To improve the quality and reduce the logistical co sts of agro-livestock products (fruits, flowering 
plants, kimchi, vegetables, ginseng and livestock products).  4. Background and authority for the subsidy 
 Law: Framework Act on Agriculture and Fisheries, Rural Community and Food Industry (Article 59). 
Authority: Ministry of Agriculture, Food and Rural Affairs. 
 5. Form of the subsidy 
 Grants.  6. Recipients and terms 
 Recipients: - Exporters of fruits, flowering plants, kimchi, vegetables, ginseng, and livestock products.  
 
Content of the subsidy: - Partial support for costs in sorting, packaging, and transporting.  
 
7. Amount of the subsidy 
 
(Unit: million KRW) 
Type 2013 2014 
Lump sum transfer (a) 31,053 31,576 
Loan - - 
Benefit of loan* (b) - - 
Total (a+b) 31,053 31,576 
* The benefit of loan is estimated based on the di fference between the loan rate and the market rate. 
 
8. Duration of the subsidy 
 No fixed time period.  
9. Trade effects of the subsidy 
 
Although this programme provides partial support for the cost of packaging and transporting, the 
impact of the programme on trad e is expected to be minimal. 
 G/SCM/N/284/KOR 
 
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  1.3  Support For Livestock Products. 
1. Title of the subsidy programme 
 Calf Breeding Stabilization Schedule and Quality Improvement Programme.  
 
2. Period covered by the notification 
 
2013-2014. 
 3. Policy objective and/or purpose of the subsidy 
 
- To improve the competitiveness and income of  Hanwoo farmhouses by reducing production 
costs. 
- To secure the Hanwoo production base by supporting stable calf breeding and management. 
- To produce high-quality beef and reduce production cost by improving cowshed facilities.  
 4. Background and authority for the subsidy 
 Law: Livestock Act (Article 3 and Article 32).  Authority: Ministry of Agriculture, Food and Rural Affairs.   
5. Form of the subsidy 
 
Grants. 
 
6. Recipients and terms 
 
a. Calf Breeding Stabilization Schedule 
Recipients: 
- Cattle farmers who joined the Calf  Breeding Stabilization Schedule.  
 
Contents of the Subsidy: 
- Support is provided to compensate for losses in cases where the average market price of a 
calf is lower than the standard price of the schedule.  
 
b. Quality Improvement Program 
Recipients: 
- Cattle farmers.  
 Content of the subsidy: 
- Provide consulting services to cattle farmers,  support fees for grading tests and engage in 
beef promotion. 
 7. Amount of the subsidy 
 
(Unit: million KRW) 
 Type 2013 2014 
Calf Breeding Stabilization Sche dule Direct Payment 999 809 
Quality Improvement Program Direct Payment 839 - 
Total 1,838 809 
* The benefit of loan is estimated based on the di fference between the loan rate and the market rate. 
 
8. Duration of the subsidy 
 
No fixed time period.   G/SCM/N/284/KOR 
 
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  9. Trade effects of the subsidy 
 
The impact of the program on trade is expected to be minimal because the purpose of the program 
is to support income stability for farmers.  
 
2  FORESTRY 
2.1  Board Assistance Programme 
1. Title of the subsidy programme  
 
Board Assistance Programme.  
2. Period covered by the notification 
 
2013-2014. 
 
3. Policy objectives and /or purpose of the subsidy 
 
To facilitate the use of culled-out trees, smal l unmarketable trees and recycling waste wood 
materials.  4. Background and authority for the subsidy  
 Law: Act on the Promotion of Forestry and Mountain Villages (Article 10) Authority: Korea Forest Service. 
 
5. Form of the subsidy  
 
Loans 
- Source of funding: Special Account for the Structural Improvement of Rural Areas.  6. Recipient and terms 
 Recipients: Board producers. Conditions: Interest rate of 4.0%. 
Terms of the loan: 10 years (7-year repayment period with a 3-year grace period). 
 7. Amount of the subsidy  
 
  (Unit: million KRW) 
 2013 2014 
Lump sum transfer (a) - - 
Loan 3,000 3,000 
Benefit of loan* (b) 68 49 
Total (a+b) 68 49 
* The subsidy effect is estimated based on the difference between the loan rate and the market rate. 
 
8. Duration of the subsidy 
 
No fixed time period. 
 9. Trade effects of the subsidy  
 Most of these products are used to meet domestic demand. Therefore, the effect on trade is presumed to be insignificant. 
 G/SCM/N/284/KOR 
 
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  Production, Consumption and Trade 
 
  (Unit: 1,000m3) 
 2013 2014 
Production 2,647 2,841 
Imports 1,535 1,954 
Exports 141 121 
Consumption 4,041 4,674 
 
2.2  Wood Utilization Assistance Programme 
1. Title of the subsidy programme 
 
Wood Utilization Assistance Programme. 
 
2. Period covered by the notification 
 
2013-2014. 
 3. Policy objectives and /or purpose of the subsidy 
 To provide financial assistance for the modernization of forestry machinery and facilities.  4. Background and authority for the subsidy 
 Law: Act on the Promotion of Forestry and Mountain Villages (Article 10). Authority: Korea Forest Service. 
 
5. Form of the subsidy 
 
Loans: 
- Source of funding: Special Account for Structural Improvement of Rural Areas.  6. Recipient and terms 
 Recipients:  - Wood manufacturers  
 
Conditions:  - (2013) Interest rate of 3.0 to 4.0%  
- (2014) Interest rate of 3.0% 
 Terms of the loan: - 10 years (7-year repayment period with a 3-year grace period).  
 
7. Amount of the subsidy  
 
(Unit: million KRW) 
 2013 2014 
Lump sum transfer (a) - - 
Loan 4,000 3,430 
Benefit of loan* (b) 110 90 
Total (a+b) 110 90 
* The subsidy effect is estimated based on the difference between the loan rate and the market rate. 
 
8. Duration of the subsidy 
 No fixed time period. G/SCM/N/284/KOR 
 
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9. Trade effects of the subsidy 
 Most domestic wood production is used to meet domestic demand. Therefore, the effect on trade is 
presumed to be insignificant. 
 
Exports and Imports 
 
(Unit: 1,000m3) 
  2013 2014 
Exports Round wood - 1 
Sawn wood 22 19 
Board 141 105 
Imports Round wood 3,757 3,676 
Sawn wood 1,756 1,984 
Board 1,535 1,954 
 
3  FISHERIES 
3.1  Support For Fishing Activities 1. Title of the subsidy programme 
 
Support for Fishing Activities.   
2. Period covered by the notification 
 
2013-2014.  
3. Policy objectives and /or purpose of the subsidy 
 
To relieve financial burden and support stable fishing operations by providing loans with lower 
interest rates.  
 4. Background and authority for the subsidy 
 Law: Article 86 of the Fisheries Act.  Authority: Ministry of Oceans and Fisheries.   
5. Form of the subsidy 
 
Loans. 
 
6. Recipients and terms 
 
Recipients: Fishermen duly licensed under the relevant domestic fisheries legislation.  
Terms: One year loan with an annual interest rate of 3%.  G/SCM/N/284/KOR 
 
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  7. Amount of the subsidy 
 
(Unit: million KRW) 
 2013 2014 
Lump sum transfer (a) - - 
Loan 1,916,814 1,978,786 
Benefit of loan* (b) 41,513 36,565 
Total (a+b) 41,513 36,565 
* The benefit of loan is estimated based on the difference between the loan rate and the market rate.  
 
8. Duration of the subsidy 
 
No fixed time period.  
 9. Trade effects of the subsidy 
 It is not possible to estimate the impact on trade, because the program is not trade-conditioned and beneficiaries may decide to sell the products either in the export market or the domestic market at their discretion. In addition, it is assu med that most of the catches will be consumed in 
the domestic market and thus the impact on trade will be negligible. 
 3.2  Support for Aquaculture Fishery Development  
1. Title of the subsidy programme 
 
Support for Aquaculture Fishery Development.  
 
2. Period covered by the notification 
 2013-2014.  
 
3. Policy objectives and /or purpose of the subsidy 
 
To ensure a stable supply of fishery products by supporting the development of aquaculture fishery 
in the context of changing circumstances in the production environment for domestic and overseas 
fisheries.  
 
4. Background and authority for the subsidy 
 Law: Article 79 and 86 of the Fisheries Act.  
Authority: Ministry of Oceans and Fisheries.  
 5. Form of the subsidy 
 Grants and loans.   
6. Recipients and terms 
 
Recipients: Aquaculture fishermen.  Terms of the grant: 30 to 50% of business expenses. 
Terms of the loan: 2 to 10 years’ loan at an annual interest rate of 1 to 4%.  
 G/SCM/N/284/KOR 
 
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  7. Amount of the subsidy 
 
(Unit: million KRW) 
 2013 2014 
Lump sum transfer (a) 16,150 22,593 
Loan 7,231 4,581 
Benefit of loan* (b) 1,058 2,583 
Total (a+b) 17,208 25,176 
* The benefit of loan is estimated based on the difference between the loan rate and the market rate.  
 
8. Duration of the subsidy 
 
No fixed time period.  
 9. Trade effects of the subsidy 
 It is difficult to estimate the effect on trad e because the program is not trade-conditioned.  
 3.3  Support for Replacement and modernizat ion of Old distant-Fishing Vessels and its 
Equipment 
1. Title of the subsidy programme 
 
Support for Replacement and Modernization of Old Distant-Fishing Vessels and Their Equipment. 
 2. Period covered by the notification 
 2013-2014.   3. Policy objectives and /or purpose of the subsidy 
 To ensure navigational safety through the repl acement of old vessels and vessel equipment.  
 
4. Background and authority for the subsidy 
 
Law: Article 26 of the Distant Water Fisheries Development Act.  
Authority: Ministry of Oceans and Fisheries.  
 5. Form of the subsidy 
 
Loans.  
 6. Recipients and terms 
 Recipients: Fishermen.  Terms of the loan: 3-year grace period and 7- year repayment at an annual interest rate of 3%.  
 
7. Amount of the subsidy 
 
(Unit: million KRW) 
 2013 2014 
Lump sum transfer (a) - - 
Loan 40,500 27,772 
Benefit of loan * (b)   
Total (a+b)   
* The benefit of loan is estimated based on the difference between the loan rate and the market rate.  
 G/SCM/N/284/KOR 
 
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  8. Duration of the subsidy 
 
No fixed time period.   
9. Trade effects of the subsidy 
 
It is difficult to estimate the effect on trad e because the program is not trade-conditioned.  
 
3.4  Support for Vessel Decommissioning 
1. Title of the subsidy programme 
 
Support for Vessel Decommissioning.  
 2. Period covered by the notification 
 2013-2014.   
3. Policy objectives and /or purpose of the subsidy 
 To support vessel decommissioning in order to maintain fleet size at a sustainable level for coastal and offshore fishery resources.  
 
4. Background and authority for the subsidy 
 
Law: Article 13 of the Act on Structural Improv ements and Support for Domestic Fisheries.  
Authority: Ministry of Oceans and Fisheries.   
5. Form of the subsidy 
 
Grant.   
6. Recipients and terms 
 
Recipients: Coastal and offshore fishermen.  
 
Terms of the grant: 100% grant to coastal fish ermen and 80% grant to offshore fishermen. 
 
7. Amount of the subsidy 
 
(Unit: million KRW) 
 2013 2014 
Lump sum transfer (a) 24,886 20,529 
Loan - - 
Benefit of loan* (b) - - 
Total (a+b) 24,886 20,529 
* The benefit of loan is estimated based on the di fference between the loan rate and the market rate. 
 
8. Duration of the subsidy 
 
The subsidy will continue provisionally until 2018.  
 9. Trade effects of the subsidy 
 It is difficult to estimate the effect on trad e because the program is not trade-conditioned.  
 G/SCM/N/284/KOR 
 
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  3.5  Support for Management of distant water fisheries 
1. Title of the subsidy programme 
 
Support for Management of Distant Water Fisheries. 
 
2. Period covered by the notification 
 
2013-2014. 
 3. Policy objectives and /or purpose of the subsidy 
 
To ensure stable production and management for distant-water fisheries. 
 4. Background and authority for the subsidy 
 Law: Article 26 of the Distant Water Fisheries Development Act. Authority: Ministry of Oceans and Fisheries.  
 
5. Form of the subsidy 
 Loans. 
 
6. Recipients and terms 
 
Recipients: 
- Distant water fisheries industry operators.   
Terms of the loan: 
- The government provides grants to compen sate for the difference between the market 
interest and the loan interest for distant-water fisheries operators or overseas resource development companies. 
 
7. Amount of the subsidy 
 
(Unit: million KRW) 
 2013 2014 
Lump sum transfer (a)   
Loan 2,530 2,372 
Benefit of loan* (b)   
Total (a+b)   
* The benefit of loan is estimated based on the difference between the loan rate and the market rate.  
 
8. Duration of the subsidy 
 
No fixed time period.  
 9. Trade effects of the subsidy 
 
It is difficult to estimate the impact on trade, because the program is not trade-conditioned.  
 4  COAL INDUSTRY 
1. Title of the subsidy programme 
 
Coal Industry Support in the Special Accounting for Energy and Resource. 
 
2. Period covered by the notification 
 2013-2014. G/SCM/N/284/KOR 
 
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3. Policy objectives and /or purpose of the subsidy 
 - To stabilize the price of coal and briquettes in order to protect the livelihoods of ordinary 
people and ensure a stable supply and demand of coal. 
- To compensate for the difference between the production cost and sale price of coal and 
briquettes following the notification of a sale price ceiling. 
 
4. Background and authority for the subsidy 
 Law: Article 29 and Enforcement Ordinance No.30-2 of the Coal Industry Act. 
Authority: Ministry of Trade, Industry & Energy. 
 5. Form of the subsidy 
 Grants.  
6. Recipients and terms 
 
The subsidy is provided to coal mine operators, briquette manufacturers, and coal miners in the form of worker’s compensation insurance, support for briquette manufacturing costs and 
educational expenses. 
 7. Amount of the subsidy 
 
(Unit: million KRW) 
 2013 2014 
Lump sum transfer (a) 189,979 236,486 
Loan - - 
Benefit of loan* (b) - - 
Total (a+b) 189,979 236,486 
* The benefit of loan is estimated based on the di fference between the loan rate and the market rate. 
 
8. Duration of the subsidy 
 
No fixed time period.   
9. Trade effects of the subsidy 
 
None. 
 
5  MANUFACTURING INDUSTRY 
5.1  Support for Foreign Invested Enterprises 
1. Title of the subsidy programme  
 
Support for Foreign-Invested Enterprises.  
2. Period covered by the notification  
 
2013-2014. 
 
3. Policy objective and /or purpose of the subsidy  
 
- To attract foreign direct investment (FDI). 
 - To support technology development and regionally-balanced growth through foreign 
investment. G/SCM/N/284/KOR 
 
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4. Background and authority for the subsidy  
 
a. Tax reduction 
- Laws: Articles 121-2 and 121-3 of the Special Tax Treatment Control Law, Article 9 of the 
Foreign Investment Promotion Act, regulations in each municipality 
- Authority: Ministry of Strategy and Finance; Ministry of Trade, Industry & Energy; Ministry 
of Security and Public Administration. 
 
b. Cash grants 
- Law: Article 14-2 of the Foreign Investment Promotion Act 
- Authority: Ministry of Trade, Industry & Energy 
 5. Form of the subsidy  
 
a. Tax reduction: Tax reduction and reduction in rental fees of state-owned properties. 
b. Cash grants: Grants. 
6. Recipients and terms 
 
a. Tax reduction  
Recipients: 
 
- Foreign-invested enterprises which are involved in businesses related to advanced 
technology or engaged in the service sector supporting other industries. 
- Foreign-invested enterprises doing business in Foreign Investment Zones, Free Economic 
Zones, Free Trade Zones, the Jeju Investment Promotion Zone and Development Districts of Enterprise New Towns. 
 
Terms:  
Requirement 
taxes Industry support services and 
high-tech industry businesses, 
firms in individual type 
Foreign Investment Zones Firms in Free Economic Zones, 
Jeju Investment Promotion 
Zones, complex-type Foreign 
Investment Zones, Free Trade 
Zones, and Developers of Free 
Economic Zones 
Corporate tax Income tax A full exemption is granted for 
the first 5 years after income is generated following the initiation of business, and a 50% reduction for the next 2 years. A full exemption is granted for the 
first 3 years after income is generated following the initiation of business, and a 50% reduction is granted for the subsequent 2 years. 
Acquisition tax Registration tax Property tax A full exemption is granted for 
the first 5 years after the initiation date of business, and a 50% reduction is granted for the subsequent 2 years. A full exemption is granted for the 
first 3 years after the initiation of business, and a 50% reduction is granted for the subsequent 2 years. 
Customs duty Individual consumption tax Value- added tax (VAT) A full exemption is granted to 
capital goods introduced into Korea by foreign-invested enterprises within 5 years for the purpose of operating a business which is eligible for tax exemption. Full exemption from customs 
duties. 
 G/SCM/N/284/KOR 
 
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  b. Cash Grants  
Recipients: 
- Foreign-invested enterprises that meet the requirements stipulated in the Foreign 
Investment Promotion Act 
 
Terms: - Meeting the requirements stipulated in the Foreign Investment Promotion Act (e.g. foreign-
invested enterprises that install or expand factory facilities). 
 7. Amount of the subsidy  
 
a. Tax reduction 
No statistics available. 
 
b. Cash Grants  
(Unit: million KRW) 
 2013 2014 
Lump sum transfer (a) 5,805 19,989 
Loan - - 
Benefit of loan* (b) - - 
Total (a+b) 5,805 19,989 
* The benefit of loan is estimated based on the di fference between the loan rate and the market rate. 
 
8. Duration of the subsidy  
 
No fixed time period.  
9. Trade effects of the subsidy  
 
a. Tax reduction: The tax reduction system is aimed at promoting foreign investment, and 
therefore has neither export requirements nor an impact on trade. 
b. Cash Grants: The cash grants are aimed at technology development and regionally-
balanced growth through foreign-investment, and therefore have neither requirements 
for trade nor an impact on trade. 
5.2  Tariff Reduction on Aircraft Parts 1. Title of the subsidy programme  
 
Tariff Reduction on Aircraft Parts. 
 2. Period covered by the notification  
 
2013-2014.  
3. Policy objective and/or purpose of the subsidy  
 
To reduce production costs by encouraging the importation of aircraft parts which are not produced domestically. 
 
4. Background and authority for the subsidy  
 
Laws: Article 89 of the Customs Act. 
Authority: Ministry of Strategy and Finance.  G/SCM/N/284/KOR 
 
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  5. Form of the subsidy  
 
Tariff reduction.  
6. Recipients and terms  
 
Those designated as aircraft manufacturers or repairers in accordance with the Promotion Act for 
the Development of Aircrafts and Space Industries.  
 7. Amount of the subsidy  
(Unit: million KRW) 
 2013 2014 
Lump sum transfer (a) 69,432 70,771 
Loan - - 
Benefit of loan* (b) - - 
Total (a+b) 69,432 70,771 
* The benefit of loan is estimated based on the di fference between the loan rate and the market rate. 
 
8. Duration of the subsidy  
 
- SMEs: No fixed time period. - Other business (reduction rate applied) : 100% (2015, 2016) → 80% (2017) → 60% (2018) 
→ 40% (2019) → 20% (2020) → abolition (after 2021) 
 
9. Trade effects of the subsidy  
 
As the tariff reduction is aimed at promoting the importation of aircraft parts which are not 
produced domestically, the effect of the subsidy on trade is expected to be insignificant. 
 5.3  Support for Farm Machinery Manufacturing 
1. Title of the subsidy programme 
 
Support for Farm Machinery Manufacturing.   
2. Period covered by the notification 
 
2013-2014. 
 
3. Policy objective and/or purpose of the subsidy 
 
To assist off-season manufacturing of farm machinery and to help machinery manufacturers meet 
the high demand for farm machinery in the farming seasons.   To promote the manufacturing and supply of high-q uality agricultural machinery made in Korea by 
providing financial resources for the establishment of machinery production facilities required for 
the automatization and modernization of agricultural facilities and machinery.   
4. Background and authority for the subsidy 
 
Law: Farm Mechanization Promotion Law (Article 4).  
Authority: Ministry of Agriculture, Food and Rural Affairs.  
 5. Form of the subsidy 
 
Loans. 
 G/SCM/N/284/KOR 
 
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  6. Recipients and terms 
 
Recipients: - Farm machinery manufacturers and developers of new-tech machinery.  
 
Content of the Subsidy: - To provide financial assistance for producing agricultural machinery and for establishing and 
constructing agricultural machinery production facilities.  
 7. Amount of the subsidy 
 
(Unit: million KRW) 
* The benefit of loan is estimated based on the difference between the loan rate and the market rate.  
 
8. Duration of the subsidy 
 
No fixed time period.   
9. Trade effects of the subsidy 
 
The effect on trade is expected to be almost non-existent since the amount of the subsidy 
accounts only for 0.1% of the total value of farm machinery production.  
 6  ENVIRONMENT, RESEARCH AND DEVELOPMENT 
6.1  Environmental Improvement Loan Programme 
1. Title of the subsidy programme 
 
Environmental Improvement Loan Programme.  
 
2. Period covered by the notification 
 
2013-2014.  
 3. Policy objectives and /or purpose of the subsidy 
 To grant private loans at lower interest rates to business for investment in environmental improvements such as installing pollution pr evention facilities with an aim to promote 
environmental protection. 
 
4. Background and authority for the subsidy 
 
Laws: Article 56 of Framework Act on Environmental Policy.  
Authority: Ministry of Environment.   
5. Form of the subsidy 
 
Loans.   
- Source of funding: Commercial banks / Korea Finance Corporation. 
 6. Recipients and terms 
 Recipients: Firms that install and operate po llution prevention devices and facilities.  
 Type 2013 2014 
Direct subsidy (a) - - 
Loan 115,863 152,401 
Benefit of loan* (b) 753 991 
Total (a+b) 753 991 G/SCM/N/284/KOR 
 
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  Terms of the loan: 4-year equal repayment period with a 3-year grace period (maximum 5 billion 
KRW).   7. Amount of the subsidy 
 
(Unit: million KRW) 
 2013 2014 
Lump sum transfer (a) - - 
Loan 48,000 34,400 
Benefit of loan* (b) - - 
Total (a+b) 48,000 34,400 
* The benefit of loan is estimated based on the difference between the loan rate and the market rate.  
 
8. Duration of the subsidy 
 No fixed time period.   
9. Trade effects of the subsidy 
 None.   
6.2  Support for R&D of Environmenta l Technology Development Projects 
1. Title of the subsidy programme 
 
Support for R&D of Environmental Technology Development Projects.  
 2. Period covered by the notification 
 2013-2014.   3. Policy objectives and /or purpose of the subsidy 
 To improve the environment in Korea by developing cutting-edge environmental technology.   
4. Background and authority for the subsidy 
 
Laws: Development of and Support for Environmental Technology Act (Article 5).  
Authority: Ministry of Environment.  
 5. Form of the subsidy 
 
Grants. 
Source of funding: Special Account for Environmental Improvement.  
6. Recipients and terms 
 
Recipients: Government-invested research institutions, universities, research institutions and 
private enterprises that participate in the Environmental Technology Development Project.  
 7. Amount of the subsidy 
 
(Unit: million KRW) 
 2013 2014 
Lump sum transfer (a) 123,975 119,975 
Loan - - 
Benefit of loan (b) - - 
Total (a+b) 123,975 119,975 
* The benefit of loan is estimated based on the di fference between the loan rate and the market rate. 
 G/SCM/N/284/KOR 
 
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  8. Duration of the subsidy 
 
No fixed time period.  
9. Trade effects of the subsidy 
 
The effect on trade is expected to be insignificant because the programme is focused on support 
for R&D of fundamental technology in order to improve the environment.  
 6.3  Project on the Emission Reductio n for Diesel Vehicles in Operation 
1. Title of the subsidy programme 
 
Subsidy for the Installation of Emission Reduction Devices (DPF, DOC) and "Cleaner" Engine Retrofit and for the Early Scrappage of Superannuated Vehicles. 
 
2. Period covered by the notification 
 
2013-2014. 
 3. Policy objectives and /or purpose of the subsidy 
 
To improve air quality in metropolitan areas including the five metropolitan cities. 
 4. Background and authority for the subsidy 
 Laws:   
- Special Act on Metropolitan Air Quality Improvement (Paragraph 6 of Article 25 and 
Article 27)  
 - Clean Air Conservation Act (Paragraph 2 of Article 58)  
 
Authority: Ministry of Environment.   
5. Form of the subsidy 
 
Grants.  
 
- Source of funding: Special Account for Environmental Improvement.  6. Recipients and terms 
 Recipients:   
- Diesel vehicles that fail the emission test on designated diesel vehicles* under Paragraph 1 
of Article 25 of the Special Act on Me tropolitan Air Quality Improvement. 
- Diesel vehicles other than designated diesel vehicles* that fail the emission test on 
automobiles in operation under Article 57 of the Clean Air Conservation Act. 
- Diesel vehicles past their exhaust gas guarantee period that fail the emission test on 
manufactured vehicles. 
 
* designated diesel vehicl es: diesel vehicles designated by the Special Act on Metropolitan Air Quality 
Improvement.  
 
Terms: To provide part of the costs (90%) of instal ling emission reduction devices, retrofitting with 
"cleaner" engines or early scrapping of vehicles (50% each from central government and local 
government expenditures).  
 G/SCM/N/284/KOR 
 
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  7. Amount of the subsidy 
 
(Unit: million KRW) 
 2013 2014 
Lump sum transfer (a) 81,214 65,471 
Loan - - 
Benefit of loan (b) - - 
Total (a+b) 81,214 65,471 
* The benefit of loan is estimated based on the di fference between the loan rate and the market rate. 
 
8. Duration of the subsidy 
 
No fixed time period. 
 9. Trade effects of the subsidy 
 
This subsidy provides the total cost for a diesel vehicle owner who installs emission reduction devices or retrofits with "cleaner" engines. Therefore, it does not differentiate between a domestic and an imported device, which means that it does not result in a discriminatory trade barrier. 
 
6.4  Natural Gas Bus Supply Project 
1. Title of the subsidy programme 
 
Subsidy for Natural Gas Vehicle Procurement and Fuel Expenses.   
2. Period covered by the notification 
 
2013-2014.   
3. Policy objectives and /or purpose of the subsidy 
 
To replace frequently-operated and high-exhaust diesel engine buses and garbage trucks with low-
emission and cleaner vehicles in order to expedite the amelioration of air quality in metropolitan 
areas.   
4. Background and authority for the subsidy 
 
Laws: Clean Air Conservation Act (Article 58).  Authority: Ministry of Environment.  
 
5. Form of the subsidy 
 
Grants: 
- Source of funding: Special Account for Environmental Improvement.   
6. Recipients and terms 
 
Recipients:   
- In accordance with the Clean Air Conservation Act, grants for natural gas vehicle 
procurement are provided to persons who purchase natural gas vehicles. 
- In accordance with the Clean Air Conservation Act, grants for fuel expenses are provided to 
persons who intend to supply natural gas for vehicles that use natural gas as fuel. 
 Terms: Subsidized by local government (50%, matching fund) 
 G/SCM/N/284/KOR 
 
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  7. Amount of the subsidy 
 
(Unit: million KRW) 
 2013 2014 
Lump sum transfer (a) 35,422 26,170 
Loan - - 
Benefit of loan (b) - - 
Total (a+b) 35,422 26,170 
 * The benefit of loan is estimated based on the di fference between the loan ra te and the market rate. 
 
8. Duration of the subsidy 
 No fixed time period.  
9. Trade effects of the subsidy 
 
The effect of the subsidy on trade is expected to be insignificant since it is intended to support purchasers of natural gas buses and garbage truc ks, without differentiation between domestic and 
imported vehicles, as well as natural gas suppliers to those vehicles, for the improvement of air 
quality in metropolitan areas.   
6.5  Support for Recycling Equipment and Technology Development 
1. Title of the subsidy programme 
 
Loan Programme for Recycling Industry Promotion.  
 2. Period covered by the notification 
 
2013-2014.  
 3. Policy objectives and /or purpose of the subsidy 
 To provide small recycling businesses with long-term and low interest rate loans for recycling facility installation and stable business operation with an aim to foster the recycling industry and 
promote resource recovery from waste. 
 4. Background and authority for the subsidy 
 
Laws: 
- Article 31 of the Act on the Promotion of Saving and Recycling of Resources.   
Authority: Ministry of Environment.  
 5. Form of the subsidy 
 Loans: - Source of funding: Special Account for Environmental Improvement  
6. Recipients and terms 
 
Recipients: 
- Recycling business operators specified in Article 31 of the Act on the Promotion of Saving 
and Recycling of Resources:  
- A business to install recycling facilities; a resource recycling business conducted by the 
operators of designated recycling businesses and designated by-product discharging 
businesses; the installation and operation of energy recovery facilities; a business to build a recycling complex; a recycling business conducted by those who have obtained permission for intermediate waste disposal business or general waste disposal business; a business of 
research and technical development to facilitate recycling of resources; or the installation 
and operation of distribution supporting centers.  G/SCM/N/284/KOR 
 
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Terms:  - Facilities: 7-year repayment period with a 3-year grace period (maximum 2.5 billion KRW). - Operation: 3-year repayment period with a 2-year grace period (maximum 
500 million KRW). 
 7. Amount of the subsidy 
 
 (Unit: million KRW) 
 2013 2014 
Lump sum transfer (a) - - 
Loan 73,000 74,959 
Benefit of loan* (b) - - 
Total (a+b) - - 
* The benefit of loan is estimated based on the di fference between the loan rate and the market rate. 
 
8. Duration of the subsidy 
 
No fixed time period.   
9. Trade effects of the subsidy 
 
The effect of this subsidy on trade is expected to be insignificant for the following reasons:  
 
- First, it is a loan programme that does not restrict foreign investment or foreign 
participation. Rather, it is a direct subsidy to the recycling industry.  
- Second, considering the inferior quality of recycled products in general, they are unlikely to 
have a consequential competitive edge over non-recycled products.  
- The subsidy is fundamentally aimed at promoting domestic waste-resource recirculation and 
recycling Therefore, its impact on international trade, either imports or exports, is estimated 
to be insignificant.  
 
6.6  Support for Telemetering Systems 
1. Title of the subsidy programme  
 
Subsidy for the Costs of Installation and Management of Telemetering Systems. 
 2. Period covered by the notification 
 2013-2014.  
3. Policy objectives and /or purpose of the subsidy 
 
To support the costs of the installation and management of metering systems installed and managed for the purpose of improving air quality through constant metering of air pollutants 
emitted from business sites.  
 4. Background and authority for the subsidy 
 Laws: Clean Air Conservation Act (Article 81).  Authority: Ministry of Environment.  
 
5. Form of the subsidy 
 Grants. 
- Source of funding: Special Account for Environmental Improvement.  
 G/SCM/N/284/KOR 
 
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  6. Recipients and terms 
 
Recipients: SMEs under Article 3 of the Enforcement Decree of the Framework Act on Small and Medium Enterprises that have installed metering devices in accordance with the regulations of 
Article 17 of the Enforcement Decree of Clean Air Conservation Act and Article 18 of the 
Enforcement Decree of Special Act on Metropolit an Air Quality Improvement, and whose business 
sites transmit the metered results to a Clean SYS control centre. 
 
Terms: Support for the costs of installation and management of Telemetering systems (40% from 
the central government and 20% from the local government).   
7. Amount of the subsidy 
 
(Unit: million KRW) 
 2013 2014 
Lump sum transfer (a) 1,613 892 
Loan - - 
Benefit of loan* (b) - - 
Total (a+b) 1,613 892 
 * The benefit of loan is estimated based on the di fference between the loan ra te and the market rate. 
 
8. Duration of the subsidy 
 
No fixed time period.  
 9. Trade effects of the subsidy 
 
There is no discriminatory trade barrier because this subsidy supports the costs of the installation 
and management of telemetering systems and does not differentiate between domestic and imported measurement devices.  
 
6.7  Project on the Distribu tion Of Low NOX Burners  
1. Title of the subsidy programme 
 
Project for the Support for Low NOX Burner Installation.   2. Period covered by the notification 
 2013-2014.  
3. Policy objectives and /or purpose of the subsidy 
 
To support the installation of low NOX burners at small and medium business sites with an aim to 
improve air quality in areas of high concern in metropolitan and rural areas.  
 4. Background and authority for the subsidy 
 
Laws:  
- Clean Air Conservation Act (Paragraph 3 of Article 26). - Act on the Budgeting and Management of Subsidies. 
- Notifications No. 2009-13 (Subsidy project to su pport low NOX burner installation, delegated 
affairs*) and No. 2009-26 (Subsidy project under the Ministry of Environment, delegated affairs*) of the Ministry of Environment. 
 
* delegated affairs: affairs entrusted to local governments 
 
Authority: Ministry of Environment.  
 G/SCM/N/284/KOR 
 
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  7. Form of the subsidy  
 
Grants. - Source of funding: Special Account for Environmental Improvement.  
 
6. Recipients and terms 
 
Recipients: SMEs under Article 3 of the Enforcement Decree of the Framework Act on Small and 
Medium Enterprises, non-profit corporations, commercial buildings and apartment houses (with the exception of public facilities) replacing regular burners with low NOX burners on regular boilers, water chillers/heaters and drying facilities (limited to indirect heating facilities). 
 
Terms: Fixed support according to volume (local governments provide additional support equal to 40% of the central government’s support). 
 
* From 2015, new and replaced boilers that burn gas or li ght oils (e.g. diesel, kerosene) with a capacity over 2 
tons are to be excluded. 
 
7. Amount of the subsidy  
 
(Unit: million KRW) 
 2013 2014 
Lump sum transfer (a) 9,505 9,489 
Loan - - 
Benefit of loan* (b) - - 
Total (a+b) 9,505 9,489 
* The benefit of loan is estimated based on the di fference between the loan rate and the market rate. 
 
8. Duration of the subsidy 
 
No fixed time period.  
9. Trade effects of the subsidy 
 
The effect of this subsidy on trade is expected to  be insignificant because it supports the costs of 
replacing regular burners with low NOX burners on regular boilers, water chillers/heaters and 
drying facilities (limited to indirect heating facilities) installed by SMEs, non-profit corporations, commercial buildings and apartment houses for the improvement of air quality.  
 
6.8  Loan Programme for R&D of information and communication 
1. Title of the subsidy programme  
 
Loan Programme for R&D of Information and Communication Technology. 
 2. Period covered by the notification  
 2013-2014.  
3. Policy objectives and /or purpose of the subsidy 
 
To provide loans for large-scale R&D projects on information and communication technology that involve high risks and would otherwise place und ue burdens on businesses wishing to pursue 
technology development. 
 4. Background and authority for the subsidy 
 Law: Information Technology Industry Promotion Act Authority: Ministry of Science, ICT & Future Planning. 
 G/SCM/N/284/KOR 
 
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  5. Form of the subsidy 
 
Loans.  
6. Recipients and terms 
 
Recipients: Private firms 
Terms: Interest rates changeable depending on market interest rates 
 7. Amount of the subsidy 
 
(Unit: million KRW) 
 2013 2014 
Lump sum transfer (a)   
Loan 40,000 57,000 
Benefit of loan* (b) - - 
Total (a+b)   
* The subsidy effect is estimated based on the difference between the loan rate and the market rate. 
 
8. Duration of the subsidy 
 
No fixed time period.  
9. Trade effects of the subsidy  
 
None. 
 
 
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