G/SCM/Q2/KOR/56  
 
1 April 2016  
(16-1846)  Page: 1/2  
Committee on Subsidies and Countervailing Measures  Original: English  
 
SUBSIDIES 
REPLIES TO QUESTIONS1 POSED BY THE SEPARATE CUSTOMS TERRITORY OF  
TAIWAN, PENGHU, KINMEN AND MATSU REGARDING 
THE NEW AND FULL NOTIFICATION OF KOREA2 
The following communication, dated 31 March 2016, is being circulated at the request of the 
Delegation of Korea. 
 
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Support for Marketing and Promotion of Ag ricultural and Livestock Products (p.4) 
 Question 1 
 
Support for sorting, packaging and transporting has always been regarded as one type 
of export subsidy because it reduces the costs of export. Co uld Korea please explain why 
the impact of this programme on trade is expe cted to be minimal, and provide details of 
exactly how it has been implemented?  Reply: 
 Korea partly subsidizes transport and freight costs for some domestic agricultural products under the special and differential treatment provision of Article 9.4 of the WTO Agreement on Agriculture 
and the Ministerial Decision on Export Competition adopted in the 10
th Ministerial Conference in 
Nairobi. The impact of the support programme on trade is limited because the subsidies are 
provided only to small and medium-sized producers whose shares in the agricultural export market 
are minimal. 
 Coal Industry Support in the Special Accounting for Energy and Resource (p.12)  
Question 2 
 Can Korea be sure that the subsidies for wo rkers' insurance and educational expenses 
do not result in market distortion or ca use unfair competition? Has the government 
adopted any measures to prevent the su bsidy programme from causing any such 
distorting side-effects in the market? 
 
Reply: 
 The purpose of the insurance support for coal work ers and educational expenses for their children 
is to promote the livelihoods of workers under poor working conditions. There is no cause for 
concern over any market distortion because domestically produced anthracite has different physical characteristics and consumers from imported coal. 
 
                                               
1 G/SCM/Q2/KOR/55. 
2 G/SCM/N/284/KOR. G/SCM/Q2/KOR/56 
 
- 2 - 
 
  Question 3 
 Is the subsidy provided also to non-Kore an coal mining operators and workers? 
 
Reply: 
 
There are no foreign coal mining operators and work ers, but if there were, they could be provided 
with the program of insurance and educational expenses under the same conditions. 
 Subsidy for Natural Gas Vehicle Procurement and Fuel Expenses (p.20)  
Question 4 
 Does the subsidy for consumers purchasing na tural gas vehicles effectively exclude or 
impede imports of like products (e.g., LPG ca rs) from other Members of a third market? 
 Reply: 
 The subsidy for purchasing natural gas vehicles is pr ovided as part of the policy to replace diesel 
vehicles that intensively emit air pollutants, such as intra-city buses and garbage trucks, with low-emission ones. Both natural gas vehicles and LPG vehicles imported from other member 
nations are eligible to receive support for purchasing vehicles and fuel expenses. The support is 
origin-neutral and non-discriminatory.  
Question 5 
 Could Korea consider that the grants provided in the supply project (especially for fuel 
expenses) might constitute export subsid ies, which are prohibited according to 
provisions of the Agreement on Su bsidies and Countervailing Measures? 
 Reply: 
 The fuel expense support does not constitute an export subsidy because it is not related to exports in any fundamental way. The fuel support is provided to bus corporations when a CNG bus has to 
drive farther than 4km without passengers or to CNG filling stations when the number of buses 
charging in a station is lower than a certain standard. Therefore, the grants are categorized neither as export subsidies nor as subsidies for specific industries or enterprises. In addition, regarding the 
subsidy for purchasing vehicles, when vehicles purchased with the support are exported abroad, 
the subsidy is scaled back according to the remaining lifespan of the vehicle.  
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